HEALTHPLAN MAGAZINE

Many people relocate to Spain with the idea of retiring in the warm sun in the beautiful Mediterranean environment, but after a few weeks and months, some find that their lives are just too quiet without the buzz or challenge of work.

To give themselves a purpose once again, they decide to start a business in Spain, but being in a foreign country with different rules and regulations can mean that the process of forming a start-up business may not be quite as simple as at first thought.

So in order to point you in the right direction, this brief article has been crafted to go over the basics of what you need to know in order to start a new business venture here in Spain.

In this article, we cover the following:-

• Why start a new business in Spain?
• Who can start a business in Spain?
• The different kinds of businesses you can set up
• Visas and work permits
• Funding your new business
• The steps involved
• Lots more.

Let’s take a look!

Before you start

No matter what country you find yourself in, if you are looking to start up your own business there are certain things you must already know.
For example, you must have a solid business plan; you need to have done enough market research to establish that there is a demand for your products or service and that your proposed business is viable.

In an ideal world, you should have some sort of experience and previous knowledge of the market you intend to enter; and if, as in Spain, the local language is other than English, you or one of your close associates must be fluent in the local language.

The different types of businesses in Spain

The types of businesses in Spain are similar to those in the UK but there are some differences; however for the purposes of this article, the most common types of business that an expat will be looking to start will be either:

• Empresario Individual or Autonomo - (the equivalent of a UK Sole Trader)
• Sociedad Colectiva - (Similar to a General Partnership in the UK )
• Sociedad Comanditaria - (Similar a Limited Partnership in the UK )
• Sociedad de Responsabilidad Limitada - SR, SRL or SL (Similar to a Limited Company in the UK )

An S.L company is one of the most common business formations in Spain and means that you have limited liability. They are quick to set up and initially, you will only need a capital investment of around €3,000. This acts as your maximum liability.

If your turnover will exceed €60,000, an S.L company will also provide you with extra tax incentives.

No matter where, or what type of business you hope to start, you must have a comprehensive business plan and bearing in mind that you may need to borrow money, your business plan should be written in Spanish as well as English.

If you have never compiled a business plan before, then you may need to seek local assistance. The Cámaras de Comercio is the Spanish equivalent of the Chamber of Commerce, and if you seek out your local office they will be able to offer you some advice regarding how to compile a professional business plan.

Who is eligible to set up a business in Spain?

The great thing is that everyone has the opportunity to set up a new business in Spain, however, the requirements are slightly different for non-EU nationals.

• EU Nationals - If you are from the EU you will find setting up a business in Spain relatively straightforward with minimal bureaucracy. If you intend to stay in Spain for longer than 180 days and set up your business, you will need to apply for an EU registry certificate which will include your NIE tax number if you don’t already have one. The certificate can be obtained in a day via a national police station (Oficina de Extranjería) and will show that you are registered in the Central Register for Foreign Nationals. You will not need to apply for a work permit. Find out how to apply for an EU Residency Certificate.
• Non-EU Nationals - If you are from outside of the EU, you will need to apply for a residence visa and work permit before you can legally work here or start a business. More below.

Will I need a visa or work permit to start a business?

If you are from outside of the EU you will need to apply for one of two visas. The one you apply for will depend on the kind of business you wish to start.

The two options are:-

• Self-Employed Visa - If you want to set up as a freelancer in Spain, you will need to apply for a self-employed work visa. This is ideal for those who want to set up a smaller business such as a consultancy, shop or cafe.
• Entrepreneur Visa - If your ambitions are larger and you are looking to set up a sizable business in Spain that will enhance the local area and create employment, you can apply for an entrepreneur visa, which is also referred to as a Golden Visa. These are typically issued in around 20 days, however, you will need to provide a detailed business report.

Funding your business

Any business must of course be suitably funded, so your next consideration has to be whether or not you have enough personal finance to underwrite the business, or whether you have to seek outside financial help.

Loans, or Préstamos as they are called here in Spain, will vary from lender to lender depending on the amount of money you wish to borrow, and for how long. However, you will be pleased to know that loans are available to both residents and non-residents alike, providing certain criteria are fulfilled.

Préstamos are available with repayment terms of anything from 3 years to 15 years, and can be repaid monthly, bi-annually, or annually. In order to find out more in terms of what loans are available to you and over what repayment periods, levels of interest, etc, you can contact the Instituto de Crédito Oficial, or any major bank (Banco). But like anywhere in the world, you'll need to be prepared to look around in order to get the best deal.

If your business will be creating new employment in a depressed area, then you may be entitled to a government grant. To find out more about this you can contact the Spanish trade department known as the DGPPME which can provide further information.

If you have difficulty obtaining a bank loan you may wish to consider using a Business Angel. As you may guess from the name, business Angels, are prepared to accept more risk than conventional banks are willing to undertake.

Licences and Permits

Last but by no means least you will need to consider if you require any licences or permits to begin trading. Don't relate to your knowledge of the UK or another country’s affairs in this matter as Spanish laws and practices can be quite different. In order to ascertain whether a special permit or licence is required, you should contact the local Town Hall (Ayuntamiento) and Comunidad Autónoma which are responsible for these affairs in your area.

Due to Covid-19, world economies are in something of a depression and Spain is of course no exception. So if you are considering setting up your own business, make sure that your finances are sturdy and that your overheads are as low as possible.

Steps to start a business in Spain

There are a number of steps involved in setting up a business in Spain, this includes:-

• Get your NIE number and entrepreneur/self-employed visa
• Obtain a no-name coincidence certificate - This is available from the RMC (Registro Mercantil) and will certify that the business name you want to use has not already been registered.
• Get your NIF or tax ID number
• Opening a business bank account - Once you have your tax codes and registered your company name you can open your business bank account. You will need to deposit the minimum capital of €3,000.
• Establish who the shareholders will be
• Go to the notary and sign the public deed of incorporation
• Register the company with the tax authorities
• Register the company with the social security office.

Although the above provides you with an overview of the process, you are strongly advised to seek the assistance of a competent law firm which has the relevant experience in company formation in Spain.