A British national, resident in Spain, who is interested in setting-up a new business wanted information on the likely costs and the legal options when starting a business here. Below are the answers, that others may find useful.
What is the cost of setting up a limited company in Spain?
There's no fixed cost. It would depend on several factors (such as: initial share capital, number of partners, extension of the incorporation deeds, …).
The costs for setting-up an ordinary limited company (3,000 euros initial share capital, with 1-4 shareholders usually are:
- 3,000 € (initial share capital). This is not actually a cost per se. You have to deposit this amount in a Spanish bank account and once the company is registered, you are free to use this amount to invest in assets on behalf of the company.
- setting-up cost: 1,500 € – 2,000 € (including notary fees, mercantile registry – company´s name reservation and certification, lawyer's fees …)
How long does the process take to set-up a limited company in Spain?
The process usually takes 4-6 weeks, once the shareholders obtains their NIE; in order to become a shareholder, every partner will need a foreigner’s ID number (NIE).
What will your fees be?
Our fees for an ordinary limited company set-up are 600 € + IVA (21%) (please note that our fees are included in our answer regarding set-up costs above).
What will your monthly or annual fees be once the business has been started to take care of tax returns etc?
We normally charge a basic fee of 120€ + IVA* to limited companies, which covers the following costs:
- Maintenance of legally required records
- Quarterly IVA returns
- Annual Corporation Tax return
- Annual Return (Abbreviated accounts, balance sheet, profit and loss statement, annual report)
*IVA charged is deductible against any IVA (VAT) paid. The monthly fee can vary depending on the number of transactions that are invoiced by the business.
What is the most cost effective way to start a limited company in Spain?
We recommend setting-up an ordinary limited company (sl), 3,000 euros initial share capital.
What is the most tax efficient way for a company to run in Spain?
It’s not easy to answer… if your profit is not too high (10,000 euros – 12,000 euros), the taxation for a sole-trader or self-employed is better than the taxation for a limited company. With a larger profit, taxation would be better for limited companies.
Would we be better to register the company in Gibraltar and have bank accounts in Gibraltar?
Most likely the taxation would be lower, but for commercial purposes I don't recommend it (companies and customers in Spain are usually wary of companies from Gibraltar, because Spanish rules and warranties do not apply.) Also, as a resident Of Spain, you will be liable for personal taxation in Spain on worldwide income which will mean that any income derived from the profits of the company will be subject to Spanish income tax anyway and you will also most likely need to hire two sets of professionals to manage your fiscal responsibilities, thus increasing your cost base.
Would both I and my business partner have to be registered as self-employed ‘autonomos’ or could one person be autónomo and the other person stay on a minimal contract for Social Security purposes?
It would depend on your role on the company:
- directors who live in Spain must be registered as autónomo (sole-trader).
- partners or shareholders who don't work in the company do not need to be registered with the social security system.
- partners or shareholders who work in the company: it would depend on their percentage of participation in the company.
Could the company name be the name of the registered sole-trader?
Yes. you can use either of the following as the company name:
- name of one of the shareholders.
- invented or figurative name
Obviously the company name may not already be registered by another entity.
I presume that we would have to keep all our receipts on a monthly basis?
Yes
As we would both be working from home and not have business premises can we put internet and both our phone bills as business expenses or would we need to take out new services in the company name?
You will need to place any utilities or other services in the company's name.
