Sunday, December 11, 2011

So You Want To Start Your Own Business in Spain?

By Javier Castillo - Dec/11/2012


As co-founder of and an American expat that’s studied and lived in Barcelona for the past 7 years, I would like to share some practical information for that entrepreneur that would like to set up a business in Spain but doesn’t know how or can’t find enough accurate English-based advice on the proper steps to take. I’m not going to lie, its not easy, in fact creating and registering a company in Spain takes 47 days as compared to the US which takes 5 days and Canada which takes only 3 days. Now, lets get to it:

For starters, what you need to determine first is whether you want to create a Sociedad Limitada (SL) or a Sociedad Anónima (SA). An SL is similar to the American 'LLC' or the Bristish 'Ltd' . In Spain the most common form is the Sociedad Limitada (SL) due to that you only need 3006 euros to create a company, whereas in the SA that amount comes to 60.000 euros.

I recommend an SL, which is what my partners and I chose when we launched the social networking site:

With that said, here are the steps to creating an SL.:

1. Certificación Negativa de Nombre.
Before you can create your company you must decide what it will be called to assure the name is not already taken. For this you will need a certificate called a  “Certificación Negativa de Nombre.” This can be bought in the Registro Mercantil for about 10€.

2. Obtain a Código de Identificación Fiscal.
Next you will need to get a C.I.F. (Código de Identificación Fiscal) which will be your company´s identification number. This you can get at the Delegación de Hacienda by presenting a filled-out 036 form as well as a photocopy of your Certificación Negativa de Nombre and the Documento Nacional de Identidad (D.N.I.) of the person interesting and involved in the creating of the business.

3. Bank Deposit. 
You will then need to deposit 3006€ in a bank account (Banco o Caja de Ahorros) opened in your company's name. Be sure to get a certificate from the bank stating that you have made the deposit.

4. Articles of Incorporation before a Notary. 
The “Escritura” of the SL should be signed by the partners before a notary. This document will contain the following:
* The partners: name, address, occupation, marital status, and marital regime.
* The name of the society that is being constituted.
* The registered office.
* The purpose, that is, what activity your business will engage in.
* The subscribed capital: Depending on the type of society it will be required to be or not fully paid and may be not only in cash, but also in real or personal property.
It must also state how much of the capital is subscribed and paid by each of the partners and the number of shares (corporation) or interests (limited partnership) that divide it.
* The rules for transferring the shares.
* The board of directors of the company: The choice of the positions and powers.
* The statutes by which the society will be governed.
* You must submit to the Notary the following documents to authorize the signing of Escritura: Certification of Name issued by the Registro Mercantil, the bank receipt of having deposited the Social Capital and the CIF.
You need to ask the Notary to give you 2 additional copies as well as the authentic copy, simply because those 2 copies will be deposited in the “Delegación de Hacienda de la Comunidad Autónoma “ a.k.a Treasury Office of the Autonomous Community when it settles the Property Transfer Tax and Stamp Duty and another when requesting registration of the company in the Commercial Register. The price of the Articles of Incorporation is set by the tariffs of the College Attorney and thus depend on the social capital of the company that is established and the extent of the writing itself. Be prepared to spend anywhere from 200 to 1000€.

5. Pay the Transfer Tax and Stamp Duty.
 This payment will be 1% of the initial capital, which will be the 1% of the bank deposit you previously did. This should be done at the Delegación de Hacienda de la Comunidad  Autónoma using the form 600. Remember to bring the original Escritura, 2 copies of this same document and a copy of your CIF.

6. Registration and Publication in the Registro Mercantil.
Once the Transfer Tax and Stamp Duty have been made, you may now register your company in the Registro Mercantil. To do this you will need to provide the first copy of the Escritura will be returned to us upon registration, a simple copy of the Escritura which will be filed by the Registro Mercantil, and the proof of having paid the transfer tax and stamp duty .In the Registro Mercantil you will have to pay the registration as well as the amount of its publication.

7. Declaration that you will begin activities. 
At the Delegación de Hacienda you will need to fill in the following forms 036 and IAE (a declaration of starting your activity).

8. Registration in the Tax on Economic Activities (Model 845).
This will also be done at the Delegación de Hacienda. In this 845 form you will need to indicate the following formation: The Company, the code or title of the activity (to be completed by the staff themselves if you don’t know), date of the start of business activity, locations, etc.

9. Registration of the company in Social Security.
This will take place at the Tesorería General de la Seguridad Social a.k.a. General Treasury of Social Security by filling the appropriate form. You will need to provide, in addition, the CIF of the company and all of this is done on the spot.

10. Register in Autonomous
It is legally required to be registered in the Régimen Especial de Trabajadores Autónomos a.k.a. the Special Regime for Autonomous Workers those who will exercise the functions of management that involves the position of director or administrator, or provide other services for a corporation you are creating.

11. Record books of registration and legalization
Record books of registration and legalization need to be stamped by the Labour Inspectorate.
In these record books the employee information will be maintained as well as, if the case occurs, the visitations by the Labor Inspectorate.

12. Communication of center opening or resumption of the activity
This application for registration in the Registro de Actividades y Empresarios Comerciales a.k.a the Registry of Activities and Commercial Enterprises should be performed, as in the previous case, before the Consejería de Trabajo a.k.a. the Department of Labor or, if applicable, Dirección Provincial de Trabajo a.k.a. Provincial Department of Labor..

13. Seeking Opening Licence application in City Hall
The request is made to the relevant municipal council, and in general, should provide the following documentation:
* Plot and layout of the location of the business: It is issued by the Planning Department, upon payment of the fee.
* Plans of the floor in which to locate the emergency exit, fire extinguishers and existing furniture.
* Sketch of the local situation.
* Assessment of the facilities available in the local.
* Report describing the activities that will take place.
* Receipt of having paid municipal taxes.
* The amount of the fees to be paid will depend on the size of the business plot and business activities that will take place. Sometimes it is not necessary that the plans are endorsed by the College of Architects and Quantity Surveyors.

14. Registration of workers and contracts
To hire workers you only need to complete and submit the form of the workers that have been registered previously at the Régimen Especial de Trabajadores Autónomos. This form should be presented to the Tesorería General de la Seguridad Social a.k.a General Treasury of Social Security. This form must be signed by the legal representative of the company and needs to accompany the employee’s DNI.

From the date of registration in Social Security, the company will have a period of 10 days to submit their employment contract in the Instituto Nacional de Empleo (INEM) a.k.a. National Employment Institute (INEM).

Will all this said and laid out for you, I do strongly advise and recommend for those of you who have a limited capacity for speaking Spanish to seek the assistance of an attorney to have the proper legal advice. This will surely also save you time, paperwork, and help solve any questions and doubts you may have. Lastly, immediately after you have all the paperwork ready and have constituted your SL, don’t forget to hire the services of a tax accountant. 

Good luck with your endeavors!

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