Expand Business in Spain

Global Upside helps businesses expand into Spain by providing talent acquisition, human resources, accounting, payroll, tax, incorporation, and professional employer organization (PEO)/employer of record (EOR) services. Our comprehensive offerings create an end-to-end solution that helps you establish your business and optimize your operations, all while maintaining compliance with Spanish laws and regulations.

The hiring and incorporation processes in Spain are often complex, time-consuming, and involve numerous legal and compliance challenges. Global Upside simplifies these processes and lifts the compliance burden from your business. Our teams have the experience and expertise required to help you establish a legal entity in Spain. We also offer PEO/EOR solutions to companies interested in hiring employees quickly, without setting up a legal entity in the country.

Capital City

Madrid

Currency

Euro (€)

Language

Spanish

Government

Constitutional Monarchy

Country Overview

Spain has a population of 47 million people and is the 4th largest country in Europe in terms of the area coverage. Spain was listed as the world’s 16th largest importer and 12th largest exporter in 2012, and has continually emerged as a high-income economy. “The Economist” states that Spain ranks among the top ten countries in terms of quality of life.

  • Spain ranks as the 13th largest economy in the world by GDP
  • Spain ranks as the 6th largest economy in Europe by GDP

Legal Entity Setup

There are various options for structuring your business entity in Spain:

Limited Liability Company (Sociedad de Responsabilidad Limitada/SL)

Many small and mid-sized companies in Spain utilize limited liability company (Sociedad de Responsabilidad Limitada/SL) structures. The capital required to incorporate an LLC is €3,005.06. Setup also requires at least one shareholder (with a maximum of 50 shareholders).

Public Limited Company (Sociedad Anonima/ SA)

A public limited company (Sociedad Anonima/ SA) is a form of establishment where the capital required is €60,101, 25% of which must be paid prior to incorporation. There is no limit on the number of shareholders that can be involved, however, mandatory audits must be completed annually.

New Enterprise Limited Company (Sociedad Limitada Nueva Empresa/SLNE)

A new enterprise limited company (Sociedad Limitada Nueva Empresa/SLNE) is an altered version of the SL which became available in April 2003. SLNE incorporation processes are more simple than those for SL structures. The maximum number of stakeholders for SLNE is 5 and the minimum capital required is the same as an SL (€3,005.06). The maximum capital requirement is €120,202.

Sole Trader (Empresario Individual)

A sole trader (Empresario Individual) is a type of setup designed for individuals intent on establishing a small business. This is the simplest form of legal business setup. The capital requirement for this structure is low, but the business owner is liable for all obligations. There is no minimum investment required.

Partnership (Sociedad Civil)

A partnership (Sociedad Civil) is a form of an official business arrangement that requires a minimum of two partners. Capital requirements must be paid equally by the partners. All profits, work, and liabilities must be shared amongst the partners.

Co-Ownership (Comunidad de Bienes/CB)

Co-ownership (Comunidad de Bienes/CB) is similar to a partnership. There must be a minimum of two people to establish this structure. The liability for each partner is unlimited and there is no fixed minimum capital requirement. An official agreement of partnership (Contrato de constitución) must be made between partners in order to complete the establishment of this entity structure.

Human Resources

Employment contracts in Spain can be written or verbal, but verbal contracts are unusual. For the employment agreement to be valid, the employment bonds must be sent to the Public State Employment Service within 10 days of commencing the contract. According to the Spanish employment laws, the following information is required on all employment contracts:

  • Name and address of the employer and company
  • Name and address of the employee
  • Job details
  • Start date and working hours of duty
  • Salary and holiday details
  • Leave details and other benefits
  • Termination and notice period­

Payroll

In most cases, the payroll frequency is monthly. However, the specific payroll frequency for an employee depends on the employment bond or the collective bargaining agreement (CBA). Regardless of payment frequency, all employers must provide a payslip to employees with relevant payment details each time they are paid.

Accounting

All accounting standards in Spain must adhere to the International Financial Reporting Standards (IFRS).

Taxation

Corporate Tax

The standard tax rate in Spain is 25%. For earnings of less than €200,000, there is a reduced income tax rate of 16.5%.

Value Added Tax (VAT)

The standard VAT rate in Spain is 21%. A reduced rate of 9% is provided for certain items such as food, medical devices, etc.

Data Privacy

The Data Protection Directive’s domestic applications have been replaced by the General Data Protection Regulation (GDPR). This regulation mandates increased transparency for how employee data is used and provides additional protection of employee data.

Anti-Bribery & Anti-Corruption Law

The recent anti-bribery and anti-corruption laws in Spain demonstrate the adoption of the SCC, Spanish Criminal Code.

Bribery for Public Officials

For Individuals:

  • Imprisonment for a minimum of 3 to 6 years
  • Daily fine of €2 to €400 for 1-2 years
  • 7 to 12 year ban from their profession

For Businesses (under sections 424 and 425):

  • Suspension of the entity’s activities for a minimum of 5 years
  • Daily fine of €30 to €5,000 for 6 months to 5 years
  • Disintegration of the establishment

Bribery for Private Officials or Entities

For Individuals:

  • Imprisonment for 6 months to 4 years
  • Monetary fine equating to 3 times the value of the bribe

For Businesses:

  • Official publication of the misdeed
  • Daily fine of €30 to €5,000 for 6 months to 5 years
  • Disintegration of the establishment