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Setting up a Sole Trader in Spain

Setting up a Sole Trader in Spain

Updated on Tuesday 09th January 2018

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A foreign entrepreneur who is interested in doing business in Spain has the possibility of choosing to open a company in this country or perform his/her economic activity as a sole trader or empresario individual or autonomo (in Spanish). For setting up a sole trader, there is no need to deposit a minimum share capital or make an initial investment as you are required when opening a limited liability company or another type of company.
An individual who is registered as a sole trader has unlimited liability for the business he/she performs and this means that the sole trader is responsible for the debts the company will have in the future. Our team of lawyers in Spain can provide legal assistance on the main characteristics of a sole trader, including the ones concerning its taxation and liability

Documents required for a sole trader in Spain

Every foreign citizen who wants to become a sole trader in Spain needs to obtain NIE (Numero de Identification de Extranjeros) – an identification number for foreigners. The persons who are not citizens of the European Union are required to obtain a self-employment work permit and a residence visa.
Foreign citizens, no matter their nationality, have to register for paying IAE (Impuesto de Actividades Económicas), submit a declaration for opening the business at the local tax office, and register for social security purposes. The contributions for the self-employed persons system (RETA) must be paid every month, even if the sole trader has no income or he/she is on sick or maternity leave.
The declaration for the tax office must contain the following information: 
the date in which the economic activity will begin;
a description of this activity (including if it is subject to VAT);
the name of the founder;
the founder’s address and identification number;
the type of profit calculation and taxation system applicable to the company.
The sole trader in Spain is the simplest way to perform an economic activity and it is chosen by entrepreneurs who have a limited budget for starting their business and who do not have an in-depth experience on corporate matters, as the sole trader will need to provide only few simple documents during the financial year. For example, unlike other types of companies in Spain, the sole trader is not required to keep a balance sheet
Persons operating as sole traders may also be imposed with the withholding tax, which is generally applicable at the rate of 15% on the company’s income. However, in the first two years of financial activity, sole traders can opt for a lower tax base, imposed at the rate of 7%. Our team of Spanish lawyers can further advise on this matter. 


Tax returns obligations for Spanish sole traders 

Most of the businesses operating in Spain are required to register for tax purposes and then, to file for tax returns as stated by the applicable requirements available for the respective type of company. If the sole trader is liable for value added tax in Spain, it will be necesary to file VAT returns of a quarterly and yearly basis
A sole trader has to keep records of all the bills, invoices and receipts registered in a financial year and to submit VAT returns no later than 31st of January for the activity of the previous year. In the case of returns for the income tax, the company must submit documents by the end of June.
A sole trader can be generally open in 15 days, if you have all the necessary documents imposed in this case. 
If you need more details on setting up a sole trader, you may contact our law firm in Spain. Our Spanish lawyers will offer you information about the documents you need for becoming a sole trader and will help you open this type of business


  • Charlie 2018-01-08

    I do believe that the sole trader can be a good option for starting a business in Spain, but only for certain types of activities and for small businesses. In the situation in which the business will develop, the legal entity should be modified into a more suitable business form.

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