Once you have the correct visa, or are registered as a local resident, the first step is to obtain your NIE, the Número de Identificación de Extranjero. This tax identification number is essential for all official and financial matters. You will also need a Spanish address and a local bank account, as these form part of your registration process with both the tax office and Social Security. Without them, you cannot register as an autónomo (self-employed) or incorporate a company.
If you plan to work for yourself, the most direct path is to register as an autónomo. This means declaring your professional activity, and paying a monthly Social Security fee. The flat rate for new autónomos is around €80 per month during the first year, and then it increases to between roughly €300 and €600 depending on your income. As an autónomo, you must submit quarterly income tax and VAT returns, plus an annual declaration. An accountant or gestor can manage these submissions, and their services typically cost between €50 and €120 per month. You could submit these yourself, however Spain’s system is bureaucratic, tricky to navigate at first, and deadlines are strict, so most people choose professional help to avoid penalties or complications.
As your business expands, you may reach the point where it becomes more advantageous to create a Spanish company, known as a Sociedad Limitada, or SL. Most professionals make the transition to an S.L. when their gross annual income approaches €100,000 (this is when corporation tax usually becomes less than personal income tax), when they take on employees, or when they need limited liability. With an SL, the company pays corporation tax instead of personal income tax, and you can reinvest profits back into the business before you pay personal tax on dividends. This allows more flexibility and better protection of personal assets.
To incorporate an SL, you must apply for a company name, define your business objectives, and visit a notary to sign the incorporation deed. You must also decide who the directors and shareholders will be and where the company will have its registered office. The minimum share capital is €3,000, which must be deposited in a Spanish bank account before registration. The whole process usually takes between four and eight weeks. Legal and notary costs vary but generally fall between €1,800 and €2,800 depending on complexity.
Once your company is registered, you will receive a CIF tax number and must begin filing quarterly VAT and corporate tax returns, plus annual accounts. It will be essential to hire or employ an accountant, as the compliance requirements for companies are more detailed than for self-employed professionals.
Setting up a business in Spain as a foreigner may seem complicated at first, but it also means that your personal assets are protected, it inspires greater trust amongst clients and business associates, it’s easier to bring in partners or investors, and it’s easier to sell or expand if the time comes.
