Spain and Portugal for Visitors

So you're moving to Spain and have decided to set up business, but you are not quite sure how to go about it. Start here:

- Get professional advice. A gestor, financial advisor, or gestoría, financial advisory bureau, is a necessity here, not a luxury. A gestor may be either an accountant or a lawyer, and is often both. Having one will make you feel more self-confident (get a different one if it doesn't), and will probably save money in the medium term, for example, on tax.

- Read up on the subject. I recommend David Hampshire's Living and Working in Spain, but there are other books on the same subject and dozens of websites to help you.

- Do you actually need to set up a company? Probably not if you intend to make a living from your own work, even if you employ, e.g., a receptionist or shop assitant. So think about simply registering as an autónomo (self-employed person). The only requirements for this are to obtain a N.I.F., tax number, and register as a tax/social security contributor with a certain economic activity - those nice folk at the Agencia Tributaria, Spanish tax collection agency, will walk you through it. As an autónomo, you have to fill in quarterly tax returns and pay your social security every month, but have almost no other responsibilities. If you are required to charge IVA (value-added tax, the rate varies but is usually 16%), you are responsible for paying it to hacienda, the Spanish tax authority. Note also that you may be entitled to claim IVA back on certain work-related expenses (which can include your home if it is your workplace, in which case you can also get tax relief on your mortgage). If you are providing any kind of service (e.g., if you are doing translations), your customers will probably be required to deduct / retain a proportion of their bills (15%) which they pay as advance income tax on your behalf - you claim the extra back on your annual tax declaration, in other words, your annual tax payment or refund is the difference between what you are obliged to pay for that year and the deductions which have already been made. 

(Note that your status in terms of social security and tax and your legitimacy to carry on your business are two different things. If you register with seguridad social as an electrician, for example, that in no way implies that your qualifications are recognised in Spain, and many foreigners find this the chief impediment to carrying on their previous business. Even now, homologación, approval, of foreign qualifications can be an arduous, heart-breaking affair, and many people simply give up and take up something else altogether, or even drop out of the system and join the economía negra, witness the large number of Eastern European nuclear physicists and the like waiting table in parts of Spain.)

- If you do decide to set up a company as such, you will have to register a company name, obtain a C.I.F. (like the N.I.F. but for companies), have deeds of incorporation drawn up and signed and witnessed, pay up a certain amount of capital, register the company (again) with the corresponding Companies Register, and so on, and it would be extreme folly to take all this on without professional advice. Having decided on your company's activity and name, the main decision you need to take is the type of company you want to incorporate, which depends mostly on how much capital you want to to stake. From less to more, this goes :

Sole owner - none, but your liability is unlimited, so I don't really get the point, myself. I think it's for traders, shopowners and the like, but in general most of them are autónomos, as well.
S.L. (Sociedad Limitada) - 3,000 euros. The liability of shareholders (who may be a single person or several) is limited to that amount of capital (but your activity may require you to take out insurance for a larger amount). This is by far the most common form of company, and is used by big financial players as well as small fry.
S.A. (Sociedad Anónima) - 60,000 euros. Your liability is limited in the same way as for an S.L., so the real advantage of an S.A. is that it is in a position to seek large-scale credit. This is for big, corporate investments, and if you're ready for it you don't need advice from me.
Cooperatives and similar formulae which you are less likely to want to use are available and not uncommon (especially in the agricultural sector). They can have advantages in terms of capital requirements and liability and, although I can't see them being of interest to most readers of this article, do as I say get informed,  professional advice.

This article is only intended to provide an overview, but the process doesn't stop there, of course, not by any means. All three levels of government - state, regional and local - will be involved in one way or another. You will have obligations in terms of your business premises, your workers, your accounts books, and so on, and you will be required to pay a local company tax as well as that to hacienda. So be prepared for extra costs and yet more paperwork.

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