The Tyler Group Expat
Written by Jakeobe Zier
Starting a Business in Spain
The Tyler Group Expat Connections at Barcelona - Below is a detailed summary of the bureaucratic and legal hurdles faced by entrepreneurs wishing to incorporate and register a new firm in Spain. It examines the procedures, time and cost involved in launching a commercial or industrial firm with up to 50 employees and start-up capital of 10 times the economy's per-capita gross national income.
This information was collected as part of the Doing Business project, which measures and compares regulations relevant to the life cycle of a small- to medium-sized domestic business in 189 economies. The most recent round of data collection was completed in June 2013.
1.Obtain a certification of uniqueness of proposed company name (certificación negativa de la denominación social) from the Mercantile Register
According to article 5 of the Spanish Royal Decree 13/2010, the certification of uniqueness will be granted within one day if its application is done online. In this case, applicants will need a digital signature. Otherwise, if applied in person at the Mercantile Registry, it will take three days. Alternatively, it can be requested by regular mail.
Once the Registry issues the certification, the requested corporate name will be reserved for a maximum of 6 months from the certification’s date of issuance.
Each certification of uniqueness of the corporate name is valid for 3 months from its date of issuance. Furthermore, once the certificate's validity has expired (3 months), the certificate can only be renewed once, after which a new certificate must be requested.
The cost of the certificate is EUR 13.52 + VAT.
2.Open a bank account for the company; deposit capital in the bank and obtain a deposit certificate
The contributions can also be directly given to the notary public before whom the deed of incorporation is going to be granted, at the time of the granting, so that the notary can deposit them in the Company's bank account.
3.Grant a public deed of incorporation before a public notary
The public deed of incorporation must include (a) the identity of the company shareholders; (b) their will to incorporate the company; (c) the disbursement made by each of shareholder and the number of shares subscribed to by each; (d) the company bylaws; (e) the type of administrative body that will manage the company; and (f) the identity of its administrators or directors; (f) fiscal identification number for each shareholder and for each shareholder representative and director; (g) the certificate of uniqueness of the corporate name and the bank-issued certification must be attached to the public deed of incorporation.
It must be noted that Royal Decree -Law 13/2010, dated 13 December 2010, concerning measures for encouraging investments and employment, introduced new procedures for the incorporation of companies through electronic means. In the said procedures, the Notary Public directly requests the certificate of uniqueness of the corporate name on behalf of the shareholders. Furthermore, once granted, the public deed is sent by electronic means by the Notary Public to the Commercial Registry for registration. These procedures are only applicable to the incorporation of companies that fulfill certain requirements, such as, among others, having (i) a maximum share capital of EUR 30,000 (simplified incorporation procedure) or EUR 3,100 (express incorporation procedure), (ii) a management body other than a Board of Directors and (iii) use standard by-laws passed by official authorities. In the event the future company fulfills all requirements indicated by the said Royal Decree-Law and is incorporated through the aforementioned procedures, the Notary fees can be reduced to EUR 60 (express incorporation procedure) or EUR 150 (simplified incorporation procedure).
4.Submit Declaración Censal de Inicio de Actividad and obtain the Tax Identification Number (Numero de Identificación Fiscal, NIF) from the Delegación Provincial de la Agencia Estatal de la Administración Tributaria
The definite Tax Identification Number can only be obtained after the company has been duly registered in the Commercial Registry. Notwithstanding this, the provisional Tax Identity Number can be obtained from the Tax Authorities prior to the granting of the incorporation public deed through the filing with the Tax Authorities of (a) a declaration of the shareholders regarding their will to incorporate the company, (b) a copy of the original certification of uniqueness of the corporate name (see procedure 1 above), (c) copies of the identity documents of the shareholders, and (d) form 036 signed by the shareholder and the future director/s.
It must be noted that the Spanish Royal Decree 13/2010 (article 5) also allows the Notary granting the Public Deed of incorporation to companies that fulfill certain requirements to apply telemetrically for a provisional NIF to the Agencia Estatal de la Administración Tributaria. Once the Limited Liability Company has been incorporated the Registry will notify it to the Agencia Estatal de la Administración Tributaria which will notify the definitive status of the NIF. In this case, it is not necessary to provide the original of the identity documents (DNI or NIE). A copy of such documents is accepted.
Financial entities often request at least the provisional Tax Identification Number in order to open bank accounts where the initial share capital of the company can be deposited and, therefore, having the provisional Tax Identification Number is commonly a prior step to the granting of the public deed.
5.Obtain a tax declaration of exemption from the Dirección General de Tributos - Consejería Hacienda Comunidad Madrid
On December 3, 2010, Spain adopted Royal Decree 13/2010 whose aim is to support businesses, primarily small and medium enterprises, and remove obstacles to growth, competitiveness and job creation. According to article 3 of Royal Decree 13/2010, all operations regarding the incorporation, capitalization and maintenance of companies are exempt from the Asset Transfer and Legal Documented Acts Tax. This implies that limited liabilities companies are exempted from the payment of this tax to the Dirección Gral de Tributos - Consejería Hacienda Comunidad Madrid (1% of the capital of the company).
The application form (Form 600) to obtain a tax declaration of exemption has to be filed with the Autonomous tax authorities. Otherwise, the incorporation may be denied at the Company's registry. The Spanish Royal Decree 13/2010, allows the Notary, the interested party, the registrar or a third authorized party to electronically submit the corresponding application and taxes with the Agencia Estatal de Administración Tributaria (AEAT).
6.File the public deed of incorporation of the company for its registration with the Mercantile Registry.
The registration costs are based on variables such as the amount of the company share capital, the number of shareholders, and the type of administrative body. For example, for a company with share capital EUR 226,863 with five shareholders and five members of the board of directors, the registration fee would be about EUR 159.
Fee schedule for registration:
If company share capital does not exceed EUR 3,005.06: the fee is EUR 6.01.
- EUR 3,005.06 to EUR 30,050.61: 0.10%.
- EUR 30,050.61 to EUR 90,151.82: 0.08%.
- EUR 90,151.82 to EUR 240,404.84: 0.06%.
- EUR 240,404.84 to EUR 601,012.10: 0.038%.
- EUR 601,012.10 to EUR 1,202,024.21: 0.02%.
- EUR 1,202,024.21 to EUR 6,010,121.04: 0.009%.
- Over EUR 6,010,121.04: 0.005%.
In any case, the regulated applicable global tariff will not exceed EUR 2,181.67. According to Royal Decree 8/2010 of 20 May to fight crisis fees for public registrar have been reduced by 5%.
It must be noted that amendments introduced by Royal Decree -Law 13/2010, dated 13 December 2010, establish specific registration fees for certain companies incorporated through electronic means which are generally subject to a special regime and fulfill certain requirements (e.g. the share capital must not exceed EUR 30,000 and the shareholders have to be individuals). In such cases, registration fees can be lowered to EUR 40 or EUR 100.
Complementary to the registration fees, a provision of funds is also required when filing the incorporation deed with the corresponding Commercial Registry in order to cover the costs of publication of the registration in the Commercial Registry Official Gazette. At present, such provision of funds is set at EUR 55,10 for the Commercial Registry of Madrid.
Once the public deed of incorporation has been registered, the company incorporation will be published in the Official Journal of the Mercantile Registry. Upon registration, the company acquires the status of a legal entity.
7.Legalize company books
Legalizing the Company Books is a formal obligation but it is not a prerequisite to begin the company´s business (articles 329 to 337 of Commercial Registry Regulation "Reglamento del Registro Mercantil"). Only the Company Book that registers the Minutes of the shareholders, and the Board of Directors meetings precise to be legalized before use (Art 116 Mercatile Register Reglament). The other books can be legalized later (within 4 months after the closing of the economic year of the company), and can be legalized by electronic means or presented as physical books (Arts 329 and following Mercantile Register Reglament, and Instruction Ministry of Justice 31 dec 1999). Although this is not a step required to start a company, it is an ex post procedure required by law.
8.Submit a notification of start of operations (declaración responsable) to a private agency authorized by the municipality (ECLU)
On December 26, 2012, Spain adopted law 12/2012. This law removes the requirement for certain commercial activities to obtain a municipal license to initiate the execution of works and start operations. A company can start operations after submitting a simple notification (declaracion responsable sin certificado de conformidad) to the private agencies authorized by the Municipality (ECLU). Within 5 days, the ECLU will verify the documentation and conduct an ex-post inspection to ensure compliance.
9.File for social security and affiliate all workers with the local general treasury of social security (Tesorería General de la Seguridad Social)
Upon registration of the company with Social Security, a state supervisory number is issued and assigned to the company. The required documents are (a) the corresponding form; (b) a copy of the public deed of incorporation; (c) a photocopy of the applicant’s national identity document or power of attorney; and (d) the company tax identification number. Registration of the company and affiliation of all the workers must be made before starting any business activities.
In addition to the registration of the company, registration of each employee with the Spanish Social Security System is required by submitting the following documentation upon hire: (a) corresponding form (signed by both the company and the employee); (b) powers of attorney of the company representative; (c) a copy of the employee's national identity document (such as DNI, NIE, or passport); and (c) a copy of the company representative's national identity card.
Alternatively, the documents that are required in order to register employees with the Spanish Social Security System may be submitted using these new electronic procedures (Real Decreto 368/2010, de 26 de marzo por el que se regulan las especificaciones y condiciones para el empleo del Documento Único Electrónico (DUE)).
The Decree 68/2010 of March 26th, 2010 has led to the use of electronic means to start up any type of company. Consequently, the documents that are required in order to register employees with the Spanish Social Security System may be submitted using new electronic procedures.
10.Notify the Delegación Provincial de la Consejería de Trabajo e Industria
The company must keep a visits book (libro de visitas) at all times. Information that must be noted includes the details of the company and the work place and a description of its business activity.
The corresponding autonomous community must be notified within the first 30 days of the start of activities and the opening of the workplace. Every autonomous community has its own form. Some require that work injury and safety documentation (corresponding to the specific business or workplace in question) be filed along with the forms. Other forms and documents might be needed depending on the workplace activities. Pursuant to Spanish Labor Inspection's resolution of November 25, 2008, the company can now register through the Labor Inspection's visits book's electronic system.