Starting a Business in Spain

Spain offers several business structures for entrepreneurs, from solo freelancing to full corporate entities. The most common choice for small-to-medium businesses is the Sociedad Limitada (SL) — Spain’s equivalent of an LLC.

This guide focuses on company formation. If you plan to work independently without creating a company, see the Autónomo Self-Employment Guide instead.

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Choosing Your Business Structure

Quick Comparison

Factor	Autónomo	Sociedad Limitada (SL)	Sociedad Anónima (SA)
Legal entity	No (you are the business)	Yes (separate legal person)	Yes (separate legal person)
Minimum capital	None	€1 (since 2022)	€60,000 (25% on formation)
Personal liability	Unlimited	Limited to company capital	Limited to share capital
Tax	IRPF (19-47% progressive)	Corporate tax (25%; 15% first 2 years)	Corporate tax (25%)
Social Security	RETA (~€80-530/month)	RETA for admin (~€80-530/month)	RETA for admin
Accounting	Simplified books	Full mercantile accounting	Full mercantile accounting + auditor
Setup cost	Free	€600-€1,500	€3,000-€6,000+
Setup time	1-3 days	2-6 weeks	4-8 weeks
Best for	Solo freelancers, low-medium income	SMEs, partnerships, liability protection	Large companies, public investment

When to Choose Each Structure

Stay as Autónomo if:

• You work alone and don’t plan to hire
• Your annual net income is below ~€40,000
• You don’t need liability protection (e.g., consulting, writing, design)
• You want minimal admin burden

Form an SL if:

• Your net income exceeds ~€40,000/year (corporate tax becomes more favorable)
• You need liability protection (your personal assets are separate from the company)
• You plan to hire employees
• You have business partners and need to formalize ownership shares
• You need credibility with larger clients, investors, or government contracts

Form an SA if:

• You plan to raise significant investment or go public
• Required for certain regulated activities (banking, insurance)
• Very rare for small businesses — the SL is almost always sufficient

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Sociedad Limitada (SL) Formation — Step by Step

Step 1: Reserve Your Company Name

Where: Registro Mercantil Central (Central Commercial Registry)

Process:

• Submit a solicitud de certificación negativa de denominación social — a request confirming your desired company name is not already registered
• You can propose up to 5 name options in order of preference
• Apply online at rmc.es or by mail

Cost: ~€16 Time: 3-5 business days

Step 2: Obtain a Provisional NIF (Número de Identificación Fiscal)

Where: Agencia Tributaria (Tax Agency)

Process:

• File Modelo 036 to request a provisional NIF for the company-in-formation
• Required documents: company name certificate, copy of founder(s)’ ID/NIE, Modelo 036 form
• Can be done in person (with cita previa) or online with a digital certificate

Cost: Free Time: Immediate to 2-3 days

The provisional NIF starts with the letter “N” and is replaced by a definitive NIF (starting with “B” for SLs) after registration.

Step 3: Open a Bank Account and Deposit Capital

Where: Any Spanish bank

Process:

• Open a corporate bank account in the company-in-formation’s name using the provisional NIF
• Deposit the minimum share capital
• The bank issues a certificado de ingreso confirming the deposit — you need this for the notary

Minimum capital:

• €1 since the 2022 Ley Crea y Crece reform
• However, the traditional amount is €3,000, and many notaries, banks, and business partners expect this
• If you form with less than €3,000, special rules apply: you must allocate 20% of annual profits to reserves until reaching €3,000

Step 4: Draft Articles of Incorporation at the Notary

Where: Any notario (public notary)

Process:

• All founders must appear before the notary in person (or via authorized representative with a power of attorney)
• The notary drafts the escritura de constitución (deed of incorporation) and estatutos sociales (articles of association)

The estatutos must include:

• Company name and registered address (domicilio social)
• Corporate purpose (objeto social) — describe all activities the company may perform
• Share capital and distribution among partners
• Management structure (sole administrator, joint administrators, or board of directors)
• Rules for share transfers, partner meetings, profit distribution

Required documents to bring:

• Company name certificate (Step 1)
• Provisional NIF (Step 2)
• Bank capital deposit certificate (Step 3)
• NIE/DNI of all founders
• Signed founding document

Cost: €300-€600 (varies by notary and complexity) Time: 1-3 days for the notary to prepare; signing appointment is ~1 hour

Step 5: Register at the Registro Mercantil (Provincial Commercial Registry)

Where: The Registro Mercantil of the province where your company is domiciled

Process:

• Submit the notarized deed of incorporation
• The registry reviews and inscribes the company
• Once registered, the company legally exists as a separate entity

Cost: ~€100-€200 (registration fees) Time: 2-4 weeks (can be longer in busy registries like Madrid or Barcelona)

Step 6: Obtain the Definitive NIF

Where: Agencia Tributaria

Process:

• After commercial registry inscription, return to the Tax Agency with the registered deed
• Exchange the provisional “N” NIF for the definitive “B” NIF
• This is your company’s permanent tax identification number

Cost: Free Time: Immediate to a few days

Step 7: Register for IAE and File Alta Censal (Modelo 036)

Where: Agencia Tributaria

Process:

• File Modelo 036 to declare the company’s tax obligations:
  • IAE (Impuesto sobre Actividades Económicas) — activity code(s) for your business
  • IVA regime (standard, simplified, or exempt)
  • Corporate tax (Impuesto de Sociedades) regime
  • Tax address, fiscal year, accounting method
• Most new SLs are exempt from paying IAE tax (exempt if turnover is under €1 million)

Cost: Free Time: 1-2 days

Step 8: Register as an Employer with Social Security

Where: Tesorería General de la Seguridad Social (TGSS)

Process (if you plan to hire employees):

• Apply for a Código de Cuenta de Cotización (employer registration number)
• Required before you can register any employee with Social Security
• The company administrator must also register under RETA (self-employed regime) if they hold 25%+ of shares or have effective control

Cost: Free Time: 1-3 days

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Total Formation Costs Summary

Item	Estimated Cost
Company name certificate	€16
Provisional/definitive NIF	Free
Minimum share capital deposit	€1-€3,000
Notary (deed of incorporation)	€300-€600
Registro Mercantil (registration)	€100-€200
Modelo 036 / IAE registration	Free
Social Security employer registration	Free
Subtotal (doing it yourself)	~€420-€3,820
Gestoría / lawyer fees (optional)	€300-€1,000
Total with professional help	~€720-€4,820

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NIE Fiscal vs. Regular NIE

Many non-EU founders encounter confusion between these two:

Regular NIE (Número de Identidad de Extranjero)

• Your personal identification number as a foreign resident in Spain
• Obtained through your visa/residency application or at the Oficina de Extranjería
• Used for personal taxes, contracts, bank accounts, and all daily life
• Required to form a company as a founder

NIE Fiscal (NIE for Tax Purposes Only)

• A tax-only identification number for non-residents who need to transact in Spain
• Does not grant residency or work rights
• Used by non-resident investors, foreign shareholders, property buyers, and remote company directors
• Obtained at the Agencia Tributaria or Spanish consulate in your home country

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Hiring Employees

Once your SL is registered and you have an employer Social Security code, you can hire employees.

Employer Obligations

• Employment contract: Must be in writing, signed by both parties, and registered with SEPE within 10 days
• Social Security registration: Register each employee before their first working day (alta previa)
• Payroll: Issue a monthly nómina (payslip) complying with all legal requirements
• Occupational risk prevention: Hire a servicio de prevención ajeno (external prevention service) to assess workplace risks — mandatory for all employers
• Workplace harassment protocol: Required for all companies, regardless of size
• Data protection: Register with the AEPD and comply with GDPR/LOPDGDD

Employment Cost to the Employer

The true cost of an employee is significantly higher than their gross salary:

Component	Example (€2,500/month gross)
Gross salary	€2,500
Employer Social Security (~30%)	€750
Total monthly cost	~€3,250
Annual cost (14 payments)	~€45,500

• Employer Social Security is ~30% on top of the gross salary
• Remember: Spanish contracts typically include 14 payments, so annual payroll cost = monthly gross × 14 × 1.30

Key Payroll Tax Obligations

Form	What	Frequency
Modelo 111	IRPF withholdings from employee salaries	Quarterly (April 20, July 20, Oct 20, Jan 20)
Modelo 190	Annual summary of all IRPF withholdings	Annual (January)
Social Security (RLC/RNT)	Monthly employer Social Security contributions	Monthly (last day of following month)
Modelo 345	Company pension plan contributions (if applicable)	Annual

Types of Employment Contracts

Refer to the full Working in Spain guide for detailed contract information. Key points for employers:

• Default to indefinite contracts — the 2022 labor reform makes temporary contracts difficult to justify
• Fijo-discontinuo contracts are appropriate for seasonal businesses
• Training contracts are available for young workers and may come with Social Security bonuses
• Part-time contracts must specify exact hours; overtime is prohibited (only horas complementarias up to a limit)

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Tax Obligations for an SL

Corporate Tax (Impuesto de Sociedades)

Situation	Tax Rate
Standard rate	25%
New companies (first 2 profitable years)	15%
Companies under Startup Law	15% (for 4 years)
Cooperatives	20%
Small entities (turnover < €1M)	23%

• Filed annually via Modelo 200 (due 25 calendar days after 6 months from fiscal year end — typically July 25 for companies with December year-end)
• Advance payments: Three installments via Modelo 202 (April 20, October 20, December 20), each typically 18% of the previous year’s tax liability

VAT (IVA)

• Standard rate: 21%
• Reduced rate: 10% (food, water, transport, hospitality, housing renovation)
• Super-reduced rate: 4% (bread, milk, eggs, fruit, vegetables, books, medicine, wheelchairs)

Form	What	Frequency
Modelo 303	Quarterly IVA return (IVA collected minus IVA paid)	Quarterly
Modelo 390	Annual IVA summary	Annual (January 30)
Modelo 349	Intra-EU operations	Quarterly (if applicable)

Annual Accounts (Cuentas Anuales)

Every SL must:

1. Prepare annual accounts within 3 months of fiscal year end (by March 31 for December year-end)
2. Approve accounts at the junta general de socios (partners’ meeting) within 6 months (by June 30)
3. File accounts at the Registro Mercantil within 1 month of approval (by July 30)

The annual accounts include:

• Balance sheet (balance de situación)
• Profit and loss statement (cuenta de pérdidas y ganancias)
• Notes to the accounts (memoria)
• Management report (informe de gestión) — only for larger companies

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Spain’s Startup Law (Ley de Startups) Benefits

Spain’s Ley 28/2022 de Fomento del Ecosistema de las Empresas Emergentes (Startup Law) offers significant benefits for qualifying innovative companies:

Eligibility Requirements

• Company less than 5 years old (or 7 years for biotech/energy/industrial companies)
• Annual turnover under €10 million
• Not listed on a stock exchange
• Not formed from a merger/spin-off of non-innovative companies
• Certified as innovative by ENISA (Empresa Nacional de Innovación)

Key Benefits

• Reduced corporate tax: 15% for 4 fiscal years (instead of the standard 25%)
• Beckham Law access: Founders and employees can access the special tax regime (flat 24% on Spanish-source income up to €600,000)
• Stock option incentives: Employee stock options exempt up to €50,000/year (vs. €12,000 under standard rules)
• Simplified visa process: Fast-track visa for founders and key employees through the UGE (Unidad de Grandes Empresas)
• Social Security flexibility: Autónomo administrators of startups can choose to contribute only while the company is active (no mandatory 60-day simultaneous contribution period)
• Deferred tax on stock options: Tax payment can be deferred until shares are actually sold (up to 10 years)

How This Differs from the Entrepreneur Visa

The Startup Law benefits and the Entrepreneur / Startup Visa are related but separate:

• Startup Visa = your immigration authorization to reside in Spain
• Startup Law benefits = tax and corporate advantages for certified innovative companies
• You can have one without the other (e.g., an EU citizen doesn’t need a visa but can use the Startup Law)
• For non-EU founders, the Startup Visa application includes the ENISA evaluation as part of the process

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Foreign Investment Requirements

Non-EU Investors

If you are a non-EU national investing in or forming a Spanish company:

• Modelo D-1A: Declaration of foreign investment. Must be filed with the Dirección General de Comercio Internacional e Inversiones within 1 month of the investment.
• No prior authorization needed for most sectors — Spain has a generally open foreign investment regime
• Restricted sectors: Defense, real-time air transport, television, radio, and gambling require prior authorization
• CNMV notification: If acquiring shares in a listed company, CNMV (Comisión Nacional del Mercado de Valores) notification rules apply

EU/EEA Investors

• No Modelo D-1A required for statistical purposes only (since 2023 simplification)
• Same company formation process as Spanish nationals
• Full freedom of establishment under EU treaties

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Choosing a Gestoría and Legal Advisors

You’ll need professional help at various stages. Here’s who does what:

Gestoría

• What they do: Administrative paperwork — company registration, tax filings, Social Security registrations, payroll processing
• Cost: €100-€300/month for ongoing SL administration (quarterly filings, annual accounts preparation)
• When to use: From day one. A gestoría is practically essential for SL administration in Spain.

Asesor Fiscal (Tax Advisor)

• What they do: Tax planning, structuring, optimization, Beckham Law applications, international tax
• Cost: €150-€500/month, or hourly for consultations
• When to use: When you have complex situations — international income, multiple entities, investor structures

Abogado Mercantil (Commercial Lawyer)

• What they do: Company formation documents, shareholder agreements, commercial contracts, dispute resolution
• Cost: €150-€300/hour, or flat fees for specific services
• When to use: Formation (especially with multiple partners), drafting shareholder agreements, any legal disputes

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Frequently Asked Questions

Can I form an SL without being a Spanish tax resident?

Yes. Non-residents can form and own Spanish companies. You’ll need a NIE (fiscal or regular) and a Spanish bank account. However, if you’re also the administrator and based abroad, consider the tax implications carefully — you may create a permanent establishment situation.

Can I be the sole partner and sole administrator?

Yes. A single-person SL (Sociedad Limitada Unipersonal or SLU) is very common. It must be declared as unipersonal at the Registro Mercantil. All the same rules apply, with additional transparency requirements (contracts between you and the company must be documented in the annual accounts).

Do I need to be autónomo if I own an SL?

If you are the administrator (the person legally managing the company) and hold 25% or more of the shares, you must register under RETA (autónomo regime). If you’re a passive shareholder who doesn’t manage the company, you don’t need to register as autónomo.

What happens if my SL has no activity?

Dormant companies (sociedades inactivas) must still file annual corporate tax returns (Modelo 200) and annual accounts at the Registro Mercantil. Failure to do so triggers fines and registry closure. If you’re not using the company, it’s usually better to formally dissolve and liquidate it.

How long does the entire process take?

• Express route (PAE/CIRCE): 48-72 hours
• Standard route with professional help: 2-4 weeks
• Standard route doing it yourself: 4-6 weeks
• If complications arise (name rejections, registry delays): 6-8 weeks

Can I convert from autónomo to SL later?

Yes, but it’s not a simple “upgrade.” You would form a new SL and transfer your business activity to it. This involves notary costs, registry fees, and potentially tax implications on the transfer of assets. Plan for this if you anticipate growth beyond the autónomo threshold.

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Cross-References

• Autónomo Self-Employment — Detailed guide to working as a freelancer, including Cuota Reducida, quarterly taxes, and invoicing
• Working in Spain — Employment contracts, labor rights, and hiring requirements for your employees
• Entrepreneur & Startup Visa — The visa pathway for innovative business founders
• Tax Residency & Beckham Law — How corporate and personal income is taxed, and the Beckham Law special regime
• Forms Reference — Links to Modelo 036, 200, 303, and other business tax forms
• Degree Homologation — If your business requires professional licensing