Along with a structured business plan, this detailed guide should ensure you get a successful foothold in the Spanish market.
2022-04-22
Growing a successful business requires hard work and dedication. Once it takes off in your home country, the opportunities for wider success become even more clear. If you are wanting to reach a larger audience with your products and services, Spain may be the ideal location to grow your business.
Spain makes the top three list of excellent countries to establish a business in Europe. The Spanish market is categorised as a high-income economy because it is the 14th largest globally. As the 4th largest country in Europe, Spain has a very competitive economy with close ties with European and Latin American nations, a convenient location occupying Africa and Europe, and has a growing interest in constant research and technology.
How to expand your business into Spain
In most cases, expanding a business to a foreign country can be pretty daunting. More so if you lack adequate information on some issues such as the country's business structures, legal processes, and regulations, to aid the smooth running of your business. Along with a structured business plan, our useful resources should ensure you get a successful foothold in the Spanish market.
Setting Up an Entity in Spain
The country of Spain is an ideal place to set up a business as an expat. There are different business structures in Spain. A popular setup option in Spain is the Limited Liability Company (Sociedad de Responsabilidad Limitada/SL) which many small and mid-sized companies in Spain utilize. Steps you must take to set things in motion include:
Get Your NIE Number
Getting an NIE (Número de Identidad de Extranjero) number is a vital step toward setting up in Spain. It is an identification number given to non-Spanish citizens, enabling them to conduct activities legally. It is a straightforward process, taking a few days for EU citizens to acquire and a slightly longer time for non-EU citizens.
Next Up, Registering Your Company
The next thing to do is to register your company's name with the Registro Mercantil Central (RMC). This registration process confirms that the name you have decided for your own company doesn't already belong to an existing company. It isn't time-consuming and can be done online.
Receive Your Bank Certificate
Opening a bank account should be your next move in setting up a company in Spain. It will prompt the receipt of a bank certificate. Also, you may need to deposit a sum in the account. It is 3,000 euros for a limited liability company.
More Registrations
The registrations may appear never-ending for a new company, but going through with them is necessary. You can choose to get all the registration out of the way by applying for social security considerations simultaneously. For this registration, you will need all the documents you have acquired so far and TA 0521, which you can get at a local security office. You will need to register for a tax identification number (CIF) online or at the Tax Agency.
Filling the Seats of the Shareholders and Directors
As a business owner, the last move will be establishing the shareholders and deciding on the directors. You will need to determine how many people will hold shares and their percentage in your new business. To fill the position of the director, you could pick two different people or a single person (Spanish resident) to have both corporate and operating functions.
What Is the Corporate Tax Structure in Spain?
Corporate tax in Spain is no joke, and defaulting on payment will attract strict penalties. The Spanish financial year is the same as a typical calendar year, and residents are taxed on their global earnings, while non-residents enjoy having only their Spanish income taxed. Another thing non-residents enjoy is a flat rate of 24%. As for residents, their taxes are charged progressively. Taxes in Spain are a lot covering state and regional ones.
As an expatriate, there are biases in your favour. It is standard for an expat who becomes a resident to pay income tax. However, under the special tax regime otherwise known as Beckham's Law by the Spanish government, you can be treated as a non-resident for five years, excluding the year you move.
The downside is that as expats taking advantage of the special tax regime, you don't get to enjoy the full benefits a typical non-resident would. The exemptions in the non-residents' income tax are unavailable to you.
What Visas Are Available to Those Wishing to Relocate?
You can apply for a Spanish visa tailored to suit the activities you want to conduct in Spain from the variety of available long and short-term visas.
Let us get it down; you don't have to bother with this if you are an EU/EEA national because you won't need a visa, only a national identity number NIE (Número de Identidad de Extranjero) if you decide to stay for more than three months. However, if you don't belong to the EU/EEA region but wish to relocate to Spain, you need a D-type visa and other documents.
Work Visa
If you will be relocating for business purposes, a work visa is the correct choice. It is granted by Work and Immigration Offices available in the various regions. However, before you apply for a work visa, if it is a must, you have a work permit. Employees can't apply for a work visa; the process will have to be handled by their employer. The exception to this is if you are self-employed.
The lifespan of a work visa is a year. However, it can be renewed for an additional five years, after which you can get permanent residency.
Student Visa
You can only apply for a student visa if you have received an offer from a school in Spain. The lifespan of this visa is as long as the study program. During your stay in Spain, you have the freedom to work and indulge in other activities.
Non-lucrative Residence Visa
This visa is perfect for those who are financially capable of not having to indulge in any lucrative activity for as long as they remain in Spain. No form of work is allowed even remote jobs. It is the perfect visa for retirees.
Family Visas
Your family can apply to join you in Spain if you have been a resident of Spain for a minimum of one year. They are also free to work without a work permit for the duration they'll be there.
Other available visas include a golden visa if you'd like to make investments and the digital nomads and remote workers visa, which hasn't been passed into law.
Ease of Entry into the Spanish Market: Good Options for Expanding Companies
Spain bounced back from its recession in 2007 and has had steady growth since then. It is an excellent place to set up your business, but it could be daunting for foreign companies if you go in without a plan. There are specific initiatives you could take to ease your market entry.
Arrange for Physical Meetings
It is crucial to know the preferences of the market you will be going into if you wish to expand abroad. When it comes to Spaniards, they value physical meetings; it could be what could change their status from potential investors to investors, especially if you plan to operate locally. Also, it is essential to know that even at these physical meetings, Spaniards are typically formal, so formal attire is recommended.
Take Advantage of the Recession
Spain has come a long way since the recession. They have recovered, but not entirely. Due to the downturn, they faced over a decade ago; many skilled people are without a job. To ease your expansion into Spain, take advantage of the talent pool and recruit highly skilled workers.
Understand Spain's Diversity
Under the umbrella of Spain are 17 autonomous communities. Every community has its strong suits and distinct identities, with Barcelona and Madrid as the major economic hubs. So, spreading your business across all the districts is advisable, beginning with the famed business hubs.
Prepare Yourself for Delayed Payments
In Spain, credit is regular in the markets. Customers can make purchases on credit, and you have to be able to accept this, too, if you want to stand toe-to-toe with your competitors. Sometimes, it takes up to three months before payments are made.
Be a Problem Solver
Be prepared because it won't be easy to make customers out of Spaniards, except your products are unique and solve a problem. After all, they are conservative buyers. They stick to who companies they trust.
Final Words
Deciding to do business in Spain will have you beaming in the long run if you do the due diligence on your part and employ the services, advice, and support of experts. Don't struggle with the entire process on your own; we are happy to help. Get in contact with us today!
How to Get the International Expansion Ball Rolling
Setting up a company in Spain is actually much simpler than many realise. Expanding internationally is a challenge, but when done correctly, it can be a streamlined process that enhances your business hugely.
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Read more: Learn how to expand your business into Germany
