How to Start a Business in Spain: Documents, Taxes, and Expenses

Foreigners can do business in Spain as self-employed individuals or by establishing a separate company. The choice of business structure affects registration, taxes, social security contributions, and the entrepreneur’s personal liability. Learn more about the required documents, key steps, costs, and rules for starting a business in Spain

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A foreigner can start a business in Spain as an autónomo or by forming a company, most commonly a Sociedad Limitada. To do so, they must obtain a NIE identification number, register the business with the tax authorities, and comply with social security requirements. Forming a company does not in itself grant the right to reside and work in the country, so immigration status must be verified separately.

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Doing business is always associated with risks: taxes, contracts, inspections, conflicts with partners or government agencies. A personal business lawyer will help you avoid critical mistakes and protect the interests of the company at every stage of its development.

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Can a foreigner start a business in Spain?

Spanish law allows foreigners to register as an autónomo, establish companies, and hold shares in Spanish businesses. However, the procedure depends on the individual’s citizenship, immigration status, and role in the future company.

Citizens of the EU, the European Economic Area, and Switzerland may engage in entrepreneurial activities without a separate work permit. If they remain in Spain for more than three months, they must register their residence in accordance with EU regulations.

Citizens of other countries must verify whether their status allows them to be self-employed. Foreign nationals who do not yet reside in Spain can apply for a residence and work permit as self-employed individuals.

To obtain this permit, applicants typically need to demonstrate:

- Possession of the necessary professional knowledge or qualifications

- Compliance with the requirements for the specific type of activity

- Possession of required licenses or the initiation of the licensing process

- Sufficient investment to launch the project

- The feasibility of the business plan and projected income

- No criminal record and no entry bans

Separately, you must obtain an NIE (Número de Identidad de Extranjero). This is a personal identification number for foreigners, used for tax registration, processing documents, opening a bank account, and other administrative procedures. The NIE is not a residence permit and does not, in and of itself, grant the right to work in Spain.

It is also important to distinguish between owning a business and actually working in it. A foreign national may be a founder or shareholder of a Spanish company, but to serve as a director, provide services, or handle day-to-day management, they may need a status that allows them to work. Registering a Sociedad Limitada does not automatically legalize one’s stay and does not replace an immigration permit.

Learn more about Spain’s tax system and current rates for 2026 by following the link.

Autónomo or Sociedad Limitada: Which Structure to Choose

Most foreigners start a business in Spain using one of two structures: they register as an autónomo or establish a Sociedad Limitada. Both structures allow you to sell goods, provide services, and hire employees. However, they differ significantly in terms of liability, taxation, and the complexity of bookkeeping.

Autónomo: A Simpler Structure for Self-Employment

An autónomo is a self-employed individual who conducts business in their own name. This structure is often chosen by freelancers, consultants, teachers, artisans, IT professionals, and owners of small service-based businesses.

No authorized capital, founding documents, or business registration in the commercial registry is required for registration. The entrepreneur registers their business with the tax authority and the social security system. Afterward, they pay IRPF income tax, charge IVA when applicable, and file the required tax returns.

The main drawback of this structure is unlimited liability. An autónomo is liable for debts, tax obligations, and other business risks with their personal assets. Additionally, as profits grow, the progressive IRPF tax rate can make this structure less advantageous.

Sociedad Limitada: A Separate Entity for Scaling Up

A Sociedad Limitada (SL) is a separate legal entity. This structure is better suited for businesses with multiple founders, significant operational risks, employees, or plans to attract investors.

The owners’ liability is typically limited to their contributions to the company’s capital. However, personal guarantees on loans, breaches of fiduciary duties, or unlawful actions may create additional liability.

An SL must maintain full accounting records, file annual financial statements, and pay corporate income tax. Its registration involves reserving a name, preparing the founding documents, consulting a notary, and registering the company in the commercial registry. Therefore, establishing and subsequently managing an SL is more expensive than operating as an autónomo.

The minimum authorized capital for an SL is 1 euro. However, until this amount reaches 3,000 euros, the company must allocate at least 20% of its profits to a reserve fund. If, upon liquidation, the assets are insufficient to settle debts with creditors, the shareholders may be liable for the difference between the capital actually contributed and the sum of 3,000 euros.

It makes sense to choose the “autónomo” status for small-scale businesses with moderate risk and a simple business model. An SL is better suited for scaling up, partnership-based businesses, working with large clients, and separating corporate obligations from the owner’s personal finances.

In our previous article, we discussed the best cities for expats to live in Spain.

How do you register as an autónomo in Spain?

You can obtain autónomo status on your own or through a Punto de Atención al Emprendedor, a gestoría, or a tax advisor. Some of the procedures can also be completed through the CIRCE electronic system. By the time you actually start working, you must already be registered with the tax authority and the social security system.

1. Obtain an NIE and a social security number

A foreigner first needs an NIE. This number is used for identification in tax, banking, and administrative procedures.

A social security number (NUSS) is also required. It can be verified or requested through the government portal Importass. If a person has previously worked legally in Spain, they may already have this number.

2. Set up electronic identification

Most tax returns and filings are submitted online. To access electronic government services, you typically use a digital certificate, an electronic DNIe document, or the Cl@ve system.

Electronic identification is required to interact with the Agencia Tributaria, Importass, local authorities, and other government platforms. It is advisable to set this up before beginning the registration process.

3. Register Your Business with the Tax Authority

Before starting your business, you must notify the Agencia Tributaria of your business activities. To do this, you must file Form Modelo 036. The simplified Form Modelo 037 was abolished in February 2025, so references to it in older instructions are no longer relevant.

The form requires the entrepreneur’s personal information, business address, start date, tax regimes, and the IAE economic activity code. You must also specify whether IVA will apply and which tax returns need to be filed.

Registration under the appropriate IAE category is mandatory. However, individuals and most businesses with a net turnover of less than 1 million euros are exempt from paying the economic activity tax itself.

4. Register with RETA

The next step is to register with RETA, the special social security regime for the self-employed. You can submit your application via Importass no earlier than 60 calendar days before the planned start of your business.

When registering, you must specify:

- Start date

- Type of economic activity

- Projected net income

- Selected contribution base

- Bank account for automatic payment deductions

- The insurance company that will cover occupational risks

The RETA registration date must correspond to the actual start of business operations and the information submitted to the tax authority. Social security contributions are paid monthly, even if the entrepreneur did not generate a profit during a given month.

5. Check for required licenses

Tax registration does not replace permits required to conduct specific activities. Stores, cafes, salons, medical offices, tourist facilities, and other physical establishments may require a municipal license to open or a declaration of compliance for the premises.

For regulated professions, recognition of a foreign diploma, proof of qualifications, or membership in a professional association may be required. Requirements vary by autonomous community, municipality, and field of work, so they must be verified before signing a lease agreement.

6. Set Up Bookkeeping and Invoicing

After registering as an autónomo, you must keep records of income and expenses, retain supporting documents, and issue invoices in accordance with Spanish requirements. An invoice typically includes the entrepreneur’s and client’s information, the document number, the date, a description of the service or goods, the base price, IVA, and, where applicable, IRPF withholding.

Tax returns are often filed quarterly, and some information is summarized in annual reports. The specific set of forms depends on the business activity, clients, cross-border transactions, and the chosen tax regime.

In our previous article, we reported that Spain is preparing a large-scale reform of immigration law.

How to Set Up a Sociedad Limitada in Spain?

Establishing a Sociedad Limitada involves more formalities than registering as an autónomo. The company acquires full legal entity status upon entry into the provincial commercial registry. The procedure can be completed in separate stages or partially consolidated through the CIRCE system.

1. Obtain an NIE for founders and directors

Foreign founders and directors of the company need NIE identification numbers. If a foreign legal entity holds a stake, it may also need a Spanish tax identification number (NIF).

Documents from a foreign company usually need to be legalized or apostilled and translated into Spanish. A representative must also confirm their authority.

2. Reserve the company name

The founders submit a request to the Central Commercial Registry of Spain and receive a certificate confirming that the chosen name is available. The application may include several options listed in order of priority.

The name must be different from already registered names. The designation “Sociedad Limitada” or the abbreviation “SL” is added to it. The certificate will be needed to draft the articles of incorporation at a notary’s office.

3. Determine the Structure and Prepare the Articles of Incorporation

Before consulting a notary, the founders must determine the legal address, types of activities, amount of capital, shareholders’ stakes, and management model. The company may be managed by a single director, several directors, or a board of directors.

The articles of incorporation must clearly describe the company’s scope of business. A formulation that is too narrow may restrict the company once it expands, while one that is too general can sometimes create difficulties during registration or when opening a bank account.

4. Contribute the authorized capital

The minimum capital for an SL is 1 euro. Founders may make cash or in-kind contributions. In the case of a cash contribution, in practice, a bank account is often opened in the future company’s name, and a bank confirmation of the deposit is obtained.

If the capital is less than 3,000 euros, additional rules regarding the formation of reserves and the liability of the shareholders apply to the company. Therefore, it is better to determine the amount of the contribution based on the actual startup costs rather than just the statutory minimum.

5. Sign the Articles of Incorporation at a notary’s office

All founders or their authorized representatives sign the escritura pública de constitución. This is a notarized document that formalizes the company’s formation, the allocation of shares, the articles of incorporation, and the appointment of officers.

The following documents are typically provided to the notary:

- Documents verifying the founders’ identities

- The participants’ NIE or NIF

- A certificate of name reservation

- The company’s articles of incorporation

- Proof of capital contribution

- Information on beneficial owners

- Powers of attorney, if anyone is acting through a representative

After signing, the company may begin some preparatory operations, but its status remains limited until registration is complete.

6. Obtain an NIF and Register the Company

An NIF is required for the company’s tax identification. It is requested from the Agencia Tributaria using Form 036. Initially, the company may receive a temporary number, which is replaced with a permanent one upon completion of registration.

The notarized document is submitted to the Registro Mercantil in the province where the company’s registered address is located. The registry verifies the documents and enters the company into the official system. After this, the SL acquires full legal entity status.

7. Register business activities and comply with industry requirements

Before commencing operations, the company must notify the tax authority of its business activities and the applicable taxes. If it plans to hire employees, it must also register as an employer with the social security system.

A director or shareholder who actively works for the company may need to register with RETA. The registration requirements depend on their ownership stake, managerial authority, and the nature of their work.

The company must also verify local licensing requirements, as well as regulations regarding premises, data protection, consumer protection, and occupational safety. If an activity is subject to separate regulations, it cannot be started until the necessary permit is obtained.

For standard cases, CIRCE allows you to consolidate more than 25 administrative forms into the Documento Único Electrónico. However, personal or representative participation in the notarization process is still required.

Learn more about the available options for legalizing your business in Spain by following the link.

How much does it cost to start a business in Spain?

There is no single fixed cost for starting a business in Spain. Registering as an autónomo involves almost no government fees, whereas setting up an SL entails costs for a notary, the commercial registry, and document preparation. The final budget also depends on the city, the field of activity, and the required permits.

Costs of Registering as an Autónomo

Submitting Form 036 and registering with RETA do not require a separate government fee. Obtaining a social security number and standard registration through government e-services are also free.

However, the absence of a registration fee does not mean you can start your business without a budget. You may need a digital certificate, professional translation of documents, a gestoría, insurance, and a local license. Once registered, you are required to pay monthly social security contributions.

The least expensive option is to launch a remote professional practice without employees or a physical location. Opening a store, café, salon, or workshop requires additional expenses for rent, technical documentation, equipment, and municipal approvals.

Costs of Establishing a Sociedad Limitada

The minimum authorized capital for an SL is 1 euro. This money is not an administrative fee: after registration, it belongs to the company and can be used for its business operations. However, this symbolic capital is usually insufficient to cover actual startup costs.

The main expenses include:

- Reserving a name in the Central Commercial Register

- Notarization of the articles of incorporation

- Registration of the company in the provincial commercial register

- Translation, apostille, and legalization of foreign documents

- Preparation of a power of attorney if the founder acts through a representative

- Services of a gestoría, accountant, or lawyer

- Obtaining municipal and industry-specific permits

- Opening and maintaining a corporate bank account

For an SL established electronically with a registered capital of no more than 3,100 euros and a standard articles of association, the law provides for fixed fees: 60 euros for notarization and 40 euros for registration. In other cases, the corresponding fees may be 150 and 100 euros. These amounts cover only specific notary and registration procedures, not the full process of launching the company.

Costs That Are Often Overlooked

The registration itself often does not account for the largest portion of the budget. An entrepreneur must set aside funds for accounting services, social security contributions, rent, insurance, salaries, and compliance with industry-specific requirements.

The cost of a business license depends on the municipality, the size of the premises, and the risk level of the business. In some cases, it is also necessary to commission a technical design from a licensed specialist, carry out renovations, or confirm compliance with fire safety and accessibility standards.

Therefore, it is advisable to structure the budget into at least three parts: one-time registration costs, monthly administrative fees, and funds for the actual launch. This helps avoid a situation where the company is already registered but lacks the resources to begin operations.

In our previous article, we discussed which categories of clients have the best chances of obtaining a mortgage in Spain and what financing terms they can expect.

What taxes do entrepreneurs and companies pay?

The tax burden depends on the legal form, profits, type of activity, and place of registration. An autónomo pays taxes as an individual, while a Sociedad Limitada is taxed separately from its owners. In both cases, VAT, withholding taxes, and social security contributions may apply.

IRPF for Autónomos

An autónomo’s income is included in the IRPF (personal income tax) base. Not the entire turnover is taxed, but rather the difference between income and documented business-related expenses.

IRPF has a progressive tax scale: as income increases, so does the tax rate. Part of the tax is set at the national level, and part by the respective autonomous community. Therefore, the same income can result in different tax burdens in Madrid, Catalonia, Valencia, or Andalusia.

Many autónomos make quarterly advance payments via Form 130. For certain professional services, the tax is withheld directly when the client pays the invoice. The final amount is determined in the annual tax return, taking into account income, expenses, advance payments already made, and available deductions.

Corporate Tax for a Sociedad Limitada

An SL pays Impuesto sobre Sociedades on the company’s taxable income. The standard rate is 25%, although lower rates will apply to certain small businesses starting in 2026.

Micro-enterprises with a net turnover of less than 1 million euros apply a 19% rate to the first 50,000 euros of the tax base and a 21% rate to the remainder. For small companies that meet the criteria of Article 101 of the Corporate Tax Law, a 23% rate is provided for in 2026.

New companies engaged in actual economic activity may apply a 15% rate during their first taxable period and the following one. This benefit is not automatically granted to every new SL: the company must meet the legal requirements and not fall under any of the specified exceptions.

Dividends or remuneration that an owner receives from the company are taxed separately at the individual level. Therefore, a lower corporate income tax rate does not always mean that an SL will be more advantageous than an autónomo.

Value-Added Tax (IVA)

The standard IVA rate in Spain is 21%. Reduced rates of 10%, 4%, or 0% apply to certain goods and services. Some types of activities, particularly certain medical, educational, and financial services, may be exempt from IVA.

A business owner adds the tax to invoices for clients and deducts the IVA paid to suppliers as eligible business expenses. The difference is reported and remitted to the government. The main quarterly tax return is Form 303.

When working with customers and suppliers from other EU countries, the rules for intra-EU transactions and the reverse charge mechanism may apply. For such transactions, registration in the intra-EU operator registry and a VAT ID number may be required.

In the Canary Islands, a separate tax called IGIC is applied instead of IVA. Its standard rate is 7%, but the rules and exemptions differ from the system in effect on the mainland and in the Balearic Islands.

Social Security Contributions for Autónomos

Self-employed individuals pay monthly contributions to RETA. The amount is calculated based on the entrepreneur’s projected net income. Upon registration, the autónomo reports their expected income and selects a contribution bracket within the applicable range.

Once actual tax data is received, the social security system recalculates the contributions. If contributions during the year were lower than required, the difference must be paid. In the event of an overpayment, the funds are refunded.

For new self-employed individuals, a reduced contribution rate is available for the first 12 months under certain conditions. The preferential period can be extended for another year if net income remains below the established minimum wage. Eligibility for the benefit and its current amount should be verified during registration.

Taxes and Foreign Income

As a general rule, an individual who becomes a tax resident of Spain must report worldwide income, not just income earned within the country. Tax residency may arise, for example, after staying in Spain for more than 183 days during a calendar year or if the person’s principal center of economic interests is located there.

Foreign accounts, assets, dividends, and income from overseas businesses may create additional obligations. To avoid double taxation, it is necessary to review the tax treaty between Spain and the relevant country. Simply having a company or bank account abroad does not, in and of itself, exempt a Spanish tax resident from filing a tax return.

Learn more about the ranking of the safest countries for investors in 2026 by following the link.

Bank Accounts, Licenses, and Hiring Employees

Registration with the tax authority or the commercial registry does not complete the preparation of a business for operation. Before the first transaction, you must set up payment systems, verify local permits, and, if necessary, register as an employer.

Opening a Bank Account

An autónomo is not required to establish a separate legal entity; however, a separate account for business activities significantly simplifies bookkeeping. It allows you to keep personal expenses separate from business transactions and more quickly verify the origin of payments during audits.

For an SL, a corporate account is required for full-scale financial transactions, tax payments, and dealings with business partners. During the company formation process, the authorized capital is also often deposited through this account.

A Spanish bank may request:

- The founder’s or director’s passport and NIE

- Proof of residential address

- Incorporation documents and articles of association

- The company’s temporary or permanent NIF

- Ownership structure diagram

- Information on ultimate beneficial owners

- Business plan, contracts, or revenue forecast

- Documents proving the source of capital

The verification process for a foreign founder may take longer, especially if the structure involves companies from multiple countries. The bank also reserves the right to refuse to open an account based on the results of its internal review. Therefore, you should not plan your launch assuming that the account will be activated immediately after submitting the application.

Municipal and Industry Permits

Permit requirements vary between autonomous communities and municipalities. For online office-based activities without visitors, a separate license may not be required. A restaurant, store, salon, medical office, tourist accommodation, or production facility usually requires additional approval.

Depending on the nature of the business, the entrepreneur must submit a declaration of compliance, a preliminary notification, or an application for a full license. The municipality may inspect the intended use of the premises, ventilation, soundproofing, fire safety, sanitary conditions, and accessibility for people with disabilities.

You should verify whether the chosen activity is permitted before signing a long-term lease. Even a space that was previously used for business purposes may not necessarily meet the requirements of the new project.

Certain sectors have their own regulations. Additional permits or professional accreditation may be required in medicine, transportation, construction, tourism, financial services, education, food retail, and other regulated industries.

Hiring Employees

Autónomos and SLs can hire employees. Before hiring the first employee, the business must register as an employer with the Tesorería General de la Seguridad Social and obtain a Código de Cuenta de Cotización.

The employee must be registered with the social security system before starting work. The employment contract is drawn up in accordance with the position, work schedule, and grounds for employment. Information about the contract must be submitted to the State Employment Service (SEPE) within the established timeframe.

The employer must also:

- Verify the foreign employee’s right to work

- Apply the relevant sector-specific collective bargaining agreement

- Keep records of working hours

- Organize payroll processing and tax withholding

- Pay the employer’s social security contributions

- Ensure an occupational risk assessment is conducted

- Comply with rules regarding vacation, sick leave, and termination

In 2026, the general minimum wage in Spain is 1,221 euros per month for 14 pay periods, or 17,094 euros gross per year for full-time employment. However, a sector-specific collective bargaining agreement may establish a higher wage. In addition to the salary, the budget must account for employer contributions and HR administration costs.

In our previous article, we discussed which countries make it easiest for foreigners to start a business abroad.

How long does it take to register a business?

Timelines depend on the chosen business structure, the readiness of the documents, and the need to obtain licenses. Tax registration as an autónomo can take one day, whereas fully launching an SL with foreign founders often takes several weeks.

Timelines for registering as an autónomo

If a person already has an NIE, a social security number, and an electronic ID, the main applications can be submitted online. Registration with the Agencia Tributaria and RETA is sometimes completed within one business day.

However, this timeframe covers only the establishment of self-employment status. Obtaining an NIE, a residence and work permit, recognition of professional qualifications, or a municipal license can take significantly longer. Therefore, the launch date should be determined based on the longest procedure, not on the speed of tax registration.

Timelines for Forming a Sociedad Limitada

According to the government portal, the CIRCE system allows for streamlined company formation procedures to be completed within 1–10 days. The speed depends on the use of a standard articles of incorporation and a model notarial document.

This timeframe does not always include the preparatory stages. Before launching via CIRCE, founders may need an NIE, documents from foreign companies, a name reservation, and confirmation of the source of capital. After registration, it may also take time to activate a bank account and obtain permits.

What most often delays the launch?

The main causes of delays are not related to the submission of the application itself, but rather to an incomplete set of documents or additional reviews.

Most often, the process is prolonged by:

- Waiting for an NIE or immigration permit

- Errors in the articles of incorporation or scope of business

- Rejection of the chosen name

- Apostille certification and translation of foreign documents

- Bank verification of owners and the source of funds

- The need to supplement documents for the commercial register

- Obtaining a municipal or industry-specific license

- Premises not meeting technical requirements

To avoid wasting time, it’s best to map out the sequence of steps in advance. For example, you shouldn’t rent a space without verifying its permitted use, or set an opening date before your bank account and licenses have been confirmed.

In our previous article, we discussed which countries have the highest corporate tax rates and where it is more advantageous to set up a company.

What should you check before starting a business in Spain?

Before submitting documents, you should draw up a comprehensive plan for registration and future expenses. This is especially important for foreigners who must simultaneously address immigration, banking, and tax issues.

Before starting your business, check the following:

- Does your immigration status allow you to engage in business activities

- Have the founders, directors, and self-employed individuals obtained their NIE numbers

- Which legal structure best suits your business model: autónomo or SL

- Which IAE codes and business activities need to be registered

- Will IVA, IRPF, or corporate tax apply

- What social security contributions will need to be paid

- Are municipal or industry-specific licenses required

- Does the chosen premises meet technical requirements

- What documents will the bank request, and how can the source of funds be verified

- How much will accounting, insurance, and HR support cost

- Is registration required for transactions with counterparties from other EU countries

- What declarations and reports must be filed throughout the year

For standard business activities without a physical location or employees, registration can be relatively straightforward. More complex preparation is required for businesses with multiple foreign founders, regulated services, international operations, or hired staff.

Some of the procedures can be completed through the Punto de Atención al Emprendedor network and the CIRCE system. If the project involves significant investments or operations in multiple countries, it is advisable to seek separate consultation on immigration, corporate, and tax matters prior to registration. This will help you choose a structure that is suitable not only for launching the business but also for its ongoing operations.

Investments, opening a company in another country, remote launch of a representative office or team relocation require a clear legal strategy. A personal business lawyer accompanies the entire process: from choosing a jurisdiction and tax model to visa processing and asset protection.

Engage a personal business lawyer and ensure safe relocation and development of your company abroad!

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