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Business Start-up Costs in Spain

Business Start-up Costs in Spain

Updated on Friday 28th July 2017

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When deciding to start a business in Spain, a foreign investor should be aware of the overall costs related to the registration of the company. The total costs imposed during the registration procedure vary according to the type of company the investor chooses to open and the licenses and permits that will be required for certain economic activities.

For the beginning, the entrepreneur should prepare the amount required for the share capital of the company. In the case of a limited liability company, the minimum share capital is established at EUR 3,000, while for a joint stock company, the minimum share capital is set out at EUR 60,000. However, during the incorporation procedure, the investors are required to deposit only 25% of the above mentioned sum. Our team of lawyers in Spain can provide more details on the share capital applicable for other types of Spanish business forms
 

Who can help you incorporate a company in Spain?

 
The foreign investors who don’t want to go in person to Spain in order to open a company may address to a Spanish lawyer, who will handle all the steps of the registration procedure. The foreign citizens may give the power of attorney to local lawyers, who will act on behalf of them and will submit all the required documents to the local Trade Register.
 
The procedure will require investors to pay a fee that may vary from lawyer to lawyer. For details about the fees and the taxes businessmen have to pay for incorporating a certain type of company, our team of attorneys in Spain can provide in-depth details. 
 
Those who choose to incorporate a company through a law firm in Spain may also  benefit from additional services, such as the virtual office (a cheaper alternative to a traditional office, with important advantages), contracting accounting services, financial consulting services or assistance on the employment legislation.
 

Taxes in Spain

 
After starting the economic activity, a company must also pay taxes, such as the following:
 
corporate tax - applicable at the standard rate of 25%;
 
dividend tax - ranging from 0% to 19%, depending on the stipulations of the double taxation treaties signed by Spain;
 
value added tax (VAT), generally applied at the standard rate of 21%; it can also be imposed at the reduced VAT rates of 10% for certain medical products, pharmaceuticals, transport of passengers, admission to cultural, sporting and entertainment events or at 4% for foodstuff, newspapers and certain social services, but it can also be applied at the rate of 0% for specific categories of commercial activities. 
 
Investors should also take into consideration the costs associated with the employment of the Spanish workforce. At the moment, such costs are below the European average, especially after the beginning of the economic crisis, when the wages decreased and the unemployment rate increased. However, investors must know that the latest data provided by the Spanish authorities have shown that the unemployment rate is decreasing on a steady manner. 
 
The main costs related to a start-up in Spain are for:
 
incorporation and registration;
accounting;
hiring employees and paying the wages and the taxes imposed in this situation;
maintenance of the business;
marketing and advertising, etc.
 

Employment taxes in Spain  

 
Any company operating in Spain will need to hire employees to develop its current commercial activities. In order to hire Spanish workforce it is necessary to sign employment contracts, which can be established on a permanent or temporary basis. The taxation of the employment activity is performed following the type of contract the employee has signed. 
 
In Spain, the companies are required to withheld a percentage of the employee’s salary. In a permanent employment contract, the taxation varies based on the value of the salary. As a general rule, the income taxes on salaries range from 24.75% to 52% of the salary.  
 
In the case of a temporary contract, the employers may retain a standard percentage, following the employment regulations.  
 
Businessmen who need to know more details on the registration of a company and the costs related to this operation, are invited to contact our law firm in Spain. Our Spanish lawyers will calculate the total cost of opening a business in this country and can help businessmen with other related aspects. 
 

Comments

  • Dan 2017-07-27

    This detailed presentation helped me to better understand the registration procedure. Thanks! Nice website.

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