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Starting a Business in Spain

Starting a Business in Spain


General considerations that should be borne in mind when starting up a business.

Under the Spanish law there are different types of legal framework for partnerships and commercial companies such us:

But the most common is the limited company, above all in the case of small businesses. In the last decade, the number of sole businesses or self-employed people has fallen by 10%, while the number of newly created limited companies amounts to around 90.000 per year. There are no particularly strong reasons for choosing one kind of setup over the other, but general considerations do exist that should be borne in mind when starting up a business. In general, in order to set up a limited company, it is necessary to execute a notaries instrument containing the following information: the identify of the members and their intention to constitute the company; the share of capital provided by each of them; the manner in which the company is to be run initially and the persons who shall be responsible for its management and corporate representation; and its articles of association. The articles should include the company or trading name, its objects and the activities proposed to be carried out, its registered office, commencement and termination of financial year, share capital (creditors of the company may only claim up to the limit of the company's share capital) stating share holdings and distribution, and the management system of the company (sole manager, board of management or joint management). It is important to note that a member may not freely transfer or sell his shares to a third party, unless such person is another member, his spouse or his ancestors or descendants.

Once the deed of incorporation of the company has been executed, if should be registered for tax purposes with the Tax Office including the Fiscal Declaration stamp (036 or 037). The company will then receive a Fiscal Identification Code number (CIF). The company should be given a heading in relation to its principal activity for the purposes of registration for payment of the local economic activity tax (IAE). Tax treatment varies in respect of economic activity, depending on the locality where the business is to be carried out. Lastly, in the event of winding-up of the company, registration with the tax authorities and the Companies Register should be cancelled. As far as tax liabilities are concerned, companies generally pay VAT and Company Commercial Activity tax (IAE), and are required to submit annual returns relating to Operations with Third Parties. On winding-up, there are numerous administrative and accounting formalities to be carried out.

Select link below:

  1. Procedures, Legal Formalities, Time Scale, Cost Fees and Expenses
  2. Official books an taxation
  3. Obligatory Books Required for Businessmen, professionals and artists relating to VAT (IGIC in Canaries)


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