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The Kingdom of Spain and the adjacent Ibero-American area are undoubtedly a significant market and aspire, in sporting terms, to soon outnumber the English-speaking markets. According to the level of GDP, Spain remains above the average of the member countries of the European Union and belongs to the fastest growing economies of the Eurozone. One of the determining factors of the country's further prosperity will probably be the effectiveness of the liberalization measures implemented by the government in the strategic sectors of electricity, telecommunications and transport.

Setting up a company and doing business in Spain

Thanks to its purchasing power, Spain is one of the largest European markets. Despite the recent economic crisis, the Spanish economy maintains a good position compared to other European countries. Spain is a long-standing member of the EU and other international organizations, which strengthens the already strong ties with Great Britain and other European countries.

Given the historical ties to South America – whose countries were Spanish colonies for many decades – it is advantageous to use Spain as a European base for expansion into South American markets. You can thus take advantage of the stable European legal environment and at the same time gain links to new markets in South America.

The most common types of companies in Spain are the Sociedad de Responsabilidad Limitada (SRL) – equivalent to our limited liability company, and the Sociedad Anonima (SA), which is the equivalent of a joint stock company. To establish a company, you need one shareholder and one manager.

The minimum share capital is EUR 3,000 and shareholders are liable for the company's debts up to the amount of their outstanding shares. As in any other European country, there will be a certain amount of paperwork involved. The company is required to have its registered office in Spain, must keep accounting records and file tax returns. Under certain conditions, it may become the subject of an audit.

The register of companies is publicly accessible, but it is always possible to find a solution – for greater anonymity, it is possible to use the so-called nominee services. Every person – and an entrepreneur in particular – has the right to privacy. That's our opinion! Anonymity is a matter of principle, and you have the right to it!

The basic corporate tax rate is 28 %, but from 2016 it will be reduced to 25 %. There is a tax break for newly formed companies and these companies only pay tax at 15 % of their taxable income. With this step, the Spanish government wants to encourage the entrepreneurial spirit among people and thus improve the economic and financial situation in Spain.

The basic rate of withholding tax on dividend payments is 20%. Spain has three VAT rates – 18 %, 8 % and 4 %. And as a final bonus – Spain is a signatory to many double taxation treaties.

INVESTING IN SPAIN

For foreign investors, Spain is attractive due to its size and population, while the economy is growing at the same time. The climate for foreign investment and capital transfers is quite liberal. The laws guarantee the right of foreign investors to transfer abroad without restriction the invested capital and the income from it generated in Spain, as well as they can freely transfer abroad dividends and profits.

Currently, Spain ranks ninth in the world in terms of investment attractiveness (in the European Union, it ranks fourth). Investments in the financial sector, energy and tourism prevail. The sector with favorable conditions for foreign investment is energy. The Ministry of Industry and Energy decides on subsidies (they can reach a maximum of 40 %). Holland and Luxembourg remain the most sought-after destinations for Spanish investments within the countries of the European Union due to their indisputable advantages.

Start your company in Spain and join the big siesta!

Basic information

  • Type of legal entity: Sociedad Limitada
  • Establishment time: four weeks
  • Number of shareholders: minimum 1, can be any nationality
  • Shareholders: members can be FO or business entities
  • Share capital: EUR 3,000
  • Shares to bearer: allowed
  • Registered address is mandatory, but does not have to be physical
  • The company secretary is not mandatory
  • Directors: minimum 1, maximum not defined
  • Resident function of the director: the director does not have to be resident in Spain
  • Before starting the process of setting up a business in Spain, all foreigners residing or foreigners with financial affairs in Spain must have a tax identification number or NIE

Taxation

  • Corporate income tax 25 %
  • Branch tax rate 25 %
  • Capital gains tax rate of 25 %
  • Withholding tax on dividends, interest 19 %
  • Net operating losses can be carried against income
  • The state VAT rate is 21 %, reduced rates of 10 % and 4 % also apply
  • Double taxation agreements with various countries were applied, determining tax rates on dividends, interest and royalties
  • Billing and preparation of accounts is required
  • An audit is not required if the total assets are less than EUR 2.85 million
  • Information about directors (administrators) and shareholders is open in the commercial register

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