Starting a business in Spain requires understanding legal structures, the tax system, and requirements for foreigners. This guide details the key aspects of running a business in the country.

1. Choosing a Business Structure

The choice of legal form depends on the business size, level of responsibility, and tax obligations. In Spain, the following structures are available:

Autónomo (Freelancer, Sole Proprietor)

• Suitable for small businesses and self-employed individuals.
• Easy registration and accounting.
• High personal liability for debts.
• Initial income tax (IRPF) – 15% for the first 2 years.
• Minimum monthly Social Security contribution – from €80 in the first year.

Sociedad Limitada (SL, equivalent to an LLC)

• Minimum share capital – €3,000.
• Limited liability (owners are only liable for their invested capital).
• Required to maintain accounting records.
• Corporate tax – 25%.
• Must be registered with the Registro Mercantil.

Sociedad Anónima (SA, equivalent to a Corporation)

• Suitable for large companies.
• Minimum share capital – €60,000 (at least 25% must be paid upon registration).
• Ability to go public.
• Strict auditing and accounting requirements.
• Corporate tax – 25%.

2. Taxes and Contributions

Entrepreneurs in Spain must pay taxes and social security contributions. The main ones are:

IRPF – Personal Income Tax

• For autónomos – 15% for the first two years, then rates range from 19% to 47% depending on income.
• For companies (SL and SA), corporate tax is 25%.

IVA – Value Added Tax (VAT)

• General rate – 21%.
• Reduced rates – 10% (some services and products), 4% (basic foodstuffs, medicines, books).
• Some small businesses may be exempt from paying VAT (recargo de equivalencia regime).

Seguridad Social – Social Security Contributions

• Autónomos – from €80 in the first year, then it increases (standard rate – around €300 per month).
• SL and SA – employee contributions amount to approximately 30% of salary.

3. Business Registration Process

To legally operate in Spain, an entrepreneur must complete several registration steps:

Obtaining a NIE (Número de Identificación de Extranjero)

• Required for all foreign entrepreneurs.
• Issued by the police or Spanish consulate.

Registering with the Tax Office (Hacienda)

• Obtaining a CIF/NIF (tax identification number).
• Registering under the appropriate tax regime (Autónomo or SL).
• Enrolling in the VAT register (if applicable).

Registering with Social Security

• Enrolling in the social security system.
• Paying contributions for the entrepreneur and employees.

Obtaining a Business License (Licencia de apertura)

• Required for most business activities.
• Issued by the local municipality depending on the type of business (retail, hospitality, manufacturing, etc.).

4. Useful Resources and Links

• Social Security: https://www.seg-social.es
• Tax Office (Hacienda): https://www.agenciatributaria.es
• Company Registration (Registro Mercantil): https://www.registradores.org