If you are thinking of running a business in Spain, domiciled here or in your home country, you need to be prepared for a lot of paperwork and a fair amount of administrative fees. In cases like these, it pays to get things right the first time, so it is strongly recommended that you seek professional legal advice on the matter of running a business in Spain before you start the process.
Running a small business in Spain
In this section, we’ll assume that you want to set up a new small business or branch of an existing company that is domiciled in Spain. To do this, you must have legal permission to live and work in the country, which by and large is not an issue for citizens of other EU countries. You will need to apply for a foreigner’s tax ID number or NIE, however, regardless of whether your home country is in the EU or not.
Cost of running a business in Spain
The cost of running a business in Spain includes all of the red tape that you will need to get through before the company is even officially set up. Depending on whether you are an EU citizen or not, this may include visa and work permit application fees and the associated costs of getting documents officially translated, notary fees, etc. Likewise, there may be fees to register the company with the Mercantile Registry. If you are setting up a company as its own legal entity, the company will also need its own tax ID number, or CIF.
Once the company is legally established or you are registered as self-employed or autónomo, the cost of running a business in Spain has a few predictable aspects. On the one hand, if your company is paying any employees (even if it’s just you), it will need to pay the employer part of social security contributions. Autónomos, on the other hand, are required to pay both the employer and employee portions of social security, which is around €285 per month. However, new autónomos are given a heft discount for the first year and a half (80% for the first six months, 50% for the next six months, and 30% for the following six months).
Additionally, most business owners and self-employed people pay a monthly fee to a gestor who manages their business paperwork, taxes, etc.
Running a UK business from Spain
Living in Spain while running a business in the UK is tricky in terms of legal and tax obligations, but it is possible in some people’s cases. The most important thing to keep in mind in an arrangement like this is that the company (a Ltd. company, for example) is treated as a separate entity from you, the business owner (and possibly sole shareholder/operator). This means that the company’s income is subject to UK taxes, but your personal income paid out from your company is subject to Spain’s personal income tax (assuming you spend more than half the year in Spain).
For you to get paid, the setup is typically the following: your UK customers pay your UK business via its UK bank account, and the company then pays you a salary of your choosing, dividends, or some combination of salary and dividends. Company profits are taxed according to the UK corporate tax rate, so some people in this situation will take all profits as salary to avoid paying this UK tax. Definitely consult your solicitor and accountant regarding this matter.
Usually, this does not require you to register in Spain as autónomo or self-employed, since you will be receiving pay slips from a foreign company and would therefore be an employee of that company. Whatever salary you take from your UK business needs to be declared on your yearly Spanish tax return. However, you may also be able to register as autónomo separately from your work as an employee so that you can pay into the Spanish social security system and get access to public healthcare, pensions, and other benefits.