Starting Your Business in Spain: A Guide for Expats

Published on October 2, 2025 and written by Cyril Jarnias

Spain, with its dynamic economy and business-friendly regulatory framework, has become a top destination for expatriate entrepreneurs. This comprehensive guide will walk you through the essential steps of starting a business in Spain, providing valuable information on legal, administrative, and cultural aspects to consider.

Understanding the Business Environment in Spain

Before embarking on starting a business in Spain, it’s crucial to thoroughly understand the country’s business environment. Spain offers an attractive market and strategic position in Europe, with easy access to European Union and Latin American markets.

The Spanish economy is diversified, with key sectors including tourism, automotive industry, renewable energy, and information technology. The country has experienced significant economic recovery in recent years, offering numerous opportunities for foreign entrepreneurs.

The Spanish government has implemented various measures to attract foreign investment and facilitate business creation. These initiatives include simplified procedures for company registration, tax incentives for startups, and innovation support programs.

Business culture in Spain is characterized by the importance of personal relationships and mutual trust. Spaniards place great value on face-to-face interactions and in-person meetings. Therefore, it’s essential to take time to build strong relationships with your potential business partners.

Choosing the Appropriate Legal Structure

Choosing your business’s legal structure in Spain is a crucial decision that will have significant implications for your operations, taxation, and liability. Here are the main options available to you:

1. Sociedad Limitada (S.L.)

Sociedad Limitada (S.L.) is equivalent to the French SARL and is the most popular legal form for small and medium-sized businesses in Spain. It offers several advantages:

– Minimum required share capital: 3,000 euros – Limited liability for partners up to their contributions – Flexibility in management and decision-making – Possibility to create a single-member S.L. (with only one partner)

2. Sociedad Anónima (S.A.)

Sociedad Anónima (S.A.) is equivalent to the French société anonyme. It’s generally chosen for larger projects or publicly traded companies. Its main characteristics are:

– Minimum required share capital: 60,000 euros (25% of which must be paid up at incorporation) – More complex structure with a board of directors – Greater ease in raising funds on financial markets

3. Empresario Individual (Autónomo)

For entrepreneurs looking to start small-scale activities, the Empresario Individual status, equivalent to the French auto-entrepreneur status, can be an interesting option. This status offers the advantage of administrative simplicity but involves unlimited liability for the entrepreneur’s personal assets.

4. Sucursal (Branch)

Foreign companies can also choose to establish a branch in Spain. This option allows maintaining a direct link with the parent company while benefiting from a local presence.

Administrative Procedures for Starting Your Business

Once you’ve chosen the appropriate legal structure for your project, you need to follow several administrative steps to officially create your business in Spain. Here are the main procedures to complete:

1. Obtain a NIE (Número de Identidad de Extranjero)

The NIE is a tax identification number for foreigners, essential for any administrative procedure in Spain. You can obtain it from the police station or foreigner’s office in your place of residence.

2. Choose Your Business Name

You must check the availability of your business name with the Registro Mercantil Central (Central Commercial Registry). Once the name is validated, you’ll receive a reservation certificate valid for three months.

3. Draft the Company Bylaws

The bylaws must define your company’s operating rules, including its business purpose, capital, governance structure, etc. It’s recommended to hire a lawyer for this crucial step.

4. Open a Business Bank Account

You need to open a bank account in the name of the company being formed to deposit the share capital. The bank will provide you with a deposit certificate needed for the notarial deed.

5. Sign the Incorporation Deed Before a Notary

Signing the incorporation deed before a notary formalizes the creation of your business. The notary will verify the legality of the bylaws and the identity of the founders.

6. Obtain the NIF (Número de Identificación Fiscal)

The NIF is your company’s tax identification number. You must request it from the Spanish tax authority (Agencia Tributaria) within 30 days of company incorporation.

7. Register with the Registro Mercantil

Registration with the local Commercial Registry is mandatory and must be completed within two months of signing the notarial deed.

8. Register with Social Security

You must register your company with Spanish Social Security before hiring employees.

Tax Considerations for Expatriate Entrepreneurs in Spain

Taxation is a crucial aspect to consider when starting your business in Spain. As an expatriate entrepreneur, you need to be particularly attentive to the tax implications of your activity, both at the personal level and for your company.

Corporate Tax

The standard corporate tax rate in Spain is 25%. However, new businesses benefit from a reduced rate of 15% for the first two profitable years of activity. Additionally, there are special regimes for certain types of businesses, such as SMEs or innovative companies.

VAT (IVA in Spanish)

The standard VAT rate in Spain is 21%. Some products and services benefit from reduced rates (10% or 4%). Businesses must register for VAT and file regular declarations.

Personal Income Tax

As an expatriate entrepreneur, your personal tax status will depend on your residency situation. If you reside in Spain for more than 183 days per year, you’ll be considered a tax resident and must declare your worldwide income in Spain. Tax rates are progressive, ranging from 19% to 47% depending on the region.

Social Security Contributions

Self-employed entrepreneurs (autónomos) must pay monthly social security contributions, the amount of which varies depending on the chosen contribution base. For companies, social security contributions are shared between employer and employee.

International Tax Treaties

Spain has signed tax treaties with many countries to avoid double taxation. It’s important to check if such a treaty exists with your home country and understand its implications for your tax situation.

Accessing Funding for Your Business in Spain

Funding is often a major challenge for entrepreneurs, especially when setting up in a new country. Fortunately, Spain offers various funding options for businesses, including for expatriate entrepreneurs.

1. Bank Financing

Spanish banks offer a range of financial products for businesses, including short and long-term loans, credit lines, and overdraft facilities. However, obtaining a bank loan can be difficult for a new business without a credit history in Spain. It’s recommended to prepare a solid business plan and provide personal guarantees if possible.

2. Public Aid and Grants

The Spanish government and regional authorities offer various aids and grants to encourage entrepreneurship and innovation. These programs can include direct grants, reduced-rate loans, or tax benefits. Priority sectors like green technologies or digital innovation often benefit from specific programs.

3. Venture Capital and Business Angels

Spain’s venture capital ecosystem has significantly developed in recent years, offering funding opportunities for startups with high growth potential. Many business angel networks are also active in major Spanish cities.

4. Crowdfunding

Crowdfunding platforms are gaining popularity in Spain, offering an interesting alternative for innovative or socially impactful projects. There are platforms specialized in business funding, allowing to raise funds from a broad public of investors.

5. European Programs

As a member of the European Union, Spain benefits from many European funding programs. Initiatives like Horizon Europe or European structural funds can offer funding opportunities for certain types of projects.

Navigating Cultural Differences

Understanding and adapting to cultural differences is essential for success as an expatriate entrepreneur in Spain. Here are some key aspects of Spanish business culture to consider:

1. Importance of Personal Relationships

In Spain, personal relationships play a crucial role in business. Spaniards generally prefer to do business with people they know and trust. Therefore, it’s important to take time to build strong relationships with your partners, clients, and suppliers.

2. Communication

Communication in Spain tends to be more indirect and diplomatic than in some Anglo-Saxon countries. Spaniards often avoid direct confrontation and may use more nuanced language to express disagreement. It’s important to pay attention to communication subtleties and not interpret a “maybe” as a definitive “yes”.

3. Business Pace

The pace of business in Spain may seem slower to some expatriates. Important decisions often take time and may require several meetings. Patience is an appreciated virtue in the Spanish business world.

4. Importance of Business Meals

Business meals are an important part of Spanish professional culture. It’s often during these informal moments that relationships are built and important decisions are made. Don’t underestimate the importance of these social interactions.

5. Hierarchy

Spanish companies tend to have a more marked hierarchical structure than in some Nordic or Anglo-Saxon countries. Respect for hierarchy and titles is important in professional interactions.

6. Punctuality

Although punctuality is appreciated in the Spanish business world, it’s common for meetings to start slightly late. However, as an expatriate, it’s recommended to always be punctual to make a good impression.

Resources and Support for Expatriate Entrepreneurs in Spain

As an expatriate entrepreneur in Spain, you can benefit from numerous resources and support structures to help you in your entrepreneurial journey. Here are some of the main resources available to you:

1. Chambers of Commerce

Spanish and international chambers of commerce offer a wide range of services to entrepreneurs, including legal and tax advice, training, and networking opportunities. The Franco-Spanish Chamber of Commerce, for example, can be particularly useful for French entrepreneurs.

2. Incubators and Accelerators

Spain has many startup incubators and accelerators, particularly in major cities like Madrid, Barcelona, and Valencia. These structures offer workspace, mentorship, and often access to potential investors.

3. Entrepreneur Associations

Joining an entrepreneur association can help you expand your network and get valuable advice. Organizations like the Young Entrepreneurs Association (AJE) or the Association of Self-Employed Workers (ATA) are active throughout Spain.

4. Government Programs

The Spanish government has implemented several initiatives to support entrepreneurship, such as the “Emprende en 3” program that simplifies administrative procedures for business creation. The Official Credit Institute (ICO) also offers funding lines for entrepreneurs.

5. Coworking Spaces

Coworking spaces are increasingly popular in Spain and offer not only flexible workspace but also networking and collaboration opportunities with other entrepreneurs.

6. Online Platforms

Online platforms like Emprendedores.es or TodoStartups.com offer valuable resources, news, and advice for entrepreneurs in Spain.

7. Specialized Consultants

Many consulting firms specialize in supporting expatriate entrepreneurs in Spain, offering services ranging from business creation to tax and accounting management.

Conclusion

Starting a business in Spain as an expatriate is an exciting adventure that offers many opportunities. With its strategic position in Europe, diversified economy, and business-friendly regulatory framework, Spain presents itself as an attractive destination for international entrepreneurs.

However, as with any entrepreneurial project abroad, it’s crucial to prepare well and understand the specificities of the local market. From selecting the appropriate legal structure to navigating cultural differences, through understanding the tax system and accessing funding, each step requires particular attention.

The key to success lies in thorough preparation, good understanding of the local environment, and the ability to adapt to Spanish business practices. Don’t hesitate to surround yourself with local experts and leverage the many resources available for expatriate entrepreneurs in Spain.

With perseverance, flexibility, and a clear vision of your objectives, your entrepreneurial adventure in Spain can transform into a lasting and rewarding success, both professionally and personally.