There are different ways of setting up a company in Spain. The business can be formed as a new company; through an acquisition; through a joint venture; or it can operate as a Spanish branch or representative office. Those working for themselves on a self-employed basis are are commonly known as autónomos.

Self-employment
Self-employed workers have to register with the Spanish tax authority and with the social security department (seguridad social).

Most autónomos have to present quarterly IVA (Impuesto sobre el valor añadido) - or value added tax (VAT) - returns and an annual income tax return (Impuesto sobre la Renta de las Personas Físicas (IRPF)). Other declarations are frequently applicable on a quarterly and annual basis, according to circumstances.

Companies
Several types of limited company exist: the most common form is the sociedad limitada or SL.

Though the formation of a company is important in protecting the owner(s) from personal liability in the event of bankruptcy, incorporation of a company does mean a number of additional tax, accounting and mercantile obligations.

An SL has to present a corporation tax return and statutory accounts annually, in addition to filing IVA data and several other periodic declarations which are usually applicable.

This brief article focuses on how to set up a new limited company. The information and guidance provided describes the steps and the public offices you must visit - including identifying some of the documentation you will need and some of the red tape you will have to cut through - in order to get your sociedad limitada set up by yourself.

1. RMC - Registro Mercantil Central
The first step in setting up an SL is to obtain a certificate (the certificación negativa de denominacióna or 'negative name certificate') from the RMC which confirms that the company name you want to use is not already taken, and that you can in fact choose it for your new company.

You can do this by yourself through www.rmc.es. You can expect this step to take about 3 days: you will receive the answer from the RMC by courier.

2. AEAT - Agencia Estatal de Administración Tributaria
Secondly, you have to apply for your código de identificación fiscal (CIF), a tax identification code. You can download a tax form (036) from www.aeat.es (pdf).

It is highly recommended that you fill it in carefully at home before going to the hacienda (treasury or tax office) to deliver it.

Take the original and a photocopy of your número identificación extranjero (NIE) document. Be sure to do this in the appropriate office of your local hacienda. It will be the one that belongs to your post code address. You will get the tax number immediately. We suggest you look in a local phone book to find your local office.

3. The Bank
Once you have obtained the tax code and the certificación negativa de denominacióna, a deposit of EUR3.06, which is the minimum authorised share capital, has to be paid into a Spanish bank account. Evidence of payment can be obtained in the form of a bank certificate for delivery to the notary or lawyer, which acts as proof of the incorporation of the company.

4. The Notary
Armed with the three previous documents, you can now visit a Notary to apply to be appointed the company founding Director (Administrator), as well as prepare the company constitution. You can arrange a local Notary to sign the deed of incorporation. You can find the nearest one in your area at www.notariado.org. This step takes between 1 and 3 days, depending on the Notary. You must supply the Notary with the original documents and a photocopy of: tax form 036, the certificate from the Registro Mercantil Central, the NIE and evidence of payment to the bank.

5. AEAT / Generalitat
With the original deed of incorporation obtained from the Notary you should then go to the tax authority to pay a stamp duty of 1% of the initial share capital. The deed will be stamped certifying this fact. This step should not take any longer than 2 hours. Do not forget to have with you your original documentation and a photocopy of the deed and your NIE.

6. RMC - Registro Mercantil Central
The deed has to be taken to the Registro Mercantil Central where it will be registered in the Spanish Register of limited companies. This step takes no less than 15 days: once registered, the original documents are returned. When you collect the original deed it will bear a certificate from the RMC stating the company is now registered.

7. AEAT - Agencia Estatal de Administración Tributaria
The next step in registering your company involves another visit to the tax office. This time it is to obtain the permanent código de identificación fiscal (CIF) at the hacienda after the completion of the incorporation process.

Newly incorporated companies must use the form 036 to request a tax identification number: the form is used to describe the business activity and other circumstances of the business. Do not forget to take along with you the original and a photocopy of the deed and the NIE.

8. TGSS - Tesorería General de la Seguridad Social
The last step of the registration process requires the company director to arrange social security and occupational accident insurance.

The director will have to comply with certain procedural formalities at a local office of the Ministerio de Trabajo y Asuntos Sociales (the Ministry of Labour and Social Affairs).

Although there are different options, the Director is the person registered as autónomo. The monthly payment for autónomos is about EUR235. You will need to complete this step using the original and a photocopy of the deed of incorporation, the NIE, form 036 and form TA 0521. You can obtain this last form at www.seg-social.es

Clearly, there are many legal issues that we have not considered.

If you are in any doubt about the process described, we strongly suggest you contact a professional - such as an economist or lawyer - to help you during the process to avoid mistakes.

More information:

Alex Chumillas
Tax Expert - Economist
Member of The Col·legi d’Economistes de Catalunya
Member of The British Chamber of Commerce in Spain

aamat@economistes.com
Telephone: +34 934 442 137
Mobile: +34 667 663 521