How we can help your business makes its money transfers
One of Europe’s healthiest economies, business-friendly structural reforms, and growing investor interest are only a few reasons to consider doing business in Spain. A strategic location and strong trade partnerships are a couple more.
Industries such as automobiles, pharmaceuticals, import/export, logistics, agriculture, wine, and tourism offer diverse opportunities for investment. You may also find business opportunities in the country’s robust technology industry or its powerful maritime economy.
Thanks to the government’s introduction of regulatory reforms, among which are increased incentives and eased business regulations, foreign investment is easier and more attractive. As a result, direct foreign investment (FDI) continues to grow. This is attested to by several editions of the UNCTAD World Investment Report, and by a 52% increase in FDI due to acquisitions during 2020, the year in which global FDI plummeted by 42%.
Regulatory reforms are not the only reason for greater investor interest. Foreign companies doing business in Spain can benefit from the country’s excellent infrastructure, a strong tourist economy, an overhauled financial sector, and its emphasis on renewable energy and global research. Other attractive elements include proximity to many Spanish multinational companies, and the country’s centuries-old cultural ties with Latin America.
Spain’s commitment to healthy economic growth and encouraging investment is not limited to the reforms mentioned above. The government has also begun working on improving employment conditions around the country, diversifying the national economy through innovation, investing in national research and development, and giving local regions greater autonomy.
You can set the prevailing exchange rate for future payments with a currency forward contract. Your rate therefore will not be affected by the market’s upturns or downturns. While this lets you plan with greater certainty, it also means that, at the time of settlement, you will receive the set rate even if the exchange rate had moved in your favour.
A spot contract may be the best option if you need to make a payment in Spain as a matter of urgency. The contract lets you make the payment at the current exchange rate. You do not need to set exchange rate targets that may not be possible to meet.
We offer three types of FX orders: limit orders, stop loss orders and OCOs. You can use limit orders when you want to buy euro at a better value than the exchange rate at that time.
Guide to business in Spain for foreigners
Is Spain a good place to start a business?
It is a good country in which to start a business, although not without its challenges. Even though reforms have made it easier, dealing with bureaucracy is still part of doing business in Spain.
In addition to investing in enterprises in local industries, you could cultivate opportunities in other regions, as the country has access to European, Middle Eastern, and North African (EMEA), as well as Latin America markets. Some of the many bilateral agreements assure reciprocal promotion and protection of interests, while others prevent double taxation. The Canary Islands offer a strategic base for doing business in other African regions.
What are some major industries in Spain?
Spain is a hub for imports and exports – Valencia is the busiest port in the Mediterranean and the fifth-busiest in Europe. Fossil fuels, chemicals, machinery and consumer goods are imported from across the world, primarily from Germany, France and China. The key exports reflect the diversity of industry here and include pharmaceuticals, automobiles, wine, citrus fruits and other agricultural goods.
Business here is varied and focused on a number of growing markets. As well as agriculture, manufacturing, energy and electricity are major industries in Spain and tourism is a major contributor to the economy, accounting for 11% of GDP.
If you’re looking for an opportunity to grow a tourism business in Spain, you’ll benefit from a ready-made market. More than 75 million tourists visit the country each year and it is the world’s third most popular tourist destination. If you’re starting a tourism business in Spain, you’ll also benefit from the fact that the World Tourism Organization HQ is located here, providing a great opportunity to build your business with a strong and well-connected network.
While one of the biggest industries here, tourism isn’t the only option is you’re looking to start a business there. Automobiles and pharmaceuticals are among the leading exports in Spain; the country is the second-largest car manufacturer with 2.8m units a year and the pharmaceutical market is valued at USD25 billion. Energy is also a growing industry in Spain; the country has invested heavily in renewables and while only 3% of the electricity produced is currently exported, this is an area that looks set to grow.
The cost of starting a business in Spain
If you’re concerned about costs, the cheapest way to get started is to form an unincorporated company, either as a sole trader (empresa individual) or partnership (sociedad civil). With these arrangements, there are no minimum investment requirements and there is significantly less red tape than registering a limited company.
How to open a business in Spain
EU citizens can register a business in Spain, with relative ease, whether this is setting up as a partnership or as a sole trader. However, expats outside the EU will require a work permit to be able to move to Spain and register a business. Work permits must be renewed every year, but after five years you can apply for residency and will no longer need to apply on an annual basis if this is granted.
Registering as a limited company in Spain has a minimum financial requirement, so you’ll need to be able to demonstrate that you have the resources to back your business. The sociedad limitada or S.L. Incorporation is the most common form of limited company; the structure protects business owners from personal liability in the event of bankruptcy, but does involve additional tax, accounting, and mercantile obligations including annual corporation tax returns and statutory accounts. There are additional declarations required, including filing VAT returns (IVA). The rules are less stringent for sole traders and partnerships, and as an individual you can also set up as a freelancer, known in Spain as profesionales autonomos..
Visit our Brexit Hub to stay up to date with the latest developments regarding the UK’s relationship with Spain and what that will mean for businesses going forward.
What documents do I need for registering a business in Spain?
As well as EU citizenship or a valid work permit, you will also need the following to start a business in Spain:
- Foreigner’s tax identification number (NIE)
- Registration to the Mercantile Registry (Registro Mercantil Central or RMC)
- Company tax identification number (CIF)
- A business bank account with a minimum deposit of €3,000
- Signed deed of incorporation
- Social security registration
If you’re planning to open a subsidiary business in Spain, the process is simpler, but you will need to include the following in your application:
- A copy of the main company’s certificate of incorporation and certificate of good standing
- Notarized power of attorney
- Spanish tax identification number (NIE)
- A member of staff at the Spanish branch to be a resident in Spain, who will agree to be liable for any company debts and tax payments
What is the corporate tax in Spain?
The general rate of corporation tax is 25%, however other taxes may also apply depending on the nature of your business and industry as well as if your organisation is a resident company in the country. It’s worth taking the time to research your corporate tax obligations for conducting business in Spain, to make sure you have all bases covered and will be paying the correct figure.
What are the challenges of doing business in Spain?
A review from World Bank and International Finance Corporation ranked Spain 136th in the world for how simple it is to start a business, with ten procedures - each with several stages – to complete. Some businesses have found the level of bureaucracy and red tape to be one of the main challenges of doing business here, which is why it’s worth checking all the requirements before you make the move. Construction permits take 182 days to be delivered and require several inspections and certificates.
Connection to the national grid can be high cost initially and requires permission from the local council. Property registration requires five separate procedures and while taxation on profits is relatively low compared to elsewhere in the world, labour tax and contributions are higher than the OECD average and a survey estimated that it takes 167 hours a year and eight separate payments to meet all tax requirements.
What is the business environment in Spain like?
When it comes to work culture, Spain is a diverse and multicultural society. Personal relationships are important in the business environment so take the time to build a strong network and become familiar with the business customs. When it comes to employing staff, most employees work a 40-hour week, have 30 days’ annual leave and are made 14 salary payments per year – one a month, with additional payments in July and December.