Spain is one of Europe’s most attractive places to start a business, but if you are a foreign national you have to add a layer a local does not have: the immigration side. Setting up your company here is entirely feasible, and in many cases it is done without setting foot in the country, but it pays to understand the right order of the steps, which structure suits you, and what tax obligations you take on from day one.
This guide takes you step by step: the legal requirements based on your nationality, the available company structures with their real figures, the incorporation process, and the tax and labor obligations you will have once you are up and running. With current data, because in this area an outdated figure can cost you money.
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Legal requirements for foreigners starting a business in Spain
The first filter is not corporate, it is your situation as a foreigner. And it changes a lot depending on where you come from.
EU citizens versus non-EU nationals
If you are from the European Union, the European Economic Area, or Switzerland, you can set up a company and work in it without a visa: your ID document and the NIE are enough. If you are a non-EU national, you can be a partner or shareholder in a Spanish company without residing in the country, but to manage it and work in it you will need an authorization that allows you to do so.
The NIE, the starting point
The NIE (Foreigner’s Identification Number) is essential for almost everything: opening the bank account, signing at the notary, and registering the company. It is requested in Spain at the immigration or National Police offices, or at the Spanish consulate in your country. It is best to request it as early as possible, because it blocks the rest of the steps. And there is a key shortcut: you can grant a power of attorney so that a local representative handles all the procedures on your behalf, including obtaining your NIE.
The immigration route: entrepreneur visa or self-employment
If you are going to reside in Spain to run your business, there are two routes worth not confusing. The entrepreneur visa under Law 14/2013 is designed for innovative projects of economic interest, and it requires a business plan favorably assessed by the competent authority. The self-employed residence and work permit is the more traditional route for an ordinary business (a consultancy, a shop), where you demonstrate the project’s viability and the funds to sustain it. Which one fits you depends on the real nature of your activity, and choosing wrong lengthens the process.
Types of business structure in Spain
Choosing the legal form is the decision that most shapes your liability, your taxation, and your image before banks and investors. These are the real options.
Limited Liability Company (SL)
It is the most widely used structure in Spain and the first option for most foreigners. It limits your liability to the capital contributed, protecting your personal assets. Here is the change many guides still fail to reflect: since Law 18/2022 (Crea y Crece), the SL is incorporated from €1 of share capital, not from the €3,000 required before. That said, if you incorporate with less than €3,000, two safeguards kick in: you must allocate 20% of profits to the legal reserve until capital plus reserve reach €3,000, and in the event of liquidation the partners are jointly liable for the difference up to that €3,000. So even though the law allows the symbolic euro, capitalizing the company with a reasonable figure remains the sensible move when dealing with banks and suppliers.
Public Limited Company (SA)
Designed for larger projects or those that expect to bring in many investors. It requires a minimum capital of €60,000, of which only 25% needs to be paid up at incorporation, and it allows shares to be issued, which makes raising capital easier. It is more complex and expensive to maintain than the SL, so it only pays off when the project genuinely needs it.
Freelancer or company
Registering as a freelancer (autónomo) means fewer procedures and lower initial cost, but you are liable for the business’s debts with all your personal assets. A company shields that liability and projects more solidity. The decision depends on the risk, the volume, and your growth expectations, and it deserves a proper look at freelancer versus limited liability company before deciding. If you are going into business alone, there is also a highly efficient variant: the single-member limited liability company (SLU), which gives you all the protection of the SL with a single partner.
Steps to incorporate the company
Once the structure is chosen, the process for an SL follows a clear sequence. Today a good part of it can be done electronically, which makes the timelines much cheaper and faster.
- Name certification. You request the corporate name certificate from the Central Commercial Registry, proposing several names. If one is free, it is reserved for you for six months.
- Bank account and capital. You open an account in the company’s name and deposit the capital. The bank issues the certificate of deposit, which is needed for the notary.
- Signing before a notary. The public deed of incorporation is signed along with the articles of association, which set the company’s internal rules.
- Registration and tax ID. The deed is registered with the Commercial Registry, which grants legal personality, and the definitive tax ID (NIF) is obtained from the Tax Agency.
Electronic incorporation with standard articles, through the CIRCE system and the Single Electronic Document, lets you complete several of these steps at once and with reduced notary and registry fees. It is the most efficient route for a foreigner who does not want to multiply trips. If you want the full detail of the procedure, there is a guide on how to create a company in Spain step by step.
Tax and labor obligations
Incorporating the company is the beginning. From there you enter the tax circuit and, if you hire, the labor one.
Company taxes
Your company will mainly pay Corporate Tax and manage VAT. The general Corporate Tax rate is 25%, but there are reduced rates worth knowing: small companies (turnover under €10 million) are taxed at 23%; micro-companies (under €1 million) apply a scale of 19% up to €50,000 of taxable base and 21% on the rest; and newly created entities are taxed at 15% in the first year with profits and the following one. These rates are coming down in stages under Law 7/2024, so set aside a moment each year-end to check the one that applies to you.
Tax registration and Social Security
After incorporation, you register the company with the Tax Agency and declare the start of activity. If you are going to have employees, you register the company with Social Security and each worker before they start, with income tax (IRPF) withheld from payroll and the corresponding contributions. The director and the partners who work in the company also have their own place in the system, usually under the self-employed regime.
Alternative for existing companies: the branch office
If you already have a company abroad and want to operate in Spain without creating a new one, the branch office lets you do so under the parent company’s legal personality, with no minimum share capital. It has operational autonomy, but it depends legally and financially on the parent, which is liable for its debts. It is registered with the Commercial Registry and obtains its own tax ID.
To open it you need to provide the parent company’s incorporation deed, a power of attorney authorizing a local representative, and documentation proving its solvency, all duly translated and legalized or apostilled. Compared with creating a subsidiary (a Spanish company owned by the parent), the branch is quicker to set up, but it does not isolate the risk: that is why, when the project in Spain is going to have real weight of its own, the subsidiary often pays off.
Starting your business in Spain as a foreigner is very doable, but the order of the steps and the choice of structure make the difference between launching in weeks or getting stuck in bureaucracy. At ILLAY Legal, immigration and corporate lawyers in Spain, we integrate the immigration side, the incorporation, and the taxation into a single process, and we handle it entirely online, even with a power of attorney if you are not in the country. Tell us about your project and we will tell you exactly what steps to take.
Frequently Asked Questions: How to Start a Business in Spain as a Foreigner
Can I create a company in Spain without residing in the country?
Yes. You can be a partner or shareholder in a Spanish company without residing in Spain, and with a power of attorney your legal representative can handle every procedure for you, including obtaining your NIE, opening the account, and signing at the notary. Working and running the business from inside the country is a different matter: for that, if you are a non-EU national, you will need the corresponding residence authorization.
Can I really set up an SL with 1 euro?
Legally yes, since the Crea y Crece law. But incorporating with less than €3,000 requires allocating 20% of profits to the legal reserve until that figure is reached and leaves the partners jointly liable up to €3,000 in the event of liquidation. In practice, capitalizing the company with a reasonable amount gives more credibility with banks and suppliers and avoids those strings.
How long does it take to incorporate a company in Spain?
It depends on the route. Through the electronic procedure with standard articles, a simple SL can be incorporated and registered within a few business days. If there are tailored articles, foreign partners who must obtain the NIE, or documents to apostille, the timeline stretches to a few weeks. The bottleneck is usually the NIE, not the company itself.
What is the difference between opening a branch and creating a subsidiary?
The branch operates under the parent company’s legal personality, which is liable for its debts, and requires no minimum capital. The subsidiary is an independent Spanish company (usually an SL) owned by the parent, with its own limited liability. The branch is faster and cheaper to set up; the subsidiary protects the parent better and usually pays off when the operation in Spain is going to carry real weight.
What taxes will my company pay from the first year?
Mainly Corporate Tax on profits (with a 15% rate for newly created entities during the first two years with a positive base) and the management of VAT on your invoices. If you have employees, you add Social Security contributions and the IRPF withholdings from their payroll. The filing calendar is quarterly for VAT and withholdings, and annual for Corporate Tax.
