Starting a business in Spain? Here are the key legal hurdles you'll face:
- Choosing a Business Structure: Most opt for Limited Liability Company (SL) - €3,000 min capital, 25% tax rate
- Navigating Taxes: Corporate tax 25% (15% for new businesses), VAT 21% standard rate
- Complying with Labor Laws: Strict rules on contracts, working hours, employee rights
- Protecting Intellectual Property: Register trademarks, patents, designs
- Handling Customer Data: GDPR compliance crucial, hefty fines for violations
Quick Comparison of Business Structures:
| Type | Liability | Min. Capital | Tax Rate |
|---|---|---|---|
| Autónomo (Sole Trader) | Unlimited | €0 | Personal income tax |
| SL (Limited Liability) | Limited | €3,000 | 25% |
| SA (Public Limited) | Limited | €60,000 | 25% |
New Spain Startup Law (2023) eases some rules for qualifying businesses. Get expert help early to navigate these challenges and set up for success.
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Picking a Business Type
Choosing your business structure in Spain impacts taxes, liability, and operations. Here are the main options:
Sole Trader (Autónomo)
The simplest start:
- You're on the hook for all debts
- No minimum capital needed
- Pay personal income tax and charge VAT
Limited Liability Company (SL)
Most popular choice. Why?
- Your liability is capped at your investment
- €3,000 minimum capital
- 25% tax rate (15% for first two profitable years)
Public Limited Company (SA)
For bigger businesses:
- Shareholders' liability limited to investment
- €60,000 minimum capital
- 25% tax rate
Quick comparison:
| Type | Liability | Min. Capital | Tax Rate |
|---|---|---|---|
| Autónomo | Unlimited | €0 | Personal |
| SL | Limited | €3,000 | 25% |
| SA | Limited | €60,000 | 25% |
Other options include partnerships, cooperatives, and branch offices.
"The SL is the go-to choice for most entrepreneurs in Spain. It offers a good balance of protection and flexibility", says Sergio Eguiguren, a legal expert in Spanish business law.
Pick what fits your business best. Each structure has its own rules and perks.
2. Understanding Taxes
Taxes in Spain can be tricky. Here's what you need to know:
Corporate Income Tax (CIT)
Most companies pay 25% CIT. But new businesses get a sweet deal:
- 15% rate for your first two profitable years
File your CIT return within 6 months and 25 days after your accounting period ends. Pay in April, October, and December.
Value Added Tax (VAT)
Spain has three VAT rates:
| Rate | Applies To |
|---|---|
| 21% | Most goods and services |
| 10% | Hotels, restaurants |
| 4% | Basic foods, books |
File VAT returns:
- Quarterly if you make under €6 million yearly
- Monthly if you make over €6 million
Personal Income Tax (PIT)
Self-employed? Here are the 2024 PIT rates:
| Income (EUR) | Tax Rate |
|---|---|
| 0 - 12,450 | 19% |
| 12,450 - 20,200 | 24% |
| 20,200 - 35,200 | 30% |
| 35,200 - 60,000 | 37% |
| 60,000 - 300,000 | 45% |
| Over 300,000 | 47% |
Self-Employment Tax
Self-employed? You'll pay monthly social security:
- Minimum: €230.15
- Maximum: €1,477.52 (based on income)
"The new system for self-employed workers, starting January 2023, aims to make payments fairer by basing them on actual income", says Sergio Eguiguren, a Spanish business law expert.
Economic Activity Tax (IAE)
Small businesses making under €1 million yearly? You're off the hook.
Startup Tax Perks
New startup law (from January 2023) offers:
- 15% CIT for qualifying startups
- 15% income tax for non-residents in startups
- €50,000 tax-free stock options for startup employees
3. Following Work Laws
Spain's work laws are strict. Here's what you need to know:
Employment Contracts
For jobs over 4 weeks, you MUST give employees a written contract. Key points:
- Give the contract within 2 months of start date
- Register a summary with the Employment Office
- Include job details, pay, hours, and leave
Working Hours and Leave
Spanish law sets clear work time rules:
- Max 40 hours per week (average)
- Max 80 hours of overtime per year
- Min 23 business days of paid leave annually
Employee Rights
Spanish workers have strong protections:
- No unfair dismissal
- Collective bargaining rights
- Guaranteed minimum wage
"At-will employment doesn't exist in Spain. Employees can only be dismissed without cause during probation", - Sergio Eguiguren, Spanish business law expert.
Social Security and Taxes
Employers must:
- Withhold taxes from employee pay
- Pay about 29.9% of gross salary for social security
Staff Representation
Even small companies need employee reps:
- Required for 10+ workers
- Can be elected reps or union delegates
Termination Rules
Firing isn't simple:
- 15 days' notice (except during probation)
- Severance: 20 days' pay per year worked (max 1 year's salary)
Remote Work
New laws protect remote workers:
- Right to disconnect after hours
- Reimbursement for work-from-home costs
Key Takeaways
- Get expert help
- Budget for higher costs
- Keep detailed records
- Stay updated on industry rules
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4. Protecting Your Ideas
In Spain, you need to protect your inventions, brands, and creative work. Here's how:
Copyright Protection
Your work is protected as soon as you create it. But:
"Filing a work in the Intellectual Property Registry can provide stronger evidence in claims against third parties", says the Spanish Patent and Trademark Office.
Protection lasts 70 years after you die. It covers literary, artistic, and scientific works. You don't need to register, but it's a good idea.
Trademark Registration
Got a brand name or logo? Register it. It stops others from using your brand, lasts 10 years (you can renew), and covers all of Spain.
Here's what it costs:
| Item | Cost |
|---|---|
| Professional fee (one class) | $210 |
| Government fee (one class) | $137 |
| Each extra class (professional) | $92 |
| Each extra class (government) | $90 |
Patent Protection
For new inventions, get a patent. It gives you exclusive rights for up to 20 years.
To get one:
- Check if your idea is new
- File with the Spanish Patent and Trademark Office
- Wait for approval (it takes a while)
Design Rights
Protect how your product looks with design rights. This covers 3D objects (like furniture) and 2D designs (like patterns). You need to register with the Spanish Patent and Trademark Office.
Tips for Entrepreneurs
- File ASAP
- Cover all parts of your idea
- Think about hiring an IP lawyer
- Watch for copycats
- Keep records of your creative process
5. Handling Customer Data
In Spain, customer data is a big deal. The GDPR sets strict rules for using personal info. Here's what you need to know:
GDPR Basics
The GDPR applies to all companies handling EU citizens' data. It covers names, addresses, ID numbers, and even IP addresses. You need clear consent to collect data, and people have more control over their info.
Key Steps for Compliance
1. Get Clear Consent
Ask before you collect. Make it easy to understand and opt-out.
2. Appoint a Data Protection Officer (DPO)
If you handle lots of data or sensitive info, you'll need a DPO.
3. Keep Records
Document everything about data. Be ready for audits.
4. Secure the Data
Use strong security to protect customer info.
5. Report Breaches Fast
Data leak? Tell authorities within 72 hours.
Penalties for Non-Compliance
The Spanish Data Protection Agency (AEPD) doesn't mess around. In 2023:
| Sector | Total Fines |
|---|---|
| All sectors | €12,907,000 |
| Financial institutions | €5,321,000 |
Google LLC got hit with a €10,000,000 fine for mishandling data.
Tips for Entrepreneurs
- Train your team on data protection
- Update and clarify your privacy policies
- Be extra careful with sensitive data
- Don't keep unnecessary data
- Check your partners' GDPR compliance
Remember: protecting customer data isn't just about avoiding fines. It's about building trust with your customers.
Wrap-up
Starting a business in Spain? Great opportunities, but legal hurdles too. Here's the rundown:
1. Business Type
S.L. (Limited Liability Company) needs €3,000 minimum capital.
2. Taxes
Complex system. New Startup Law cuts corporate tax from 25% to 15% for eligible startups.
3. Work Laws
Foreign nationals need work permits.
4. Intellectual Property
Spain follows EU standards.
5. Customer Data
GDPR compliance is a must. Fines can be big.
Spain Startup Law 2023 changes:
| Benefit | Details |
|---|---|
| Tax Rate | 15% (down from 25%) for up to 4 years |
| Tax Debt | Deferrable for first 2 profitable years |
| Investor Deductions | Up to €100,000/year (from €60,000) |
| Company Registration | Now 6 hours (was 5 days) |
These changes make Spain more startup-friendly. But the legal maze is tricky.
"It costs more for entrepreneurs to worry about legal issues later than to handle them from the start." - Sergio Eguiguren, Legal Expert
Smart advice. Getting legal help early saves time, money, and stress. It's not just about dodging fines - it's about setting up for success from day one.
Help for Business Owners
Starting a business in Spain isn't easy. But you've got options for support:
Find My Lawyer: This tool connects you with Spanish business law experts. They'll help you:
- Choose your business structure
- Handle taxes
- Protect your ideas
- Follow data privacy rules
One-Stop Shops: Some firms do it all:
| Firm | What You Get |
|---|---|
| Delvy | • 10+ years experience • Full startup support • Ongoing legal help |
| Lawants | • Startup law pros • License & permit help • Market insights |
| LEGID | • Individual & startup support • Quality legal services |
"Need help setting up in Spain? Contact our Spanish lawyers today." - Giambrone & Partners
Don't go it alone. These resources can make your Spanish business journey smoother.
