Basics For Setting Up A Company In Spain For Foreigners

Who can set up a company in Spain?

It does not matter whether you are a resident in Spain or you are a foreigner; everybody is allowed to start a business in Spain. For ex-pats, setting up a company in Spain can open up many opportunities.

If you are a foreigner, you must first obtain your NIE number, which stands for “Número de Identificación del Extranjero”, which can be translated to “Foreigner Identification Number” in English. This document will provide the foreigner with an identification number so that the Spanish Authorities can identify them.

Bear in mind that, even if you finally do not set up a Company in Spain but carry out commercial operations within the territory, you will also need the NIE.

What type of company should I choose?

Before you set up a company in Spain, you need to choose which legal structure the company will have.

Foreign investors generally incorporate or acquire limited companies when setting up business in Spain.

In Spain, there are the following types of limited companies:

1. Sociedad Limitada or Private Limited Company.
2. Sociedad Anónima or Public Limited Company.
3. Filial or Subsidiary.
4. Sucursal or Branch.

Choosing between these types of companies usually depends on the scale of the business, the legal requirements, the future ability to raise capital or the stricter rules SA companies have.

Sociedades Limitadas are the most popular type of company among our clients, given its advantages over Sociedades Anónimas. The main benefits are that it only demands a minimum capital investment of 3.000€, which will be allocated to the Share Capital of the newly constituted Company, and the liability of the shareholders will be limited to the capital invested. Another advantage of SL is that they present more flexibility and greater autonomy to decide on the company’s structure and organization.

On the other hand, Sociedad Anónimas are ideal for big companies that gather large amounts of capital. The minimum capital investment is 60.000€ as the Share Capital, and the shareholder’s liability will be proportional to the amount of capital invested. The main advantage is that it allows new shareholders to invest in the company more efficiently. Still, its regulation in the Ley de Sociedades de Capital is more rigid than for their sisters, the Sociedades Limitadas.

Filiales or Subsidiaries are entirely new companies, but they are dependent on the primary company. Given they are a new entity, they must have their share capital.

In contrast, Sucursales or Branches are secondary establishments operating permanently as a parent company’s representative. Although they carry out all or part of the company’s business activities, they do not have separate legal personalities.

How do I open a bank account?

When setting up a company, you must open a bank account to deposit the Share Capital. To do so, you will need to go to your chosen bank office, identify yourself, and sign the bank contract to open the account.

At this point, you will need to decide on the company’s shareholding structure since you will need to invest the 3.000€ for Sociedades Limitadas or 60.000€ for Sociedades Anónimas once the account has been opened. Once you have opened the bank account and transferred the capital, you must request the Bank Certificate of the Share Capital because you will need to present it on the day of the constitution of the company.

Do I need to come to Spain to set up a company?

When setting up a company, you must come to Spain on different occasions.

Nonetheless, if you use ETL ILIA’s Company Incorporation Services, you can avoid being present in Spain or for most of the process. You may carry out the constitution through a Power of Attorney signed before a Notary Public in your country (duly authenticated and with the Apostille of the Hague Agreements). This Power must contain all necessary faculties to carry out the constitution’s steps.

What documents do I need to submit for setting up a company in Spain?

When setting up a company, you will need to present before the Notary varies depending on the legal type of the company and the shareholding structure.

If you want to constitute a regular Sociedad Limitada, where all shareholders are natural persons, what will need to be presented is the following

1. NIE documentation of each shareholder.
2. Passport of each shareholder.
3. Mercantile Registry’s Certificate of the Name of the Company.
4. Certificate issued by the Bank stating the Share Capital has been deposited.
5. By-Laws of the Company.

But if one of the shareholders is a Company, you will also need the Company’s NIF (Tax Identification Number for Foreigners) and the Director’s NIE. Along with these documents, you must also present the Company’s Certificate of Incumbency and the Deed where the Powers of the Director to invest or open new Companies are stated. These two last documents must come with the Apostille of the Hague Agreements.

What are the contents of the by-laws and the constitution deed?

The By-Laws of the Company are the internal rules the company will be based on, and lawyers shall carry out this document. On the By-Laws, general aspects of the company are described, such as how the shares can be sold, how the company shall be liquidated, what activities the company will carry out or which faculties the Director’s Body will have, as well as the amount of Share Capital.

On the other hand, within the Constitution Deed, the shareholding structure will be stated (who has what % of Shares), and the Directors will be appointed.

I have already signed the incorporation deed of the company. Can I start operating with it?

Once you have signed the Incorporation Deed of your brand new Company before a Notary, you will be given a provisional NIF. Regardless of this number provided, you will not be able to operate with the company (for example, receive invoices as the company or issue invoices, carry out contracts, and other commercial transactions).

The company will be considered fully constituted and thus operating once the Mercantile Registry has registered it. This process usually takes around four weeks.

Once the company is registered at the Mercantile Registry, you will need to register it at the Tax Office to obtain the CIF (Corporate Tax Identification) by presenting Form 036.

Do I need to be resident in Spain to operate with my company?

The company’s shareholders or even its Director doesn’t need to be a resident of Spain.

Regardless of the affirmation above, the company needs someone residing in Spain to communicate with Authorities. This person needs to have certain faculties over the company (primarily representative faculties) and will need to be contributing to the Social Security Group 1, the designated group for high mandates within a Company.

At ETL ILIA, we usually advise our clients to designate a Company Director residing in Spain to meet the abovementioned requirements.

If the Director is a foreigner, the company can hire an employee residing in Spain. This employee will need to be contracted full-time (40 hours a week) under a permanent contract, contribute to the Social Security Group 1, and have certain representation faculties.

How to obtain a business visa?

If you are an EU citizen, moving to Spain and obtaining a residence permit is reasonably straightforward. As an EU citizen, if you do not want to extend your stay further than three months, no paperwork – a part from the NIE – needs to be made. Nonetheless, if you plan to settle in Spain for an extended period, you will need to obtain your residency card, which is also quite simple.

On the other hand, if you are foreign to the European Community, you will need a valid work permit to start a business. You will need to apply for the permit at the Spanish Embassy in your home country.