Key Steps to Starting a Business in Spain

Many expats looking to buy property in Spain are also looking for a reliable source of income to support them financially while living abroad. Starting your own business is a great way to make this easier, but only if you follow the right procedures and regulations.

So, for those moving to Spain to set up a business, once you have an idea you will need help. You need to consider the different types of tax regime: whether you are running the business as a sole proprietor in Spain (running it as an individual) or as a limited company.

Taxes and qualifications

You can choose between two ways of paying your tax: a) you make quarterly VAT returns and income tax returns under the "direct assessment method", just on your actual profit, or b) you pay a quarterly fixed income tax and VAT amount under the "modulos" system. It is best to discuss these systems with your accountant. Self-employed workers can also take on employees and therefore have the chance to expand their company once the business is running well.

There is the option to pay lower initial payments as your business grows, increasing them over the first 18 months.

The right accountant is essential, meaning someone who can ensure that your daily accounting and invoicing is in line with what the Spanish authorities require.

Setting up a business in Spain

For some businesses on the Costa Blanca, qualifications are a legal requirement. Real estate agents in Spain can work without proof of qualifications. A lawyer cannot. Another example is that you cannot work as a private taxi driver on the Costa Blanca without the appropriate licenses.

Licenses are also important when premises are used and you will need to contact the geystor for assistance with this. You will need to arrange a license (operating license) which is required to open the business covered by the license (operating license).

The local Spanish town council must grant planning permission. Any refusal must clearly state the reason (i.e. in what specific respect the project does not comply with the relevant planning regulations).

Employees and legal entities

If you employ others, it is important that you have employment contracts and that you pay tax and meet other legal requirements such as social security. EU citizens can set up a business if they have a NIE number. A non-EU citizen must have the necessary visa, work permit and minimum capital investment.

This can seem quite complicated, and depending on how you decide to start your business, you will need the services of an accountant and possibly a lawyer. And once the initial paperwork is completed, you are up and running and can continue to make money. Getting the right advice is crucial to ensuring that your dream business in Spain is a sure thing.