Hard to believe, we know, but some people prefer to build business empires, than to play at the beach! Once you have an idea, you will need some help with licences, registering a Spanish business in the appropriate offices such as Social Security and Treasury Department and providing your staff with contracts of employment. EU citizens can set up a business once they have a NIE number. A non-EU citizen has to have the necessary Visa, work permit and a minimum capital investment. You also need to consider the type of Spanish business you should set up.
SOLE TRADER
The simplest way to run a business is as a sole trader, an “autónomo”. You can then either trade in your own name or as a business name. With the relevant documents, your business can be registered within around 15 days of the papers being signed. You may need to obtain an opening licence if you have business premises.
Can you just see how the business goes without having to pay any mandatory expenses? Unfortunately, not legally. You are required by law to register with the Special Social Security scheme for self employed workers, paying approx. E250 each month as a sole trader. You are then entitled to the local health service and if you pay for a certain number of years you may qualify to receive a pension. It is illegal to work inSpainwithout paying Spanish social security.
As a sole trader you will be assessed for Spanish income tax. You can choose between two methods of paying tax: a) you make quarterly VAT and Income Tax Declarations on the “direct estimations method”, just on your actual profit and earnings or b) you pay a quarterly fixed income tax & VAT amount under the “modulos” system. It is best to discuss the two systems with your accountant. Self-Employed workers can also take on employees and so have the chance to expand their company once the business takes off.
PARTNERSHIP
A partnership or “Communidad de Bienes” can be set up by two or more proprietors. The legal requirements are almost exactly the same as those for a sole trader with the exception that whilst each proprietor will pay their own income tax and social security contribution, the business makes the IVA return.
SPANISH LIMITED COMPANY
There are also benefits to forming a Spanish company; a “Sociedad Limitada”, or buying a ready-made one. As the company is a legal entity, you may be protected should you fall victim to litigation. Also, the rates of corporation tax are lower than the highest rate of personal income tax and you may be able to offset more of your business costs against your profits.
However, you need to open a company bank account and deposit a sum of initial share capital of just over 3,000€. You will also have fees of a notary and licences to pay. You have to pay social security for any employees and give them contracts. You will need a name clearance certificate and to register the Articles of Association (“Escritura”) at the Mercantile Registry. A Notary needs to sign off the Articles of Association and you will have to register your company’s trading activities for tax and IVA (get a CIF code) and pay stamp duty.
This may all sound quite daunting and in whichever manner you decide to start up your business, you will need the services of an accountant and possibly a lawyer. A sole trader set up, however, is not too painful and, once the initial paperwork is done, you will be up and running and can get on with making some money!
SOLE TRADER
The simplest way to run a business is as a sole trader, an “autónomo”. You can then either trade in your own name or as a business name. With the relevant documents, your business can be registered within around 15 days of the papers being signed. You may need to obtain an opening licence if you have business premises.
Can you just see how the business goes without having to pay any mandatory expenses? Unfortunately, not legally. You are required by law to register with the Special Social Security scheme for self employed workers, paying approx. E250 each month as a sole trader. You are then entitled to the local health service and if you pay for a certain number of years you may qualify to receive a pension. It is illegal to work inSpainwithout paying Spanish social security.
As a sole trader you will be assessed for Spanish income tax. You can choose between two methods of paying tax: a) you make quarterly VAT and Income Tax Declarations on the “direct estimations method”, just on your actual profit and earnings or b) you pay a quarterly fixed income tax & VAT amount under the “modulos” system. It is best to discuss the two systems with your accountant. Self-Employed workers can also take on employees and so have the chance to expand their company once the business takes off.
PARTNERSHIP
A partnership or “Communidad de Bienes” can be set up by two or more proprietors. The legal requirements are almost exactly the same as those for a sole trader with the exception that whilst each proprietor will pay their own income tax and social security contribution, the business makes the IVA return.
SPANISH LIMITED COMPANY
There are also benefits to forming a Spanish company; a “Sociedad Limitada”, or buying a ready-made one. As the company is a legal entity, you may be protected should you fall victim to litigation. Also, the rates of corporation tax are lower than the highest rate of personal income tax and you may be able to offset more of your business costs against your profits.
However, you need to open a company bank account and deposit a sum of initial share capital of just over 3,000€. You will also have fees of a notary and licences to pay. You have to pay social security for any employees and give them contracts. You will need a name clearance certificate and to register the Articles of Association (“Escritura”) at the Mercantile Registry. A Notary needs to sign off the Articles of Association and you will have to register your company’s trading activities for tax and IVA (get a CIF code) and pay stamp duty.
This may all sound quite daunting and in whichever manner you decide to start up your business, you will need the services of an accountant and possibly a lawyer. A sole trader set up, however, is not too painful and, once the initial paperwork is done, you will be up and running and can get on with making some money!
