Steps to set up a company in Spain

If you are thinking of setting up a company in Spain, today we are going to tell you step by step how you can do it.

This may seem a complex process at first, but by following the series of structured steps in this article, it is possible to do it efficiently and safely.

In our Ibercenter flexible workspaces we have had the opportunity to see the birth of several companies and we have experience in what needs to be done and with this detailed guide, we explore all the steps necessary for you to set up a successful business.

1. Define the business idea

The first step in setting up a company in Spain is to have a clear and viable idea. To do this, it is necessary to:

• Identify a need in the market: Detect opportunities where your product or service can satisfy unmet demands or improve existing ones.
• Analyse the competition: Study other companies offering similar products or services to identify competitive advantages and areas of differentiation.
• Determine the target audience: Know who your potential customers will be, their demographics, behaviours and preferences.

To do this we recommend that you use the Canvas business model, which is a very powerful tool for defining your business idea.

2. Drawing up a business plan

A business plan is a document that describes in detail how the business will operate. It should include:

• Executive summary: Overview of the business, mission, vision and objectives.
• Market analysis: Industry research, trends, customer segmentation and competitor analysis.
• Marketing and sales plan: Strategies to promote and sell products or services.
• Operational plan: Location, technology, processes and human resources required.
• Financial plan: Financial projections, sources of financing, profitability analysis and cash flow.

This plan will serve as a roadmap and will be essential to attract investors or apply for funding.

3. Choosing the legal form of the company

Choosing the right legal form for a company in Spain is a key decision that affects legal liability, taxation, administrative requirements and business management costs. Here are the main factors to consider:

1. Factors to consider:
2. Number of partners: Whether you start alone or with partners will influence the choice.
3. Liability: Whether you want to limit your liability to the capital provided or take on unlimited liability.
4. Initial capital: Some forms require a minimum capital.
5. Taxation: Differences between Personal Income Tax (for self-employed) and Corporation Tax (for companies).
6. Formalities and costs: Some types require more formalities and accounting obligations.
7. Main legal forms in Spain:

(b.1) Individual Entrepreneur (Autónomo).

• Ideal for: Small businesses or self-employed professionals.
• Liability: Unlimited (you are liable with your personal assets).
• Taxation: Personal Income Tax (according to profits).
• Minimum capital: Not required.
• Disadvantage: Greater personal risk in case of debt.

(b.2) Limited Company (SL)

• Ideal for: Small and medium-sized enterprises (SMEs).
• Liability: Limited to the capital contributed.
• Taxation: Corporation Tax (fixed rate of 25%).
• Minimum capital: €3,000.
• Disadvantage: More formalities than a self-employed person.

(b.3) Public Limited Company (SA)

• Ideal for: Large companies with the intention of attracting investment.
• Liability: Limited to the capital contributed.
• Taxation: Corporation Tax.
• Minimum capital: €60,000, paying up at least 25% at the start.
• Disadvantage: High incorporation costs and stricter requirements.

(b.4) Cooperative Society

• Ideal for: Companies with a philosophy of cooperation between partners.
• Liability: Limited (depending on the articles of association).
• Taxation: Tax benefits and Social Security advantages.
• Minimum capital: Variable according to the autonomous community.
• Disadvantage: Greater complexity in management.

(b.5) Civil Society

• Ideal for: Associations of self-employed persons with a common objective.
• Liability: Unlimited.
• Taxation: Personal Income Tax or Corporation Tax if it has a commercial structure.
• Minimum capital: Not required.
• Disadvantage: You are liable with your personal assets.

• How to choose the best option?
• If you are looking for simplicity and speed, choose Autónomo.
• If you prefer limited liability, choose SL.
• If you are planning a large business with investment, the best option is SA.
• For collaborative projects, consider a Cooperative or Civil Society.

If you need more specific advice, the ideal is to consult a manager or lawyer specialised in commercial law.

4. Apply for negative certification of the name

Before registering the company, a negative certification must be applied for from the Central Commercial Register to ensure that the chosen name is not in use.

Steps to apply for negative certification of the company name:

a. Go to the website of the Central Mercantile Registry

• Visit the official website: www.rmc.es
• In the menu, look for the option “Company Names”.

b. Fill in the application form

• You must propose up to 5 names in order of preference.
• The name must be original and not already registered.
• Indicate whether the company will be an SL, SA, etc.

c. Pay the fee

• The approximate cost is 16€ – 20€ (depending on format and delivery).
• You can pay by credit card or bank transfer.

d. Receive the certification

• Response time: Approximately 1-3 working days.
• If the name is available, you will receive the certificate.
• If it is not available, you will have to choose another name.

e. Validity and use

• The certificate is valid for 6 months.
• You have 3 months to file the deed of incorporation with the notary.

Useful tips

• Use an original name and check similar names in the RMC before applying.
• If the name is rejected, you can reapply with new options.
• This is a compulsory procedure for incorporating a company in Spain.

5. Drafting the articles of association

The articles of association are the rules that will govern the operation of the company. They must include:

• Company name: Name of the company (must coincide with the Negative Certificate of the Mercantile Register).
• Corporate purpose: Description of the activities to be carried out by the company. It should be as broad as possible within the main activity.
• Registered office: Tax address of the company in Spain.
• Duration: Normally indefinite, unless otherwise specified.
• Capital and shares:
  • For an SL, the minimum is €3,000, divided into shares.
  • In an SA, the minimum is €60,000, divided into shares.

• Administrative bodies: Indicate the type of administration:
  • Sole administrator.
  • Joint and several or joint administrators.
  • Board of Directors.

• Form of adoption of resolutions: Majorities required at shareholders’ meetings.

Transfer of holdings/shares: Restrictions or requirements in the purchase and sale of shares.

• Cessation and appointment of directors: How and when they can be removed or appointed.
• Dissolution of the company: Conditions under which the company can be dissolved.

1. Key tips for good drafting

Use clear and precise language. Avoid ambiguities that could lead to conflicts.

Tailor the bylaws to your type of business. Do not copy standard models without reviewing them.

Define internal rules well. Especially in the entry and exit of partners or distribution of profits.

Consult a lawyer or manager. It will help you avoid legal problems in the future.

Ensure flexibility in the corporate purpose. To avoid future modifications if you expand your activity.

b. Where to register the articles of association?

Notary: They are included in the deed of incorporation and must be signed before a notary.

Mercantile Register: The company does not officially exist until it is registered in the Mercantile Register of the province.

Tax Office: Once registered, you can apply for the definitive NIF and start the activity.

Drawing up good articles of association avoids legal problems and conflicts between partners in the future.

6. Executing the public deed of incorporation

Now it is necessary to go to a notary to formalise the incorporation of the company by means of a public deed.

To appear before the notary, all the founding partners must bring with them:

• Negative certificate from the RMC.
• Bank certificate of the share capital.
• Articles of Association.
• DNI/NIE of the partners.

The notary draws up and signs the Public Deed of Incorporation, which formalises the creation of the company.

Payment of the Transfer Tax and Stamp Duty (ITP-AJD).

There are exemptions in most cases, but it is compulsory to file Form 600 with the regional tax authorities.

7. Obtaining the provisional tax identification number (NIF)

Once the deed has been registered, the definitive NIF is requested from the Tax Agency, and you can now operate legally as a company.

8. Register the company in the Mercantile Register

Registration in the Commercial Register confers legal personality on the company and must be carried out within one month of obtaining the public deed.

Estimated time of the process

Between 2 and 4 weeks, depending on the workload of the Commercial Register.

9. Obtaining the definitive NIF

After registration in the Commercial Register, the documentation is submitted to the Tax Agency to obtain the definitive NIF.

Within 6 months of obtaining the provisional CIF, go to the Tax Agency with:

• Form 036 (marking “Request for definitive NIF”).
• Deed of incorporation registered in the Mercantile Register.
• DNI/NIE of the legal representative.

📌 The definitive NIF is obtained, with which the company can now operate without restrictions.

Useful advice:

• Do not wait until the last minute. If the provisional CIF expires, the company could become inactive.
• Check that the company is correctly registered in the Mercantile Register before applying for the definitive CIF.
• Consult a manager or advisor to avoid errors in the documentation.

10. Registering with the tax on economic activities (IAE)

The company must register under the corresponding IAE heading, which classifies the economic activity to be carried out.

Steps for registering with the IAE (IAE)

1. File Form 036 or 037 at the Tax Agency (Agencia Tributaria)
2. It is used to declare the registration in the business census and choose the corresponding IAE epigraph.
3. It can be filed in person or online with a digital certificate.

• Choose the activity epigraph
• The IAE classifies activities in epigraphs according to the type of business.
• They can be consulted at the Tax Agency (List of IAE headings).
• It is possible to register in several epigraphs if you carry out different activities.

• Non-exempt companies: File Form 840.
• If the company’s turnover exceeds 1 million euros, it must file Form 840 with the Tax Authorities.
• This is done in the first 30 days of activity or in December if you lose your exemption.
• IAE is paid annually and varies according to the activity and the municipality.

When do I have to modify or deregister from the IAE?

• Change of activity: File a Form 036 or 840 if you change epigraph.
• Cessation of activity: File the IAE deregistration within 1 month of closing.

Quick summary

• Self-employed and SMEs with turnover <1 million euros: Register with the Inland Revenue using Form 036/037 (but without paying IAE).
• Companies >1 million euros: File Form 840 and pay the tax.
• Correct epigraph: Check the classification carefully to avoid tax problems.

11. Register the company with the social security authorities

Before hiring employees, the company must register with the Social Security and obtain a Contribution Account Code (CCC).

Steps to register a company with Social Security

1. Obtain the definitive Tax Identification Number (NIF)

• Before registering, the company must be incorporated and have the definitive NIF.
• This is requested at the Tax Agency after registering in the Companies Register.

2. Submit the application for registration

This is done at the General Treasury of the Social Security (TGSS) in the following ways:

• In person: At a Social Security office.
• Online: Through the CASIA system or the Electronic Headquarters (www.seg-social.es) with a digital certificate.

3. Necessary documentation:

• Model TA.6 – Company Registration Application.
• Deed of incorporation of the company and its registration in the Mercantile Register.
• Company’s definitive Tax ID number.
• DNI/NIE of the legal representative and powers of attorney if applicable.
• Obtain the Contribution Account Code (CCC).
• This is the number that identifies the company in the Social Security.
• If the company has work centres in different provinces, you will need one CCC per province.

4. Affiliation and registration of workers

If the company is going to hire employees, it must:

• Register the workers with the Social Security using Form TA.2/S.
• Register in the RED System, which is obligatory for the telematic management of contributions and affiliations.

5. Register with a Collaborating Mutual Society

• It is compulsory to choose a Mutual Society for Occupational Accidents and Occupational Diseases to cover occupational risks.
• It is formalised using Form TA.16.

Deadlines and advice

• Registration must be done before hiring any worker.
• If you are the sole administrator and do not hire employees, you can register as self-employed without this procedure.
• Consult a manager to avoid errors in the process.

Once the company is registered with the Social Security, you can legally operate and hire employees.

Conclusion

Starting a company in Spain requires a few essential administrative and legal steps. However, one of the most important decisions is to select a suitable workspace for the company. In this sense, Ibercenter is the best option for domiciling your company and starting your activity in a professional, flexible and fully equipped environment.

With offices in Azca, Gran Vía and Velázquez, Ibercenter offers private offices, coworking spaces, meeting rooms and virtual offices with all the necessary amenities to guarantee a successful business start-up. In addition, having a prestigious management and a comprehensive management service will allow you to focus on growing your business without worrying about infrastructure.

If you are looking for the best place to establish your company in Madrid, Ibercenter is the ideal choice. We invite you to visit our facilities and discover how we can help you take your business to the next level.