“Setting up a company in a foreign country”, may sound a bit overwhelming when you read it, however, we have created this guide so you can orient yourself in the creation of your company in Spain.

When we talk about the creation of a company in Spain we have to take into account many aspects in order to carry it out successfully. You will have to take into account what type of legal form the company will have, the articles of association, different types of documentation you will have to have, register patents, trademarks, etc.

These are just some of the aspects you will have to take into account. Below we will discuss in detail the steps you must follow to successfully achieve this goal. Do not forget that you can get financial and legal advice from us, so that this process will be much more comfortable for you.

Requirements

There are a number of requirements that you must meet in order to establish a company in Spain, pay close attention to each one so that you can achieve your goal of establishing your business in the country. We tell you about them:

To be a legal resident of Spain.

It is essential and primordial.

However, there are two possible cases. If you belong to the European Union or to Switzerland, Iceland, Norway or Liechtenstein, you will only need to apply for your NIE (Foreigner’s Identity Number) and the registration certificate of the European Union.

On the other hand, if you are a foreigner not belonging to the territories mentioned above, you will have to apply for an entrepreneur visa with the respective business residence permit.

The application for this visa is broken down into two possibilities:

• If you are in your country of origin and have never lived legally in Spain, then you must apply for this visa at the Spanish Embassy of your respective country at the Economic and Commercial Office. After 10 working days you will receive the results of your application. After the visa is accepted so that you can travel to Spain, you will get your Residence Card.

• On the other hand, if you are in Spain legally, the only thing you will have to do is to apply for a residence permit.

Be of legal age.

The next requirement you must meet is that you must be older than the legal age established in Spain, which is 18 years old.

No criminal record.

In this section, we must mention that you must not have a criminal record in Spain or in any other country.

Not to be listed as rejectable.

When we talk about not appearing as rejectable, we are not only referring to the Spanish country, but to all the countries with which it has agreements.

Have the necessary experience

To be able to exercise the economic activity without any inconvenience.

Create new jobs.

You must define whether the economic activity you are going to carry out will be able to create new jobs in Spain.

To have the necessary capital.

Another requirement is that you must have sufficient capital to cover your stay in Spain and the main investment of your business.

Medical insurance.

In this case, international medical insurance will not work, you must have medical insurance in the country.

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Legal Form

After having fulfilled all the requirements we have taught you, the next step will be to establish and define the legal form of your business model.

This is why we present below the 20 different legal forms that exist in Spain:

Individual Entrepreneur

A sole proprietorship is the one that executes in an individual and personal way the management of its economic activity.

This type of legal form has the characteristic of having only 1 partner, which is the individual we have mentioned, it has unlimited liability, no minimum legal capital is required and the entrepreneur is responsible for all its assets.

Limited Liability Entrepreneur

This entrepreneur is almost identical to the sole proprietorship, except that he/she has a limited liability because he/she has certain conditions

Community of Property

The Community of Goods is based on the association of the commercial activity between several people, sharing the property of a good or a right.

This legal form must have a minimum of 2 partners, without the need to have a minimum of legal capital and where the partner is responsible with all its assets.

Civil Community

The Civil Community is the placement of a common capital between two or more persons, in order to share the profits generated by the economic activity.

This type of legal form has the same characteristics of the Community of goods, having a minimum of 2 partners, without the need to have a minimum legal capital and where the partner is responsible with all its assets.

General Partnership

It is a commercial partnership in which the partners establish a percentage of participation in the rights and obligations.

The characteristics of this Company are identical to the General Partnership and the Civil Community.

Limited Partnership

It is a Mercantile Company just like the General Partnership, with the difference that there are general partners, whose liability is unlimited; and limited partners, where their liability will be based on the proportion of capital they have contributed.

The characteristics are the same as the last 3 legal forms of which we have spoken to you.

Limited Liability Company

This is a company in which the capital stock is divided into indivisible and cumulative shares. The partners in this case will not respond personally to the social debts.

This company has certain characteristics where there must be at least one partner, and whose share capital is not less than 3,000 euros, whose liabilities will be subject to the capital contributed by each partner.

Successive Formation Limited Partnership

This legal form is a Commercial Company almost identical to the Limited Liability Company, except for some obligations to guarantee a third party protection.

This company has the characteristic of being able to be formed with only one partner, where there is no minimum capital to be contributed and where the liability is limited to the capital contributed in the company.

New Company Limited Partnership

It is a specialty of the Limited Partnership, where the minimum number of partners is 1 and the maximum is 5. A minimum contribution of 3,000 euros is also required, but there is a limit of 120,000 euros. The liability is also limited to the capital contributed to the company.

Public Limited Company

Corporations are formed by shareholders, such shareholders are not personally liable for the corporate debts and are integrated by the contributions of the partners.

For this legal form a minimum of 1 partner is required, with a capital of no less than 60,000 euros, where the liability is limited to the capital contributed in the company.

Limited partnership by shares

It is a corporation, formed by the capital stock which is divided into shares based on the contributions of the partners. There is a general partner whose liability is unlimited and who is in charge of the administration of the company and will also be personally liable for the company’s debts.

A minimum of 2 partners is required to form, with a minimum share capital of 60,000 Euros and where the partner is responsible for all its assets.

Labor Limited Liability Company

These are limited companies where the majority of the capital stock is owned by the workers who provide personal and direct services in the company.

A minimum of 2 partners is required, with a minimum share capital of 3,000 euros and where the liability is limited to the capital contributed to the company.

Labor Corporation

These are joint stock companies where the majority of the capital stock is owned by the workers who provide personal and direct services in the company.

This legal form requires a minimum of 2 shareholders, with a share capital of at least 60,000 euros and its liability is limited to the capital contributed to the company.

Cooperative Society

It is a company formed by members who carry out business activities, with a democratic operation.

For a first degree Cooperative Society, a minimum of 3 partners is needed, while for a second degree, 2 cooperatives are needed, where the minimum capital stock is fixed in the bylaws and the liability is limited to the capital contributed in the society.

Associated Worker Cooperative Society

Company formed by individuals that provides its partners with part-time or full-time jobs, through a common organization.

It requires a minimum of 3 partners where the minimum legal capital stock is the one fixed in the bylaws and they have a liability limited to the capital contributed to the company.

Professional Partnerships

It is a company whose objective is the common exercise of a professional activity.

Only 1 partner is required, whose legal capital will be defined according to the legal form adopted, and whose liability will be limited to the capital contributed to the partnership.

Sociedad Agraria de Transformación

These are Civil Companies with a socioeconomic objective in order to produce, transform and commercialize agricultural, livestock or forestry products, carry out improvements in the rural environment, promote and develop agriculture and provide common services that serve their purpose.

For these companies there is no minimum legal capital, however, a minimum of 3 partners is required, where each one is responsible for its own assets.

Mutual Guarantee Company

These are financial entities that are in charge of financing small and medium-sized companies.

This company requires a minimum of 150 partners, with a minimum capital of 10,000,000 euros, where each partner is limited to the capital contributed to the company.

Venture Capital Entities

These entities are those that provide direct and indirect financing to other companies, so that they can increase their value and retire with a profit.

Venture Capital Companies need a minimum capital of 1,200,000 euros, while Venture Capital Funds need a minimum of 1,650,000 euros, where at least 3 members are needed in the Board of Directors and the liability is limited to the capital contributed in the company.

Economic Interest Grouping

These are Mercantile Corporations whose objective is to improve the results of the activity of its partners.

In these companies, the partner is responsible with all its assets, a minimum of 2 partners are required and there is no minimum legal capital.

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Formalities

Once you have defined the legal form that best suits your business, you can continue with the process of opening a company in Spain, for this, the next step in this process will be the completion of a number of formalities necessary for the creation of the company.

These procedures must be carried out in a meticulous manner so that they can be carried out correctly, that is why TAS Consultancy offers its experience and capabilities in order to advise and accompany you in the realization of your project to create a company in Spain.

These formalities are the following:

Application for a Foreigners’ Identification Number (NIE)

The Foreigner Identification Number is a unique number belonging to each foreigner who has applied for such documentation. This permit will be issued to you once you have obtained authorization to stay in Spain. This document will be the one you will need to carry out all the formalities you wish to do in the country, whether it is opening a bank account, buying a car, filing a tax return, etc. It is very important that you do not skip this step, since it is the most important so that you can carry out the proceedings within the Spanish territory without any inconvenience.

The steps to follow to request this document are not difficult, you will simply have to provide the following documents to the Consulate General:

• A letter requesting the NIE, as well as an explanation of the reasons why you are requesting this document.

• Bring the original and the printed form of the official Form EX 15. Be sure to fill out everything correctly.

• Proof of payment of Consular Fees.

• Applicant Information Form.

• Submit the original passport, plus a copy of your biographical page.

• In case the application is made by a representative, you must have the accreditation of the representation in which it is expressly stated that the representative is authorized to present the application for the assignment of the NIE.

If you are in Spain and wish to apply for this document, you must schedule an appointment at a police office in the country.

Company name registration

The following procedure that you will have to request, will be the negative certification of the name of your company, this certificate accredits that there is no other company that is carrying out its economic activity under the same name of the one you have requested.

The steps to follow to request this procedure, like the previous one, are quite simple:

• The first thing you will have to do will be to go to the portal of the Commercial Registry.

• Then, you will have to fill in the application form with the 5 possible corporate names you want.

• After that, you will have to define the form or type of your company in the box on the right.

• Press the continue button

Once you have completed these steps, you will have to wait approximately 48 hours, where you will be informed which of the corporate names you selected are available.

In case you wish to carry out this procedure in person, you can go to the physical offices of the Mercantile Registry to request your document without any problem.

Company domiciliation

Another step that you will have to follow to be able to start your company is that you will have to domicile it in Spain. What does this mean? Well, you must have a registered location in the country where your company is managed and administered. For this, we have to know first two primordial concepts so that you can carry out this registration, the Social Address and the Fiscal Address.

These two concepts, in spite of having many similarities, present some differences that, in spite of being minimal, their level of importance is great.

It should be noted that, in order to carry out the creation of your company, you must have a registered office, and then, in order to start working, you need a fiscal domicile, which is also called domicile of activities.

Having said that, here are the definitions of these two types of domiciles:

• Registered Office:

At the time of the creation of your company, you must establish its registered office. According to article 9 of the Law of Companies, “The capital companies will fix their domicile within the Spanish territory in the place in which the center of their effective administration and direction is located, or in which their main establishment or operation is located”, what does this mean? That the registered office will be the place from which the administration and management of the company will be carried out.

As it was previously noted, the registered office is defined by the Law of Capital Companies, this address will appear in the Mercantile Registry, whose knowledge will be public for all the people.

It is important that you know that it is not necessary that the Social Address is the same as the Fiscal Address, however, this is very common in the companies. Another important thing you should know is that it is not mandatory for self-employed workers to present a registered office address.

• Fiscal Domicile:

Unlike the Social Address, the Tax Address is defined by the General Tax Law, which, in its article 48, establishes that the Tax Address is the “place of location of the taxpayer in its relations with the Tax Administration”. In this address, it will be where the notifications that have to do with their tax obligations will arrive.

The fiscal domicile will also be where the management of the economic activity of the company is carried out. However, it varies according to the legal form. For example, the Fiscal Domicile of a self-employed businessman will be his home or where the economic activity is carried out; however, for a Mercantile Society, as we mentioned before, it will be where the management of the economic activity is carried out.

These two addresses are the ones that will be included in your Tax Identification Number (NIF), which we will discuss below. We must also tell you that the consultancy and agency TAS Consultoría offers you a tax domicile service which is essential for the establishment of your company in Spain. In this case, your company will be domiciled at the address of our consultancy which will receive for you all the notifications coming from the tax and social administration.

Tax Identification Number (NIF)

The Tax Identification Number, it is a unique number which will identify the company from all the others, this number is associated to a Social Address, which we have explained above, and which can be traceable by the State.

To be able to request your NIF it will have to have passed a month of the date of the constitution of the legal person, this step is carried out in the Tax Agency. It can be done in person, but if you have a Digital Certificate or if you are registered in the Cl@ve PIN system, then you can do it electronically.

First you will have to apply for a provisional Tax Identification Number, where you will have to fill in form 036. After you have received your provisional TIN, within 6 months you will be able to apply for the definitive TIN by presenting a copy of the deed of incorporation of the company.

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Identification of partners and drafting of the company’s by-laws

One of the key steps at the time of creating your company, is the drafting of the bylaws that will tell the main functions of the manager, the number of partners, their signatures and their percentage of participation, and other types of information that will ensure that there are no future problems with respect to the operation of the company.

This is why it is highly recommended to surround yourself with one or more lawyers who are experts in this area so that there are no problems or contradictions in the drafting of these statutes that could lead to legal consequences. TAS Consulting puts at your disposal a number of qualified lawyers who can facilitate this process by taking you by the hand throughout the drafting of the statutes and giving you advice and tips that will benefit you and your company.

Some of the mentions that you will need in order to create the statutes of your company will be:

• The name or company name of the company

• The activity of the company

• The address of the registered office

• The amount of the company’s capital

• The conditions for the transfer of shares

• The name of the manager and his functions

• The name of the partners

• the number of shares held by the partners

• The signatures of the partners

Opening a bank account

Once you have done all the procedures that we have mentioned, the next step will be the opening of a bank account, in which you will have to deposit the minimum required capital stock that will depend on the legal form that you have adopted. At the beginning of this guide we leave you the 20 types of legal form that exist in Spain, where you will be able to adopt the one that adapts more to the economic activity of your company.

We recommend 4 types of banks where you can open your account. The Santander bank, which is one of the main banks in Europe, the Caixa bank which is a savings bank, the BBVA bank which works together with Latin America, and the Sabadell bank, which is a business bank recommended for adapting a form of business taking into account foreign investors.

A very important thing to mention is that in case you do not have enough money for the minimum capital required according to the legal form, you can use different assets that can add up to the minimum amount of such capital. Although we always recommend that if you have enough money for this capital, you should make it available to the company.

Signing of the public deed

The next step to be able to create our company, will be to go to the notary to sign the public deed, for this, you must provide the notary the corporate purpose, the statutes, the address of your company, the bank certificate, the negative certification of the name of the company, and the identity documents of all the partners.

All the partners must be present at the time of the signature of the public deed, once this is done, you will have to wait approximately 3 weeks to receive a positive answer, however, once you have signed this deed before the notary, you will be given a provisional VAT number with which you will be able to start your economic activity.

Registration of the Company in the Mercantile Registry

Once you have signed the public deed before a notary, the next step is to register your company in the Commercial Registry. To do so, you must go to an office in the province where your company is located.

When you go to that office, you will need to submit the following documents:

• NIF of the Company.

• Form 600.

• The public deed.

• Certificate of Labor Company.

In the case of being a Limited Company Entrepreneur:

• Notarial document.

• Registration in the Census of Entrepreneurs and Professionals.

• DNI or NIE

• Form 601.

From the moment you sign the public deed, you will have a period of two months to register your company in the Mercantile Registry.

Register with IAE

The Economic Activities Tax is a tax that is applied to companies, both self-employed and corporations, for carrying out an economic activity in Spanish territory. One of the steps you must take to establish your company in Spain is to register in IAE.

This procedure can be done online, so you will not have to go in person to any office. To register your company, the electronic site of the Tax Agency provides the following information on the procedure:

“Presentation of forms 840 and 848. When the census management is carried out by the State Tax Administration, the declarations of registration, variation or cancellation in the IAE (form 840) will be presented in the Delegation or Administration of the State Agency of Tax Administration that corresponds. It will be possible to file this form electronically. The communication of the net amount of the turnover (form 848) shall be filed either directly with any Delegation or Administration of the State Tax Administration Agency, or by certified mail, addressed to the Delegation or Administration of the State Tax Administration Agency corresponding to the taxpayer’s tax domicile or by telematic means through the electronic registry of the AEAT.”

Registration of patents and trademarks

The patent and trademark registration is similar to what we did in the first steps to establish our company name. This has to be done to confirm that there is no other company using the same logo, slogan, or anything else that you think needs to be established as yours.

This procedure is done at the Spanish Patent and Trademark Office. It can be done either in person or at its electronic headquarters.

If you want to register patents and trademarks online, you will have to go to its electronic headquarters, where you can register everything you think necessary, logos, trade names, trademarks, etc.

The process is simple and not at all cumbersome, you have to take into account that the waiting time for the granting of a trademark is 12 months as long as you have submitted the appropriate documentation for the registration of the trademark.

Electronic Certificate

Although this procedure is not mandatory, we include it in this section because it is highly recommended to request an Electronic Certificate to be able to carry out the procedures of your company in an online way so that it is simpler and you save an important amount of time. This document is issued by the Fábrica Nacional de Moneda y Timbre (Spanish Mint) in its electronic headquarters.

To request this procedure you will simply have to:

• Make the previous configurations requested by the page.

• Request the certificate online.

• Prove your identity.

• Download the certificate.

This document is valid for two years and costs 14 euros excluding taxes. Only VISA or MasterCard credit/debit cards are accepted.

You may need to add other types of paperwork depending on the economic activity you carry out, such as a municipal opening license, having a visitors’ book for inspections, etc.

At first glance you may notice that the process to establish your company in Spain is a bit long, we will not deny it, but once you have opened your company, you will see that all the effort will have been worth it. Do not forget that in TAS Consultancy we can help you in the creation of your company and in all the necessary procedures that you will have to do to successfully carry out the creation of your company. Do not hesitate to contact us to get advice from our specialists in the field to start your company!