Establishing a company in Spain presents numerous advantages for entrepreneurs and international investors. With its dynamic economy, strategic location in Europe, and access to EU markets, Spain offers a favorable environment for business development. This article provides a practical guide on business structures, corporate taxation, and VAT regulations for those interested in setting up a legal entity in Spain.
- Country Overview
- Official Name: Kingdom of Spain (Reino de España)
- Capital: Madrid
- Population: Approximately 48 million (as of 2024)
- Official Languages: Spanish (Castilian); Catalan, Basque, and Galician have official status in certain regions
- Religion: Secular state; Roman Catholicism is widespread
- Climate: Mediterranean climate along the coast, continental climate inland
- Time Zone: UTC+01:00 (UTC+02:00 during daylight saving time)
- Phone Code: +34
- Currency: Euro (EUR)
Business Structures for Establishing a Company in Spain
When establishing a company in Spain, choosing the appropriate legal form is the first step. The three main structures are:
| Company Type | Minimum Capital | Liability | Corporate Features |
|---|---|---|---|
| Limited Liability Company (Sociedad Limitada) | €3,000 | Partners are liable only up to their capital contribution | – Suitable for small and medium-sized enterprises – Requires at least 1 partner – Shares can be transferred but may be subject to restrictions |
| Joint Stock Company (Sociedad Anónima) | €60,000 | Shareholders are liable only up to their capital contribution | – Suitable for large-scale companies and public offerings – Shares freely transferable – Higher audit and reporting obligations |
| Branch Office | None | Parent company is fully liable for debts and obligations | – Not a separate legal entity – Must be registered to conduct business in Spain – Operates under the parent company’s accounts |
| Representative Office | None | Limited liability as it does not conduct commercial activities | – Limited to marketing, communication, and market research – Cannot carry out commercial transactions – Registration usually not required |
| Cooperative | Variable | Members can have limited or unlimited liability | – Suitable for enterprises based on mutual benefit – Operates under democratic management principles – Often engaged in social activities |
| Civil Partnership (Sociedad Civil) | None | Partners have personal and unlimited liability | – Usually established among freelancers or professionals – Taxation based on individual partners’ income |
VAT (IVA) in Spain
When establishing a company in Spain that engages in commercial activities, understanding VAT obligations is crucial:
- 21% general VAT rate for most goods and services
- 10% reduced rate for items like transportation and healthcare products
- 4% super-reduced rate for basic essentials like bread, books, and medicine
Since July 2017, VAT-registered companies must report invoice data electronically through the Immediate Supply of Information (SII) system. Invoices must be submitted to the Agencia Tributaria within four days of issuance.
Contact us for more information on setting up a company in Spain, navigating local regulations or optimising your corporate structure and tax position.
