What’s the cost of setting up a business in Spain?
If you’re planning on starting any sort of business in Malaga, you’ll want an idea of how much it’s going to cost you. There are a number of steps that require some sort of expenditure and in this article, we run through the main ones, both for individuals setting up as self-employed and for companies. Read on for detailed information on the cost of setting up a business in Spain.
Did you know?
As always with anything to do with Spanish paperwork, you can save time, stress and energy if you use the services of a professional (legal, fiscal or administrative) to help you. Since time always equals money in business, using professional services will ultimately save you money.
Instead of spending hours trying to set things up yourself, let the professionals do their thing while you do yours!
The costs of setting up as self-employed in Spain
When you become self-employed in Malaga, you’ll find that as well as paperwork, certain costs are involved. They include the following:
Monthly social security payments
Until 2031, Spain is phasing out its fixed-rate and replacing it with a 15-tier contribution system that varies according to your earnings (see table below). To choose your tier, forecast your net earnings for the calendar year and subtract expected expenses (add 7% of the total for general expenses), Divide the resulting figure by 12 to see which tier is yours.
For example, if your projected earnings are €30,000 and your total forecast expenses are €3,000, your expected monthly income is €2,250 so your tier is €2,030-2,300 and your social security payment €320 a month.
You can change your tier every two months if your income goes up or down. You can change it online – click on Acceder and login. The change comes into effect up to two months later. For example, if you change between 1 January and 28 February, the new contribution is valid from 1 March.
Discounts: The newly self-employed in Malaga (or if you haven’t been self-employed for at least two years in Spain) get a discounted rate. You pay €80 a month for the first 12 months and then move onto the rates in the table above.
Licence for premises
If your self-employed business in Spain involves premises, you need an opening licence. The cost varies depending on the council, but in Malaga, for example, a licence costs from €400 to €800. Expect to pay around €500 for the licence to open a shop or office, for instance.
You can of course do the paperwork yourself and save paying the following costs. However, employing an expert to do it for you will save you invaluable time (and stress), which you could spend on growing your business.
- Signing up with the tax office – expect to pay between €50 and €100 for someone to do this for you.
- Signing up for social security payments – costs range from €40 to €100 for this service.
- Applying and obtaining an opening licence for premises – costs start at €50.
The costs of setting up a company in Spain
If your business interests involve setting up a company, it’s considerably more expensive than being self-employed. Expect the following costs:
Minimum set-up capital
Until October 2019, at least €3,000 capital was required, although of course you get this back if you dissolve the company. However, this requirement changed in line with the government’s objective to streamline business set-ups.
As a result, you can now set up a company in Spain for just €1. However, this minimum amount comes with two conditions:
- You must put aside 20% of the company’s profit as you earn it until it reaches €3,000. This forms part of the company capital and acts as a ‘legal reserve’.
- If your company fails and its capital is not enough to pay off its debts, you and other shareholders must pay the difference up to €3,000.
Company statutes and deeds
One of the most important parts of setting up a company since the statutes and deeds lay out the road map for the company and dictate what you can and cannot do.
Take expert legal advice on this point. Expect to pay from €200 for drafting the company statutes and preparing the company’s title deeds – money very well spent in our personal experience!
You sign the constitution of the company at a notary public. Expect to pay around €600 for this, more if your deeds are complex and/or long.
Company Registry costs
You also need to register the company at the Registro mercantile and this costs around €250.
Licence for premises
If your company is going to have premises, you need to get an opening licence. The cost varies depending on the council, but in Malaga, for example, a licence costs from €400 to €800. Expect to pay around €500 for the licence to open a shop or office.
Other set-up costs
As is the case for those setting up as self-employed in Spain, when you establish a company there are procedures you can do yourself. Or you can pay someone to do them for you. For the company, these include:
- Company tax declaration and obtaining the company tax number (CIF in Spanish) – estimate at least €100 for this.
- Signing up the company at the tax office and getting a digital certificate – expect to pay a minimum of €50 for this service.
Bring in the professionals
When you set up as self-employed or as a company in a foreign country, it’s advisable to hand the administration and fiscal paperwork to the experts. You can contract the services of an accountant, tax advisor and admin separately or use a company that offers an all-in-one package.