The Entrepreneur's Guide to Starting a Company in Spain:
Key Steps and Legal Insights

Everything You Need to Know to Navigate the Process of Setting Up and Running Your Business in Spain:


    Spain offers a vibrant landscape for entrepreneurs and businesses looking to establish or expand their operations. With its strategic location acting as a gateway to Europe and Latin America, a robust legal framework, and a dynamic market, setting up a company in Spain is an attractive proposition for many. However, navigating the administrative and legal processes to establish a business can be daunting without a clear guide. Understanding the Spanish legal framework, choosing the right type of business entity, and adhering to registration procedures are crucial first steps toward successful business incorporation in Spain. This article aims to demystify the process, providing a step-by-step guide to setting up a company in Spain, ensuring you are well-informed and prepared to take your business aspirations from concept to reality.

    Different Types of Spanish Companies

    Before embarking on the journey of setting up a business in Spain, it’s essential to understand the different types of companies and decide which structure best suits your business needs. The most common forms of business entities in Spain are:

    • Sole Proprietorship (Empresario Individual): Ideal for individual entrepreneurs looking to start small-scale businesses. The main advantage is the simplicity of setting up and managing the business. However, the owner bears unlimited personal liability for business debts and obligations.

    • Limited Liability Company (Sociedad Limitada – SL): This is the most popular choice for small to medium-sized businesses. It offers limited liability to its owners, meaning their personal assets are protected from business liabilities. The minimum capital required to start an SL is €3,000.

    • Public Limited Company (Sociedad Anónima – SA): Suitable for large businesses, an SA requires a minimum capital of €60,000, of which at least 25% must be paid up before registration. It also offers limited liability and is often used for businesses looking to raise capital from the public.

    Each type of company has its advantages and disadvantages, including tax implications, liability issues, and administrative burdens. Therefore, choosing the right business structure is a crucial decision that should be made with careful consideration of your business model, goals, and financial capabilities.

    Pre-Registration Steps

    The first concrete steps towards establishing your business in Spain involve several pre-registration requirements:

    1. Company Name: Your company’s name must be unique and not similar to any existing company’s name in Spain. The Central Mercantile Register (Registro Mercantil Central) provides a certification to ensure your chosen name is exclusive.

    2. Company Statutes: Draft the company statutes, which outline the operational rules, business activities, and the structure of your company. This document is essential for the incorporation process.

    3. Corporate Bank Account: Open a corporate bank account in the name of your company. For an SL, you must deposit the minimum required capital of €3,000, and for an SA, at least €15,000 of the required €60,000 capital must be deposited.

    4. NIE (Número de Identidad de Extranjero): Before you can proceed with any formal business registration processes, all foreign nationals intending to do business in Spain must obtain a NIE. This identification number is essential for all transactions that require tax identification in Spain, including the incorporation of a company, opening a bank account, and the execution of public deeds with a notary.

    These preliminary steps lay the foundation for your business and are prerequisites for the formal registration process.

    Registration Process

    Once the pre-registration steps are complete, the next phase is the formal registration of your company in Spain. This process legalizes your business and involves several key steps:

    1. Tax Identification Number (NIF): The first step is obtaining a provisional Tax Identification Number (NIF) for your company from the Spanish Tax Agency (Agencia Tributaria). This number is required for all your business’s tax-related activities.

    2. Deed of Incorporation: The deed of incorporation, which includes the company statutes, must be signed in front of a notary. This official document establishes your company’s existence and outlines its operating framework.

    3. Mercantile Registry: Following notarization, the deed of incorporation must be registered with the Mercantile Registry (Registro Mercantil). Once registered, you will receive a definitive NIF for your company.

    4. Community Tax Number: If your company plans to engage in trade within the EU, you must apply for a Community Tax Number from the Spanish Tax Agency.

    This process solidifies your company’s legal standing, allowing you to operate within Spain and the broader EU market.

    Post-Registration Requirements

    After registering your company, there are several post-registration tasks to complete before commencing your business operations:

    1. Register for Tax: You must register your company with the Spanish Tax Agency for the relevant taxes, including Corporate Tax, Value Added Tax (VAT), and any other applicable taxes based on your business activities.

    2. Social Security Registration: Your company needs to register with the Spanish Social Security system. This is mandatory before hiring any employees and ensures your business is compliant with labor laws.

    3. Licenses and Permits: Depending on your business activity, you may need to apply for specific licenses and permits. These can range from local municipality licenses for a physical location to industry-specific permits for regulated sectors.

    Hiring Employees

    Expanding your team is a crucial step in growing your business. In Spain, hiring employees involves several legal and administrative requirements:

    1. Registration: Employers must register with the General Social Security Fund (Tesorería General de la Seguridad Social) and obtain a company social security number.

    2. Contracts: Spanish labor laws require employment contracts for all employees, detailing terms of employment, job duties, and compensation. Contracts can be indefinite or for a fixed term, depending on the nature of the employment.

    3. Payroll Taxes and Social Security Contributions: Employers are responsible for withholding income tax and social security contributions from their employees’ salaries and paying these to the relevant authorities.

    Ongoing Compliance and Legal Obligations

    Running a company in Spain involves adhering to ongoing legal and financial obligations:

    1. Tax Filings: Companies must regularly file tax returns and pay corporate tax, VAT, and other relevant taxes. Deadlines and requirements vary based on the company’s activities and size.

    2. Bookkeeping: Spanish law mandates that companies maintain accurate books and records, including financial statements and transaction records. These should be prepared according to the Generally Accepted Accounting Principles (GAAP).

    3. Annual Accounts: Companies must file annual accounts with the Mercantile Registry, providing a transparent overview of their financial health.

    Compliance with these obligations is crucial to avoid penalties and ensure the long-term success of your business in Spain.


    Setting up a company in Spain is a multifaceted process that requires careful planning and adherence to legal procedures. From choosing the right business structure to navigating registration and compliance, each step is critical to establishing and operating a successful business. While the process may seem daunting, the benefits of accessing the Spanish and European markets can offer significant opportunities for growth and expansion. As always, seeking professional advice to navigate these steps can provide valuable insights and help avoid common pitfalls, ensuring a smooth journey from conception to operation.

    Need to incorporate a Spanish copmany remotely?
    Incorporating a company in Spain offers the flexibility of remote setup, allowing entrepreneurs from around the globe to establish their business without the need to be physically present in Spain.
    This process involves several key steps, including obtaining a Spanish Identification Number for foreigners (NIE) for owners, directors, and employees, which can now be managed online or through legal representatives in Spain.