Setting-up a Company in Spain to Beat Brexit

  • Inmaculada
    Inma
    Inmaculada has assisted individuals and corporations in the Valencia region with the legal and tax matters for over 30 years. From offices in Valencia City and Castellón de la Plana, Inmaculada provides expert legal advice and assistance to English-speakers in Property matters, Contract Breaches/Debt Recovery, Family law and Business formation and bookkeeping service.
  • Francisco
    Francisco
    With more than 20 years legal experience, Francisco leads a multi-disciplinary law firm which comprises ten lawyers working in their specialised fields. Assistance in all major areas of the law are offered including property law, contract breach/debt recovery, business formation and taxation as well as civil matters such as family law and inheritances.
  • Miguel
    Miguel
    Miguel is a highly qualified - and regulated - economista, similar to a chartered accountant in the UK. He specialises in business and property matters and over the years has assisted many English-speakers relocating to Spain who wish to establish their businesses in Spain and also get assistance with property investment. Miguel speaks English fluently.
  • Alfonso Padilla
    Jacobo
    Alfonso is a lawyer specialized in Tax Law and Commercial Law. Graduated in Law with a Diploma in Economic and Business Sciences. Alfonso has practiced law in Brussels and Madrid and has extensive teaching experience and as a speaker at numerous conferences and seminars on taxation of legal persons and international taxation. He has taught the Masters of Taxation Course at the Garrigues Studies Center, the School of Public Finance and the Contax Academy in preparation for competitive examinations to the Ministry of Finance. Between 1999 and 2004 he worked as the Deputy Director General of Tax Policy in the Ministry of Economy and Finance. He speaks English and French.
  • Jacobo
    Jacobo
    Jacobo is a registered and regulated tax lawyer in Madrid, with a Masters in Taxation Matters. After 5 years spent developing his experience at Ernst & Young, Jacobo now assists companies large and small, national and international, as well as sole traders in all tax and accounting related matters. He speaks English fluently.
  • Rosana
    Rosana
    Rosana has a background in banking and international law, having spent over 10 years in the London and Marbella branches of international law firms. She is a member of the Chartered Institute of Economists of Malaga and provides a broad range of support services for English-speakers and firms in Malaga, Marbella, Estepona, Fuengirola and across Spain.
  • Sergio
    Sergio
    Sergio has a broad experience in International Taxation, Real Estate Taxation, Tax planning, In-company tax assessment, tax compliance, audits by the Spanish Tax Administration, International agreements and Corporate Restructuring. He graduated in Law and obtained a Masters in Taxation, later obtaining an MBA. He started his career as a Tax Advisor working in multinational law firms in Madrid and Barcelona and has furthered his knowledge and experience by leading the taxation department of a a multinational company. For the last four years Sergio has been working in an International Tax boutique in Barcelona. He speaks fluently Spanish, English, German and French.

Against the backdrop of the recent Brexit vote, a common concern among those currently considering a move to Spain is whether they should open a Limited Company there, on the basis that this may help with residency claims at a later date. Unfortunately there is no definitive answer to this question. Ultimately both the public and the business world are dependent upon the outcome of negotiations at a governmental level.

That said, there appears to be a widespread belief taking root, that those who are resident and ‘working’ in the UK or Europe, regardless of their nationality, shall be permitted to stay – at least before an ‘as yet’ unspecified date.

It would therefore seem prudent for British citizens planning a move to Spain, and who plan to work here, to consider doing so as soon as possible. It is also important that they register as living locally by way of getting listed on the local padron (ie register with the local Council) and obtaining an NIE number, then becoming either self-employed or setting-up a limited company – according to preference and circumstances. Moving to Spain but failing to register as described could leave an individual in the worst possible situation of having accumulated considerable expense in moving to another country, but not being able to stay beyond a certain date in the future.

Apart from the above, the main decision you will need to make is as it always was – should you set-up a limited company or as a sole trader?

Both have benefits and drawbacks. Here we will look at the differences between the two so that you can decide on which is the most appropriate for your business in Spain.

 

Sole Trader v Limited Company

Sole traders in Spain are known as ‘autonomos’ and those who are just starting-out and where the income is likely to be low tend to choose this route.

Why?

Mainly because it is less complex and more economical to both set-up and  run. For example, setting-up as an autonomo does not require €3000 of capital as would be the case with a limited company in Spain.

 

Fiscal Obligations

As in other countries, whether your business is classed as ‘autonomo’ or as a limited company there are a number of fiscal obligations that the owner of a business in Spain will have.

Most businesses will have an obligation to make VAT (in Spain this is called IVA) and Income Tax returns. Of course if you decide to create a limited company then you will also have to make a company tax return (impuesto de sociedades) as well as file the annual accounts with the Company’s Register.

A company will need to retain up to 15% of any invoice presented to it by a professional/autonomo and file a return.

These extra obligations mean that the cost of maintaining the company are higher than where a sole trader is concerned.

 

Social Security Obligations

As an autonomo or sole trader you will need to register with the local social security office and pay contributions each month. These contributions tend to be significantly higher than in other northern European countries with a current minimum of approximately €250 per month payment, regardless of income.

There are some reductions for those under 30 years of age or a temporary discount for example where the person has been unemployed and has decided to become self-employed.

In the case of a limited company there is an obligation to make social security contributions on behalf of an employee of 24% of their income. Where there are no employees of the company i.e. a single director company then that director must register as an autonomo and pay those social security contributions.

 

Liability

Just as elsewhere, one of the major differences between the two forms of business is that creating a limited company ensures limited liability to the owner of the company. If as a result of the operation of the company a financial liability should arise, then often this is limited to the amount of capital in the company.

As a matter of law in Spain the minimum level of capital that any company can have at any time is set at €3000 though this is sometiimes disrgarded by less scrupulous business owners.

One of the major drawbacks of registering as an autonomo is that you will be personally liable for any debts or losses incurred by your business and any personal assets could be at risk if your business is in financial trouble – either as a result of damages owed to a client or failure to pay due taxes and social security contributions.

 

Our Experts

All of our experts are registered and regulated by the relevant authority in Spain – most typically the local Law Society and/or the Accountancy body equivalent. We will provide details of each of our consultants credentials upon request.

We ensure that each of our consultants is able to speak a high level of English in order to be able to provide our clients with a superior service, though not at any additional cost over and above the standard rates available to Spanish businesses and individuals.

 

60 Office Locations Across Spain

With 60 individual office locations throughout the Iberian peninsula and the islands, and 6 specialist tax centres we are able to offer a truly nationwide service to English-speakers wherever they are located in Spain.

 
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If you would like to discuss your business plans in Spain in greater depth, contact us on or telephone  +34 932 20 44 40 (Spain) or 0800 098 8033  (UK), or via the email form below.

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