The government of Spain actively encourages foreign entrepreneurs, making the country an increasingly attractive destination for business opportunities. Law BOE-A-2013-10074 governs commercial activities and provides various forms of support for business owners, including tax incentives, social benefits, financing opportunities, and a streamlined company registration process. Foreign citizens have unrestricted rights to establish companies under various forms of ownership. Additionally, entrepreneurs can obtain a 12-month special visa and a renewable 3-year residence permit in Spain.
For those wishing to work as self-employed professionals, Law BOE-A-2017-12207 (Reformas Urgentes del Trabajo Autónomo) simplifies the process and offers substantial support. The government promotes self-employment by introducing reduced tax rates and measures to help balance family and work life. In this article, we outline the company registration process in Spain, the available legal business structures, the benefits of starting a business in the country, and provide valuable tips to help you get started.
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Why open a company in Spain?
Spain ranks 30th out of 190 countries in the World Bank’s Doing Business report, reflecting the country’s ease of doing business. Factors such as access to public and private investments, low corruption levels, transparent legislation, manageable tax rates, and streamlined bureaucracy contribute to this favorable ranking. Additionally, Spain performs well on the Legatum Prosperity Index, ranking 27th out of 167 countries for providing a comfortable environment for entrepreneurs.
Here are several compelling reasons to register a company in Spain:
- Stable economic growth: Spain boasts steady economic development, low inflation (2.3% at the time of writing), and consistent GDP growth (both total and per capita).
- Diverse business opportunities: Promising industries include agriculture, tourism, light manufacturing, shipbuilding and engineering, and fishing.
- Access to the European market: Companies benefit from access to the EU single market, with no customs duties or volume restrictions for goods and services.
- Global market reach: Spain serves as a gateway to the markets of North Africa, the Middle East, and Latin America, offering access to over one billion consumers worldwide.
- Straightforward startup process: The process to start a business is simple and transparent, with assistance available from the General Directorate of Industry, Small and Medium Enterprises.
- Favorable financing options: Entrepreneurs can obtain loans on favorable terms from reliable banks or secure funding through investment programs and funds.
- Attractive tax system: Spain has a competitive tax framework and 94 double taxation treaties signed with countries worldwide.
Spain also prioritizes the internationalization of its business environment. According to Invest in Spain (a division of the Spanish Institute of Foreign Trade), as of 2024, there are more than 18,000 foreign companies registered in the country. Entrepreneurs are drawn to Spain’s business-friendly policies, including its flexible immigration laws, which allow for obtaining a local residence permit when establishing a company of any ownership structure.
One notable program is the Spanish startup residence permit. This program does not require entrepreneurs to make a significant investment; instead, a well-structured business plan is sufficient to apply.
Advantages for foreign entrepreneurs in Spain
Spain ranks 13th globally for foreign investment, according to the Foreign Trade Institute. Notably, 70 of the top 100 international companies listed in the Forbes Global 2000 operate within the country. To support foreign investors, Spain offers a range of incentives and assistance programs through the General Directorate of Industry, Small and Medium Enterprises, including the Fund for the Internationalization of Companies (FIEM) and the Co-Investment Fund (FOCO). Entrepreneurs can also access financial backing from business angels and venture capital firms.
Foreign business owners, like their local counterparts, benefit from tax incentives, customs advantages, and additional government support. Key initiatives include:
- Preferential financing options through the Official Credit Institute (ICO)
- Incentives for investments in underdeveloped regions or specific industries such as IT and green energy
- Reduced or zero mandatory contributions, tax holidays, and expanded social security packages
In addition to national programs, Spain’s autonomous communities offer localized support to businesses, further enhancing opportunities for entrepreneurs.
Many immigrants choose to open a business in Spain as a path to residency and to enjoy the country’s exceptional living standards. According to an independent Numbeo study, Spain ranks 18th globally for quality of life. Entrepreneurs can explore various residency options, including:
- Startup Residence Permits for innovative business founders
- The Spanish Digital Nomad Visa, particularly attractive to professionals in the IT sector
Types of companies in Spain
Before registering a company in Spain, it is important to choose the appropriate legal form for your business. All available options are outlined in the national Commercial Code. Below is an overview of the most popular legal structures.
Overview of popular legal entities
- Sociedad de Responsabilidad Limitada (SL).
A Limited Liability Company (LLC) can be established by a single founder, with the authorized capital divided into shares. The main advantage of this form is that the owners are not personally liable for the company’s debts. There are no restrictions on the company name, number of members, or distribution of assets. Authorized capital: From 1 EUR, but in practice, a minimum of 3,000 EUR in assets is required to cover potential debts in the event of liquidation. Best for: Small and medium-sized businesses. Disadvantages: Mandatory public reporting, prohibition on issuing bonds, and inability to participate in the stock market. - Sociedad Anónima (SA).
A Public Limited Company offers similar protection from personal liability but allows the issuance and sale of shares. This makes it suitable for businesses looking to increase profitability through the sale of equity. Minimum authorized capital: 60,000 EUR. Founders required: At least one. Special requirement: Mandatory for certain industries, such as insurance. Advantages: Freedom to issue and sell shares to raise capital. Disadvantages: Complex and costly administration, a high entry threshold, and corporate tax obligations without preferential terms. - Empresario Individual (Autónomo).
An Individual Entrepreneur (Self-Employed) is a natural person conducting economic or professional activities for profit. This is a popular choice for small businesses due to its simple registration process, low maintenance costs, and no requirements for authorized capital. Best for: Self-employed individuals, including foreign entrepreneurs. Taxation: Personal income tax (not corporate tax). Advantages: Easy setup, minimal costs, and flexibility. Disadvantages: Personal liability for business debts and high personal income tax on significant profits.
Other less common forms of company incorporation
- Sociedad Civil (Civil Society): Designed for two or more co-founders to pool capital and share profits.
- Sociedades Profesionales (Professional Societies): Intended for professionals in specialized fields, such as researchers or consultants.
- Sociedad Cooperativa (Cooperative): Complex, multi-structured entities such as worker or housing cooperatives.
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How to choose the best company form?
To determine the most suitable company form for registration in Spain, it’s essential to consider several key factors:
- Minimum required authorized capital
- Complexity of document management
- Property liability of participants
- Number of available co-founders
- Openness to external investment
- Form and amount of taxation
For example, small and medium-sized businesses often opt for sole proprietorship (Empresario Individual). This option requires no partners, no minimum capital investment, and involves minimal paperwork. However, sole proprietors pay income tax at a progressive rate, which depends on their annual profits. This is advantageous if annual earnings do not exceed 20,199 EUR, as the tax rate is 24%. However, for higher profits, the rate can rise to 47%. In such cases, it becomes more profitable to register a Limited Liability Company (LLC or SL), which pays a flat corporate tax rate of 25% on income (or 15% for newly established companies during the first two years).
For large businesses, sole proprietorship is generally not suitable. It restricts opportunities for investment from venture capital or private equity firms and limits the ability to delegate management responsibilities or form partnerships. In such cases, it is more logical to establish an LLC, Open Joint Stock Company (Sociedad Anónima), or Closed Joint Stock Company, depending on the nature and scope of the business. Certain business types, such as venture capital funds, are also subject to specific legal requirements and can only operate under designated legal structures.
Regardless of the company form you choose, you can apply for a residence permit in Spain for the purpose of startup development. This residence card is issued for 3 years with the option for renewal. Over time, this can lead to permanent residency and eligibility for EU citizenship.
Schedule a detailed consultation with our experts to learn everything about obtaining a permit through a startup and discover how our lawyers can assist you.
Steps to register a company in Spain
To register a company in Spain, you will need to select a name, obtain identification numbers, open a bank account, and determine whether to purchase or lease real estate. You must also prepare all required documents and register the company with the state.
Choosing the company name
To reserve your company’s name, submit a request to the Central Commercial Registry (RMC). If the name is available, the authority will issue a certificate of uniqueness, which reserves the name for six months. During this period, the company registration process must be completed. The procedure is free of charge.
Note that requirements for the company name depend on the chosen legal structure. For example, if registering an LLC, the name must include “Sociedad de Responsabilidad Limitada,” “Sociedad Limitada,” or the appropriate abbreviation (SRL / SL).
Obtaining NIF/NIE for foreign founders
To register a company in Spain, foreign founders must obtain an NIE (Número de Identidad de Extranjero)—a foreigner identification number. This document is issued by the local police department (or via a diplomatic mission abroad) and is essential for opening a bank account, purchasing real estate, forming the company, and conducting financial transactions.
In addition, a NIF (Número de Identificación Fiscal) is required for any commercial activity in Spain and for tax payments. Initially, a temporary NIF is issued. The notary sends a petition to the Tax Administration along with a copy of the approved deed of incorporation. Once the company is registered, the final NIF is provided.
Preparing incorporation documents
The list of required documents includes the Memorandum of Association, the content of which depends on the chosen legal structure.
For an LLC (Sociedad Limitada), the document must outline:
- Names of the founders
- Their financial contributions
- Management responsibilities
- Social representation
- Conditions and agreements regarding company creation
Additionally, the Articles of Association are prepared, specifying the company name, business activities, registered office, capital amount and share distribution, and organizational structure.
For a Public Limited Company (Sociedad Anónima), the memorandum also includes founding costs. The articles of association add details such as the start date of operations, the company’s duration, rules for decision-making, and potential restrictions on share transfers.
Registering the company with the tax and commercial registry
To register with the Commercial Registry, visit the Entrepreneurs’ Service Office. If you are setting up an LLC, you can also submit your application online through the CIRCE system. In either case, you must complete the Single Electronic Document (DUE). Service Point staff will assist you with this process, and video instructions are also available.
Opening a bank account in Spain
A key step in company registration is opening a bank account in Spain and depositing the authorized capital. This is confirmed by a document that must be submitted to the notary. Reputable banks include CaixaBank, Santander, Sabadell, and BBVA.
When selecting a bank, consider the terms of service and fees. The list of required documents varies depending on the bank but generally includes the company’s founding documents.
Legal and tax aspects of doing business in Spain
The taxation structure in Spain depends on the type of company registered. Generally, businesses pay a corporate tax, while sole proprietors and self-employed individuals pay personal income tax (PIT). Additional taxes may include real estate tax, property tax, and value-added tax (VAT).
Income tax and other compulsory levies
Personal Income Tax (PIT) in Spain applies to individual entrepreneurs, self-employed persons, and sole proprietors with limited liability. It is progressive, based on annual income:
- 0 to 12,450 EUR – 19%
- 12,450 to 20,199 EUR – 24%
- 20,200 to 35,199 EUR – 30%
- 35,200 to 59,999 EUR – 37%
- 60,000 to 299,999 EUR – 45%
- Over 300,000 EUR – 47%
Most businesses, including limited liability companies (SL), pay a corporate tax instead of PIT. The standard corporate tax rate is 25% of total profits, with a reduced rate of 23% for companies earning less than 1 million EUR in the previous tax year. New companies benefit from a reduced rate of 15% for their first two years.
Entrepreneurs who supply goods and services are subject to value-added tax (VAT). The standard VAT rate is 21%, though reduced rates of 10%, 5%, 4%, or 0% apply to specific categories, such as food products.
Labor laws and hiring employees
Most business structures in Spain, including sole proprietorships, allow for the employment of staff. The primary regulations governing employment contracts are outlined in Law BOE-A-1995-7730 “Estatuto de los Trabajadores”, supplemented by additional legal acts, such as laws prohibiting gender discrimination and supporting individuals with disabilities.
Every employee in Spain is entitled to:
- Timely payment of agreed or legally defined wages
- Physical integrity, privacy, and respect for their dignity
- Safe and adequate working conditions, including mandatory insurance as required by the profession
- Opportunities for promotion and vocational training
- Protection against discrimination based on gender, race, social status, religion, or political beliefs
Employing individuals under the age of 16 is prohibited. Employers may hire staff on a full-time or part-time basis, provided they adhere to restrictions on standard working hours. Employment contracts can be made in writing or verbally, depending on the agreement between the parties. Contract types include group, internship/training, seasonal, temporary, part-time, or home-based agreements. Each contract must outline the duration of employment, rights and obligations of both parties, salary, working schedule, and other relevant details.
Businesses can hire non-EU foreign workers if the position is on the authorities’ list of high-demand professions or if no local resident can fill the role. Spain also offers a special migration program for highly qualified professionals. In such cases, the employer must apply for a Spanish residence permit (LPR) for the employee.
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Additional steps for a successful business
For those unsure of how to start a business in Spain, official government support is available through the Directorate General of Industry, Small and Medium Enterprises. Entrepreneur Service Points (PAE) provide comprehensive information on:
- Company registration forms and their specific requirements
- Available government assistance and incentives
- Social security regulations and related details
The Ministry of Industry has also implemented the CIRCE system—a unified electronic data processing platform—allowing entrepreneurs to register an LLC (SL) or sole proprietorship online, conveniently from home.
To establish a business, you must have a physical office address in Spain as your official place of incorporation. It’s advisable to find a suitable property for rent or purchase in advance, using specialized online platforms. To avoid potential pitfalls—such as unknowingly acquiring a property in areas with issues like illegal occupancy (okupas)—it’s wise to enlist the help of experienced professionals.
In any case, relying on specialized experts when setting up your company is highly recommended. This ensures you don’t have to navigate the complexities of company registration alone. Experts can simplify intricate processes, provide clear answers to your questions, and offer practical assistance. Their support is particularly valuable when applying for a residence permit, which is essential if you plan to live in Spain while managing your business.
Prospects for moving and doing business in Spain
Spain offers a highly favorable investment environment for foreign entrepreneurs, making it an ideal destination for both business development and immigration. The country is particularly attractive due to its streamlined company registration process and tax incentives for new businesses. Spain’s economy is steadily growing, the workforce is highly qualified, and labor costs remain competitive by European standards, with the average salary at approximately 1,700 EUR per month.
Establishing a new company in Spain provides an immediate 3-year residence permit for both you and your family members. This permit can be extended for an additional 2 years and, eventually, you can apply for permanent residency. In the long term, you may qualify for Spanish citizenship, which becomes available 10 years after obtaining your initial residence permit.
