Setting up a business in Spain
New company Formation and Purchase of an existing firm
With a ready-made company ('off the shelf') you save the step of registering a new name (8-14 days). As soon as you come to sign at the notary, your company can begin operations. If you want to change the name of the company later on, though, it will cost 350€.
- A tax rate of 30%, applicable to the first 120,000 euros of taxable income
- Accelerated depreciation of certain fixed assets
- A 10% tax credit for investments and expenses in internet, information technology, and communications
What is the difference between a Sociedad Limitada (SL) and a Sociedad Anónima (SA)?
An SL is similar to the British 'Ltd' or the American 'LLC'.
- Accounting for an SL is fairly simple and in the first three years, you can apply for 'simplified accounting'.
- Accounting for an SA is more complicated and yearly auditing is required. An SL requires capital backing of 3006€, while an SA requires 60,000€.
- In an SL there is wide flexibility regarding who can be named as a Director. In an SA, administration is strictly regulated. The job is usually performed by a group of paid professionals who represent all the shareholders.
You might choose an SA:
* If you want to be able to sell stock or company bonds, or go public (IPO)
* It will be a part of international estate planning
* To establish a non-resident company in Spain
* It will be a part of international estate planning
* To establish a non-resident company in Spain
Otherwise, you would choose an SL. Most companies formed are now SLs, and not just for small businesses
My company wants to open a branch in Spain. Is this better than creating a new SL?
Creating a branch has similar requirements to VAT registration in Spain. In most cases, it is preferable either to create an SL or to register for VAT. If you plan to have a business address in Spain, creating an SL usually offers more tax advantages than a branch. Comparing branch creation with VAT registration, for the latter you don't have to file taxes in Spain whereas you do for a branch.
Should I be self-employed or should I form a company?
If you are self-employed (Autonomo) and someone files a lawsuit, then you are liable -- your personal assets may be taken from you. If you form a company, then only the assets of the company are at stake. Normally, self-employment is the option when you're just starting out and aren't ready to commit money for company formation and accounting. In certain circumstances it is possible to reduce tax implications by going down the company formation route.
The Spanish tax system is modern and pro-business. The tax burden in Spain, (i.e. tax and social security contributions as a percentage of GDP), is approximately three points lower than in neighboring countries.
Source: Taxation trends in the European Union 2009. Total tax revenue (including social security contributions). 2007 in % of GDP
The main direct taxes applicable in Spain are:
* Corporate income tax
* Personal income tax
* Non-resident income tax
* Personal income tax
* Non-resident income tax
The main indirect taxes applicable in Spain are:
* Value added tax (VAT)
* Transfer and stamp tax
* Transfer and stamp tax
source: investinspain
