Everything you need to know if you are self-employed in Spain

29 May 2018 0 Comments Category: blog, expat guide

self employed

While the entrepreneurial environment in Spain is dynamic, there is a high failure rate for start-up businesses, with a third folding in the first three years. The biggest mistake most people make when deciding to set up a business in Spain is forgetting to budget for the 12 months or so that it takes to get the business off the ground.

There is also the seemingly impenetrable bureaucracy, which is hard enough for a fluent Spanish speaker to comprehend, let alone a fledgling newbie. To get through this, you will need a gestor, a paperwork-professional who will guide you through all the rules and regulations you will have to comply with.

The gestor is vital to proceedings, so make sure you find a highly-recommended one and don’t forget to add around €2,000 your budget to cover his or her costs. Once set up, you are advised to maintain a gestor at a cost of around €50 per month.

When you have decided on the type of business you want to set up, the next question is what type of business structure will best suit your business.

This is an important question in Spain as it depends on whether you need start-up capital or to employ staff, and is best discussed with an accountant (asesor).

In Spain there are four main types of business:

  • Autónomo
  • Sociedad Civil
  • Sociedad Limitada (SL)
  • Sociedad Anonima (SA)
  1. Autónomo.

To be autónomo, you need to make monthly contributions, by direct debit, to the Spanish social security office. These will be between €250-€300 per month and give you free entitlement to the local doctors and hospitals (but not dentists) and education. This is the minimum obligatory amount and you need to ensure that you have this put aside regardless of monthly earnings.

  1. Sociedad Civil

Is a partnership where several individuals come together to form a business. For this, you will need to draw up an agreement that is legally binding between yourself and your partners. No mínimum investment is required and any financial obligations or debts are divvied up between the partners.

  1. Sociedad Limitada (SL)

A limited liability company (more than 95% of new companies are SL). Requires capital of €3,000 into a nominated bank account. This will be returned once the company is set up.

  1. Sociedad Anonima (SA):

Requires returnable capital backing of €6,000.

Registering Your Business

If you are going to be operating your business from its own premises, you will need to register it by getting an opening license (licencia de apertura) that defines what it is and how it will operate. This comes from the town hall in the area where you are going to locate your business. If you are intending to open a restaurant or bar or anything serving food or drink, you will need to have a health license, which will require an inspection by local authorities.

Registering With The IVA Office (Agencia Tributaria)

All autonomo and businesses must register for IVA regardless of earnings. Once you have registered with the IVA you will receive an ID number called a CIF (thisis the same as the NIE but for businesses). The Agence Tributaria is responsible for taxing you on your business activities. IVA is chargeable either monthly or quarterly.

Registering With The Social Services Office

You need to register with the Social Services office in order for your business to make social security payments.

This varies on the type of business you have set up. If you are autonomo (freelance) and contribute for 25 years (recently revised from 15 years), you are entitled to a pension. If your business is a SL or SA, you will have to pay social security on behalf of your employees.

The Spanish tax year runs from the 1st January to the 31st December.

Funding A Business

Loans are available in Spain for locals and foreigners. The Instituto de Crédito Oficial is attached to the Ministry of Economy and Finance and exists to boost any economic activity that merits development or promotion.

For a more ‘peaceful’ life there is always the option of buying an existing business. The main benefits of this are that you can get up and running quickly and will already (hopefully) be making a profit and have a customer base. In order to do this, though, you will need to have substantial capital ready to invest. If you are interested in this route, you need to be aware that just because a business is operating does not mean it is legal.

If it is legal, it does not automatically mean that you will be able to obtain a license to operate it.

Also, do not always trust that the accounts you are issued with are the actual accounts for the business.

They might just be the accounts drawn up for the tax office. Finally, don’t forget to question why the business is being sold. Is there something wrong with it?

Due diligence is required every step of the way. Do not take anything at face value.

Working Hours In Spain

Depending on what type of work and where you are in Spain, a typical working day begins at eight am, stops for breakfast at nine, continues until two pm, stops for a lunch break from two pm until five pm, and then continues until eight pm.

In southern areas, the lunch break can be even longer, with work resuming at six pm until nine pm. A 40-hour week is typically expected, with 21 days of holiday a year.

Most of the country shuts down in August and when it comes to fiesta time and family occasions, you may as well shelve any plans of working, at least “hasta mañana”.

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