Lawyers in 45 Offices Across Spain
- How to set-up a limited company in Spain
as Self-employed in Spain
- Fiscal Obligations of Autonomos in Spain
- VAT in Spain
Assuming you have already decided on the type of business you want to run and where in Spain you wish to locate it, then the main decision you will need to make is whether you should set it up as a limited company or as a sole trader.
Both have benefits and drawbacks. Here we will look at the differences between the two so that you can decide on which is the most appropriate for your business in Spain.
Sole Trader v Limited Company
Sole traders in Spain are known as 'autonomos' and those who are just starting-out and where the income is likely to be low tend to choose this route.
Mainly because it is less
complex and more economical to both set-up and run.
For example, setting-up as an autonomo does not require
€3000 of capital as would be the case with a limited company
As in other countries, whether your business is classed as 'autonomo' or as a limited company there are a number of fiscal obligations that the owner of a business in Spain will have.
Most businesses will have an
obligation to make VAT (in Spain this is called IVA) and
Income Tax returns. Of course if you decide to create a
limited company then you will also have to make a company
tax return (impuesto de sociedades) as well as file the
annual accounts with the Company's Register.
A company will need to retain
up to 15% of any invoice presented to it by a
professional/autonomo and file a return.
These extra obligations mean that the cost of maintaining the company are higher than where a sole trader is concerned.
Social Security Obligations
As an autonomo or sole trader you will need to register with the local social security office and pay contributions each month. These contributions tend to be significantly higher than in other northern European countries with a current minimum of approximately €250 per month payment, regardless of income.
There are some reductions for those under 30 years of age or a temporary discount for example where the person has been unemployed and has decided to become self-employed.
In the case of a limited
company there is an obligation to make social security
contributions on behalf of an employee of 24% of their
income. Where there are no employees of the company i.e. a
single director company then that director must register as
an autonomo and pay those social security contributions.
Just as elsewhere, one of the major differences between the
two forms of business is that creating a limited company
ensures limited liability to the owner of the company. If as
a result of the operation of the company a financial
liability should arise, then often this is limited to the
amount of capital in the company.
As a matter of law in Spain the minimum level of capital
that any company can have at any time is set at €3000 though
this is sometiimes disrgarded by less scrupulous business
One of the major drawbacks of registering as an autonomo is
that you will be personally liable for any debts or losses
incurred by your business and any personal assets could be
at risk if your business is in financial trouble - either as
a result of damages owed to a client or failure to pay due
taxes and social security contributions.
How to contact myAdvocate
myAdvocate Spain can help you to start a business in Spain by assisting you with becoming registered as an autonomo or by setting-up a company in Spain as well as managing ongoing tax and fiscal obligations.
We can provide this service across Spain via our registered and reglated English-speaking consultants, lawyers and tax experts located in local offices across mainland Spain and the islands.
They will help you to maintain your business by handling your fiscal obligations such as quarterly tax and VAT returns as well as dealing with day-to-day communications from Hacienda and the Social Security Office.
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