Understanding the requirements and practical implications of setting up a business in Spain…
Once the appropriate business structure is selected, it is important to be aware of the practical requirements of setting up a business in Spain.
Registration of the Company Name
An application must be made for a Certificate of Uniqueness (Certificación Negativa de la Denominación Social), to prove that the name of the company is not already registered. This can be obtained from the Central Commercial Registry (Registro Mercantil Central) for a small fee.
- Central Commercial Registry Office procedures can be performed online: Click here
Open a Bank Account
A bank account must be opened and the capital deposited. The amount that will need to be deposited will depend on the type of company that is to be set up. A deposit certificate will then be issued.
Obtain a Public Deed of Incorporation
This will need to be done before a notary. The public deed of incorporation will include the names of the company shareholders, the amount of shares held by each shareholder, the type of administrative body managing the company and the identity of the administrators or directors. The public deed of incorporation must also include the tax identification number of each shareholder as well as the bank deposit certificate and the Certificate of Uniqueness.
Apply for a CIF
An application must be made for a company tax identification code (Codigo de Identificacion Fiscal/CIF). This can be done at the Tax Office (Delegación de Hacienda). A provisional number will be given straight away, and a permanent CIF number must be obtained within six months.
Pay Transfer Tax and Stamp Duty
The next step is to pay transfer tax and stamp duty (Impuesto de Transmisiones Patrimoniales y Actos Jurídicos Documentados) at the local Tax Office of the province in which the company is incorporated. The deed of incorporation and the CIF will need to be presented and the cost is one percent of the company capital share. The payment must be made within 30 days following the public deed of incorporation.
Note: Companies that are formed in the Canary Islands are not liable to pay stamp duty.
Register the Company
Once transfer tax has been paid the company needs to file the public deed of incorporation with the Central Commercial Registry (Registro Mercantil Central) in order for the company to be registered. Registrations costs will depend on a number of things including the number of shareholders and the capital invested. Registration must take place within two months of the date the public deed of incorporation was granted.
Submit a Formal Declaration to Start Activity
A formal declaration to start company activities (Declaración Censal de Inicio de Actividad) needs to be filed at the local Tax Office (Delegación de Hacienda).
Register for Tax
The company will then need to be registered for tax at the local Tax Office. The Tax Office will need a description of the business activity, business starting date and a description of the business premises. Once the Tax Office has the relevant paperwork the company will be allocated an official activity code in order for the company to pay taxes.
Legalise Company Books
Under Spanish law, companies must keep accounts books, a minutes book and VAT (IVA) register books. These statutory books must be submitted to the Central Commercial Registry to be certified and stamped before they are used.
Obtain an Opening Licence
A licence to open business premises (Licencia Municipal de Apertura) must be obtained from the Town Hall. The cost of the licence depends on the intended business activities and there may be different requirements for the licence depending on the area or district in which the business is located. The only document necessary to present to the Town Hall is the public deed of incorporation.
Notify the Regional Work Authorities Office
Before starting the economic activity, companies must notify the Regional Work Authorities (Delegación Provincial de la Consejería de Trabajo e Industria).
Companies must keep a log book (Libro de Matrícula) at all times. Details of the company, the work place and business activities must be kept in this book. The book must be made available to the Labour and Social Security Inspectorate at all times.
Any foreign investments used to set up a business in Spain will need to be declared at the Spanish Investments Register (Registro de Inversiones).
Online Company Registration
A New Enterprise Limited Company (SLNE) and Limited Liability Company (SL/SRL) can be created with the assistance of the Counselling and Start Process Point (Puntos de Asesoramiento e Inicio de Tramitación/PAIT). PAIT can provide information and transmit details to various governmental authorities, saving the applicant the task of visiting each office separately. A notary must complete the Deed of Incorporation, but theoretically, PAIT can assist with the rest of the proceedings.
