If you are running your own company at home, but are looking to set up a branch or subsidiary, doing this can be simpler than starting from scratch with a new company.
When processing your application, you must provide a series of documents, including the following:
- A copy of the main company’s certificate of incorporation and certificate of good standing
- Notarized power of attorney
- Spanish tax identification number (NIE)
- A member of staff at the Spanish branch to be a resident in Spain, who will agree to be liable for any company debts and tax payments
- While additional branches and subsidiaries don’t need to file accounts on the business register, they must pay income tax and submit quarterly VAT returns through their NIE number. Some banks and business advisory companies will offer special packages to help you set up the particulars of opening a new branch in Spain.
Starting up a non-profit company in Spain
Non-profit companies in Spain will fall into two categories:
1.- foundations and associations. Traditional charities which accept donations from the public will generally fall into the foundation category.
2.- Associations,
on the other hand, are usually run more informally by groups of people who have a common interest.
It is free to set up an association, but you will need capital of at least €30,000 to do this. With a foundation, anyone can donate to the cause (they don’t need to be a member) and committee members can be paid for their work, as with a normal business. Foundations that turnover more than €2.4m or have more than 50 employees need to undergo an external audit annually.
Administrating your business in Spain
Businesses must keep records of their accounts and order books, which can be requested for scrutiny by government bodies such as the tax authority.
Companies must also keep a book of minutes containing details of measures agreed at Annual General Meetings (AGMs).
Companies must have their mandatory book of accounts certified and stamped by the local office of the Mercantile Registry before they begin to use them.
Business banking in Spain
Business bank accounts are provided by all of the biggest lenders in Spain.
The good news is that it is possible to get a bespoke account depending on the specific needs of your business.
Banks such as BBVA, Bankia, Santander, and La Caixa all provide business accounts. The majority of these lenders also offer specific products for self-employed people and larger companies, respectively.
To open an account,
you will generally need to provide proof of your company’s registration, a registered address, and (for larger companies) at least two signatories. Business accounts vary in cost, and in lieu of a fee, some will require minimum deposits.
You can find out more about banking in Spain in our full guide to opening a bank account in Spain.
Taxation for businesses in Spain
How your business is taxed in Spain depends on the type of enterprise you are running. Sole traders will pay tax on a quarterly basis at the standard rate of income tax; they will need to fill out a tax return at the end of each financial year.
Partnerships work similarly,
with each partner being held responsible for paying their own income tax. For limited companies, the process is significantly different. Limited companies pay corporation tax, which is levied on worldwide profit.
Tax breaks are available for new companies. For the first two years, limited companies pay 15% tax
on the first €300,000 of profit, and 20% tax on profits
above this threshold. After this period, you will be taxed at the general rate of 25%.
VAT for limited companies in Spain
While some businesses are exempt from VAT, the vast majority need to pay this. Unlike in some other countries, there is no threshold when VAT kicks in; rather, it is applicable on all profits. VAT is generally charged at 21%,
although companies in some industries can pay a lower level of either 4% or 10%.
Social security for companies in Spain
Sole traders and partnerships in Spain need to contribute social security
at a charge of around €265 per month, plus a further contribution if they are employing staff.
Limited companies will need to register for social security payments and make contributions at 29.9% of their employees’ salaries.
They will also have the responsibility of deducing the required social security contributions from their employees’ salaries each month.