Spain is a country located in southwestern Europe, occupying the Iberian Peninsula. It is the fourth largest country in Europe and the second largest in the European Union. Spain has a rich history and culture, having been home to many different civilizations over the centuries, including the Romans, the Moors, and the Catholic Monarchs.
Today, Spain is a constitutional monarchy with a parliamentary system of government. The capital city is Madrid, and other major cities include Barcelona, Valencia, Seville, and Bilbao. Spain is known for its sunny beaches, vibrant nightlife, and world-famous cuisine, including paella, tapas, and sangria.
Types of business structures in Spain
Spain is a developed country in every aspect; economy, infrastructure, etc. It offers a variety of opportunities for local and foreign investors to engage in business through legal business structures, some that are popular among them are tabulated below.
| S# | Type of business structure | Local name | Min.paid-up capital required |
| 1. | Sole Proprietorship | Empresario individual | No minimum paid-capital required |
| 2. | Limited Liability Company | Sociedad de Responsabilidad Limitada, S.L. | €3,000 |
| 3. | Public Limited Company | Sociedad Anónima, S.A | €60,000 |
| 4. | Partnership | Sociedad Civil | No minimum paid-capital required |
| 5. | Cooperative | Cooperativa | No minimum paid-capital required |
| 6. | Branch Office | Sucursal | No minimum paid-capital required |
Sole proprietorship
A sole proprietary business is the simplest form of doing business in Spain. It does not require any paid-up capital or adherence to strict regulations. Mostly favored by skilled individuals or retailers who do business with consumers directly. This format of business is owned and managed by a single person who enjoys all the profit and bears all the responsibilities.
Limited liability company
An LLC is recognized as a legal person in the eyes of law. Hence, all the responsibility and liabilities fall upon the company and not the owners. Owners, referred to as members, are thus freed from any personal obligations arising from the business.
Public limited company
Large corporations, multinational companies, or ideas that require huge funding usually settle down for a public limited company. In a PLC majority of the funds are generated through public offerings in the form of shares. A private person can own any number of shares offered on the stock market and become a shareholder of that company.
Partnership
Two or more individuals form a partnership to promote a common commercial interest. If the interest is not commercial, it may be termed as cooperation or trust but not partnership (in business terminology). Artists, musicians, technically skilled individuals, etc. team up with like-minded people or people who can propel their economic interests.
Furthermore, a partnership may be general, where all partners are responsible and obligated in a personal capacity, or a limited partnership where a group of partners is obligated only to their extent of share in the business
Cooperative
This is a type of company that is owned and operated by its members, who share the profits and have a say in the decision-making process.
Branch office
This is a type of business structure in which a foreign company opens a branch office in Spain to conduct business.
Cost of registering a company in Spain
The cost of registering a company in Spain depends on various factors such as the type of legal entity, the level of services required, and the fees charged by professionals such as lawyers, accountants, and notaries. Here are some general expenses an investor must budget beforehand:
Legal and Administrative Costs
These costs include fees for drafting and reviewing legal documents such as articles of incorporation, bylaws, and minutes of meetings. Investors may also need to pay registration fees with the Commercial Register, as well as administrative expenses such as obtaining a tax identification number and opening a bank account. Legal and administrative costs can vary widely depending on the complexity of the incorporation process and the legal services required. The general cost of all such services may fall between €1,000 to €2,000.
Notary Fees
Notary fees in Spain can also add to the cost of incorporating a company. The notary is responsible for verifying the authenticity of the company’s documents and signatures, and their fees are based on the value of the company’s capital. The cost of notary fees will depend on the amount of the company’s capital, but one can expect to pay at least €150 to €200.
Professional Fees
In many cases, owners will need to hire professionals such as lawyers, accountants, or business consultants to navigate the incorporation process. Their fees will depend on the level of services required, but the estimated cost can at least be between €500 to €1,000 for these services.
In general, the cost of registering a company in Spain can range from €1,500 to €3,000 or more.
Costs involved in doing business in Spain
A formal business incurs costs during the course of business, this is called the operational cost or OPEX. In Spain, the cost is influenced by various factors such as the industry, nature and size of the business, location, etc.
Here is a general overview of the expected OPEX a firm may incur:
Labor Costs
The cost of labor in Spain can vary depending on the industry and the location of the business. The minimum wage in Spain is €950 per month, but the average wage is higher at around €1,600 per month. The employer also has to pay social security contributions, which can add up to around 30% of the employee’s salary.
Taxes
Businesses in Spain are subject to various taxes, including corporate income tax, value-added tax (VAT), and local taxes. The corporate income tax rate is 25%, but there are certain deductions and exemptions that may apply. The VAT rate is 21%, but there are reduced rates of 10% and 4% for certain goods and services.
Rent and Utilities
The cost of rent and utilities can vary widely depending on the location and size of the business. Rent for office or retail space in Madrid or Barcelona can range from €15 to €30 per square meter per month, while utilities such as electricity, gas, and water can add up to around €100 to €200 per month.
Licensing and Permit Fees
Depending on the industry, businesses may need to obtain various licenses and permits to operate legally in Spain. The fees for these licenses and permits can vary widely depending on the type of business and the location.
Professional Services
Businesses may also need to hire professionals such as lawyers, accountants, and consultants to help them navigate the legal and regulatory environment in Spain. The fees for these services can vary depending on the level of service required and the complexity of the business.
