Every good business starts with a single idea. If you’re thinking of establishing a company in Spain or starting a small business in Spain then there is a lot to consider: from where to start your business to understanding the tax implications of owning a Spanish business, it will take extensive research and hard work to turn that single idea into a viable business concept.
Foreign nationals make up approximately 12 percent of the population of Spain right now. Because the country is so popular with ex pats, starting a company in Spain that is tailored to the ex-pat market is a great way to establish a Spanish business without having to fully immerse yourself in Spanish culture and understand a new market. After all, as an ex pat yourself, who better to understand the unique needs of the ex-pat population? With that in mind, here’s everything you need to know about starting a business in Spain:
Where to Establish Your Company in Spain
If you’re yet to move to Spain then you may be wondering where best to establish your new Spanish business. Much of this will depend on the type of business you hope to run: businesses targeting Britons might want to set up in Málaga, for example, where there is a huge British ex-pat population. Of the 360,000 Britons living in Spain, an incredible 53,000 live in Málaga. Other locations to consider include:
- Barcelona has the biggest concentration of Irish ex-pats in Spain, so if you’re hoping to start a business in Spain that will appeal to an Irish audience then this is the right location for you.
- American ex-pats tend to favour Madrid, so if your company in Spain will appeal to Americans then this is the place for you: more than a quarter of all the American ex-pats in Spain live in Madrid, and the city is also popular with American students and tourists.
- Finally Nerja, in the outskirts of Malaga, has a huge population of Swedish ex-pats, making up the second largest foreign language population in the town. That means that if you have an idea for a niche business that will appeal to Swedes then where you’re starting a business in Spain, Nerja is the ideal location for you.
Registering Your Spanish Business
Only two things in this life are certain: death and taxes. For that reason, one of the first thing you should do when you have established your company in Spain is register with the tax authorities, and in order to do this you should ensure you have a foreigner’s tax identification number (NIE). You will be issued with a tax identification number after you are registered (known locally as an IRPF number). The type of IRPF number you will be given will depend on the type of business you are establishing. There are three different types of business that you can register as. They are: sole trader, company, or partnership. The simplest and easiest to register of these is as a sole trader, whilst companies and partnerships have more legal requirements you must meet to be eligible. Once your Spanish business is registered, you will be issued with an official license and certificate, and you will then be able to open a Spanish business bank account and begin to trade legally.
It's worth bearing in mind that the Spanish tax system is much more complicated than the system in the UK, but don’t worry. Spanish business authorities also tend to work quickly and be very efficient: this means that if you’re starting a business in Spain quickly then you could be registered and trading in around 10 working days. If dealing with the tax implications of your business operations seems complicated then it is also worth hiring an accountant and tax expert at this stage: let them do all the hard work so that you don’t have to.
How Easy is Starting a Business in Spain?
If you are an EU citizen, or have already secured a work permit and visa to live in work in Spain then you will find that starting a business in Spain is relatively easy. For ex pats from outside of the EU (which includes Britons since Britain left the EU at the beginning of the year) this will be more time consuming, because securing a visa that will enable you to work during your time in Spain should be your first step, and these can be relatively difficult to obtain. If you’re thinking of ease then consider a business structure that will allow you to work as a sole trader rather than establish a limited company: the Spanish government invoking minimum financial requirements for those looking to incorporate in Spain, meaning that the process can be both time consuming and expensive.
Are you thinking of moving to Spain? Always dreamt of starting a business in Spain and living in the sun at the same time? Then why not get in touch with our locally based property experts, who have years of experience in helping house hunters just like you to find the property of their dreams.