Any EU citizen is entitled to start a business in Spain. As with setting up business anywhere though, it is essential to do your research to check there will be demand for your business. Although there are similarities between the British and Spanish markets, do not take it for granted that what sells at home will sell in Spain.
One essential piece of documentation you will need is the NIE (Número de Identidad de Extranjero), an identification number for foreigners living in Spain.
Apply for it at the Oficina de Extranjeros at the local Policía Nacional (police headquarters). You will need your passport plus two photocopies and two passport size photos of yourself. The process should be straightforward and you will receive your NIE within a month.
Once you have the NIE, you can buy property, open a bank account, apply for a business permit and pay taxes.
Registering your business
To obtain an opening permit (Licencia de Apertura), you have to register with the local town hall, outlining what your business is. Furthermore, you need to also register with the Spanish Inland Revenue, the IVA. A good level of Spanish-speaking is required to fill in these forms.
It is worth noting that in the past, tax evasion was rife in Spain, but in recent times, the regulations have been greatly tightened and there are severe penalties for incorrect filing.
When deciding on your business structure, you can choose from setting up as a sole trader (empresa individual) with the business registered in one person’s name; a partnership of two or more individuals (sociedad civil); a limited company (sociedad limitada); or a larger company with shareholders (sociedad anonima).
You will need to pay social security for yourself and for any employees. These payments will entitle you to the use of the local health service and will contribute to a state pension (after 15 years of paying in).