Setting up and running a company in Spain involves certain expenses. As well as start-up costs, you will also be liable for annual payments such as taxes on economic activities, employees’ social security contributions and council tax on your premises.
In this guide, we list all the costs involved from day one of your company as follows:
Capìtal investment requirements
Most companies in Spain must register an initial investment and the amount varies depending on the type of company chosen.
No capital investment requirements
The following are exempt from initial capital investment:
- Self-employed (Individual Entrepreneur or Limited Liability Entrepreneur).
- Comunidad de Bienes
- Sociedad Civil
- Sociedad Colectiva
- Sociedad Comanditaria Simple.
Limited company capital investment requirements
The various types of limited companies in Spain such as Sociedad Limitada (SL) and Sociedad Limitada Nueva Empresa (SLNE) now have a minimum requirement of €1.
Corporation capital investment requirements
For any sort of corporation such as Sociedad Anónima (SA) and Sociedad Comandataria por Acciones (SCA), the minimum is €60,000.
Venture capital company investment requirements
Any kind of venture capital enterprise has a minimum requirement of €1.2 million for companies and of €1.65 million for funds.
Costs of setting up and registering your company
Unless you are self-employed or have set up an enterprise that is exempt from initial capital investment (see above), you must set up and register your company. Costs depend on the type of company – for example, expect to pay between €100 and €350 to register a limited company.
Note that there is no fixed price to constitute a company at a notary and there’s quite a lot of competition, so it pays to shop around or ask for recommendations. Note also that you must pay an annual fee to legalise the company paperwork such as accounts and minutes.
The company is liable for varying taxes, which depend mostly on the company’s annual turnover. They include:
Tax on Economic Activities
Known as the Impuesto sobre actividades económicas (IAE), this tax depends on:
- Type of company – the self-employed and civil companies are exempt provided their net annual revenue is less than €1 million.
- Municipality where the company is registered – not all municipalities charge IAE.
- Activity carried out – an amount of IAE is levied for each activity.
Unless you’re exempt, expect to pay from €120 a year up to thousands of euros.
Personal Income or Company Income Tax
If you’re self-employed or have set up a civil society, you will be liable for personal income tax (impuesto sobre la renta de las personas físicas/IRPF) at rates between 20 and 47% on your gross profits.
All other sorts of companies including limited and corporations are liable for Company Tax (impuesto sobre las sociedades/IS). This tax ranges from 25 to 30% of the company’s gross profits.
The majority of regions in Spain levy wealth tax (impuesto sobre el patrimonio) on assets owned by individuals, regardless of whether it forms part of their business activity. Madrid and Andalucia (from 2023) have abolished wealth tax and many regions apply generous personal reductions.
Value Added Tax
Value-added tax (impuesto sobre el valor añadido/IVA) is charged on almost all goods and services in Spain and 100% of the amount your company collects as IVA is payable to the Spanish Treasury.
However, a refund on IVA is available on company expenses that have the corresponding invoice.
Social Security contributions
If your company has employees, it will be liable for monthly social security contributions. The amount varies, but expect to pay the following:
- Self-employed individuals generally pay the minimum contribution (around €300 a month in 2022, from €230 to €420 in 2023).
- Companies generally pay 30 to 35% of the employee’s gross salary a month.
- Companies with interns (becarios) pay a flat rate of around €40 a month per intern.
Running a company necessarily involves everyday expenses that range from small outlays to large sums, again depending on the type of company and activity. These expenses may include:
Annual accounting and tax management
While it is possible to manage accounting and tax paperwork yourself, in practice, lack of time and knowledge make this impractical and most companies rely on experts. Expect to pay from €30 to €150 a month, depending on the volume of work involved.
Brand creation and intellectual property registration
Even the smallest companies need a logo and some sort of branding to operate. Fees for the design and set-up vary considerably. You may also want to register your brand/trademark at the Spanish, European and/or international level.
Fees for registration of your brand in Spain cost around €150, while European registration costs approximately €900. Note that to maintain the registration, you must pay for a renewal every ten years.
Expenses for premises
If your company owns or leases premises or land, you may be liable for the following costs:
- Property purchase tax and stamp duty – if you purchase the premises, you will be liable for transfer tax (impuesto sobre transmisiones patrimoniales) if it’s a resale property or VAT if it’s a new build (i.e. you’re the first owner) and stamp duty.
- Monthly rental or mortgage fees.
- Council tax or rates (impuesto sobre bienes e inmeubles/IBI).
- Licence to carry out designated activities – the amount depends on the activity and municipality, but it can be over €1,000 a year.
- Refuse tax.
- Utility fees (electricity, water, gas).
- Community fees if the premises form part of a community of owners.
- Insurance policy.
Expenses when you sell the premises
When the company sells the premises, it will also be liable for capital gains in two forms:
- Any profit made on the sale is taxed within Company Tax (Impuesto de Sociedades) at 25%.
- Payment of capital gains on the increase in value of urban land (Impuesto sobre el incremento de valor de los terrenos de naturaleza urbana/IIVTNU). This tax is levied by the municipality where the premises are located.
Expenses for vehicles
If the company relies on vehicles to operate, the following expenses will apply:
- Purchase, rental or leasing of the vehicles.
- Running expenses such as fuel, mechanical services, tyres etc.
- Municipal vehicle tax – charged by the municipality and usually paid in quarterly instalments.
- Vehicle insurance policy.
Miscellaneous everyday expenses
And last, but not least in our list of the costs of setting up and running a company in Spain are the following:
- Telephone and internet services.
- IT expenses such as website domains, hosting and maintenance, and hardware and software equipment.
- Marketing expenses including advertising, website, signage, company literature and social media services).
- Office and work material, equipment and tools.
- Travel and per diem expenses for you and your employees.
Get expert advice
If you’re thinking of setting up a company in Spain or already have one, but need advice about running up, get in touch with our team. They’re experts in all aspects of company establishment and management and are available to help you now.
We look forward to hearing from you!