Setting up a company in Spain requires completing a series of corporate, tax and labour procedures. Knowing the requirements, the deadlines and the various available alternatives for establishing a presence is key to avoiding delays and making the most appropriate decision from the outset.
In this article we analyse, step by step, the process of incorporating a company in Spain and the main options available to foreign companies and investors, including the creation of a company, the opening of a branch, a representative office, or the acquisition of an already incorporated company.
Why it is worth understanding the process from beginning to end
The incorporation of a company is not governed by a single piece of legislation: the obligations are scattered across the Capital Companies Act (Ley de Sociedades de Capital), the regulations governing Transfer Tax and Stamp Duty (ITP/AJD), Law 10/2010 on the prevention of money laundering, and Social Security regulations. For anyone planning an investment, having an overall view is precisely what makes it possible to calculate timeframes, costs and the dependencies between procedures.
In our experience, the practical relevance is twofold. First, because each step conditions the next: without a negative company name certificate, the bank account cannot be opened; without the deed, there is no provisional tax ID; without the provisional tax ID, the tax cannot be settled nor the company registered. Second, because several deadlines are mandatory and failure to meet them requires procedures to be repeated or gives rise to liability.
The incorporation process, stage by stage
1. Before starting: powers of representation and identification of non-residents
The process begins with the granting of powers of attorney to the person who will incorporate the company (the “Newco”) on behalf of the founders. If the power of attorney is signed outside Spain, it must be legalised by means of the Hague Apostille — or the corresponding legalisation procedure — and accompanied by a sworn translation if it is not in Spanish.
A question we are constantly asked by international investors: yes, a foreigner can incorporate a company in Spain, whether resident or not. Individuals need the Foreigner Identification Number (N.I.E.) and legal entities the Tax Identification Number (N.I.F.). The procedure for obtaining these is not complex, but it does involve formalities — powers of attorney granted to residents, appearances before the authorities — that can take up a considerable amount of time. This is, in our experience, the first bottleneck that should be anticipated.
Indeed, every non-resident shareholder or director of a Spanish company — whether an individual or a legal entity — must have a Spanish NIF. For individuals, the application made through an authorised representative requires Form 790 (payment of the fee), Form EX-15, a copy certified by a notary public and apostilled or legalised of all pages of the passport, a power of attorney valid for no more than three months, and a notification from the Spanish notary of the grounds justifying the application. For legal entities, Form 036, the appointment of an individual representative, documentation evidencing such representation, a copy of the representative’s identity document and NIE, and a copy of the deed of incorporation and bylaws of the applicant entity. A useful nuance we frequently encounter in practice: the Spanish Tax Agency has been accepting that, if the foreign power of attorney states that the company is validly incorporated and in good standing under the laws of its country, no additional documentation evidencing its existence needs to be submitted.
2. The name and the money: reservation of the company name and deposit of contributions
The company name is reserved with the Central Commercial Registry by means of the negative company name certificate, which confirms that the desired name is available. The certificate reserves the name for six months, but is only valid for executing the deed for three months from its issue. Once expired, it can be renewed by submitting the expired certificate; once six months have elapsed without the incorporation being registered, the name is cancelled and a new one must be requested. The application can be made in person, by post or electronically through the Central Commercial Registry’s website, with delivery even available electronically with a digital signature: an example of effective digitalisation of the procedure.
In parallel, the initial payment is deposited in an account opened in the name of the “Newco in formation.” The bank will normally require the negative company name certificate, and the deposit receipt must be presented to the notary. Non-cash contributions are also possible, with a different regime depending on whether it is a public limited company (S.A.) or a private limited company (S.L.).
3. Signing before the notary: deed, beneficial ownership and foreign investment
Before the notary, the following are presented: the bylaws, the negative certificate, the bank deposit receipt, the apostilled powers of attorney with sworn translation, identity documents, and the foreign investment declaration (Form D-1A), which is mandatory albeit purely informational and must be filed with the Foreign Investment Registry within one month of incorporation; the notary themselves may take care of this.
Law 10/2010, on the prevention of money laundering and terrorist financing, also requires identification of the beneficial owner: the individual or individuals who ultimately own or control, directly or indirectly, a percentage exceeding 25% of the capital or voting rights, or who otherwise exercise control over management. Exempted, among other legally established cases, are companies listed on regulated markets in the EU or in equivalent third countries. If no individual reaches that threshold, under Article 8 of Royal Decree 304/2014 it is deemed that control is exercised by the director — and, if the director is a legal entity, by its individual representative. This identification is documented either in the deed itself or in a separate public document (deed of declaration).
4. After signing: provisional tax ID, taxes, Commercial Registry and corporate books
Provisional NIF. Once the company has been incorporated, the provisional NIF is requested at the Tax Agency office, by submitting Form 036 together with the deed of incorporation; notaries may file this electronically on behalf of the company. The provisional NIF is necessary for all subsequent procedures relating to the incorporation — settlement of the Transfer Tax and registration with the Commercial Registry — and will retain its provisional status until the entity submits a copy of the public deed and the certificate of its registration in a public register.
Settlement of ITP/AJD. The incorporation of companies is exempt from the Corporate Transactions form of ITP/AJD — pursuant to Article 45.I.B.11 of the consolidated text of the Tax Act, approved by Royal Legislative Decree 1/1993, of 24 September — as are capital increases, shareholder contributions that do not constitute a capital increase, and the transfer to Spain of the place of effective management or registered office from another EU Member State. However, the exemption does not exempt the obligation to file Form 600, together with the deed, a copy thereof and the NIF, at the relevant office of the Autonomous Community, stating that it is an exempt self-assessment, within 30 business days of the execution of the public deed.
Registration with the Commercial Registry. Registration is requested at the Commercial Registry corresponding to the registered office, attaching the deed of incorporation, the ITP/AJD tax return-assessment, the provisional NIF and the corresponding fees. This is the legally decisive moment: registration confers legal personality; from then on the company legally exists. It must be carried out within two months of the execution of the deed, and the Registry’s review period is 15 business days. The authorising notary may send the deed to the Registry electronically, which again shortens timeframes.
Corporate books. Under the Capital Companies Act, the company must keep certain official books, the keeping and custody of which is the responsibility of the management body: the minutes book, recording the resolutions of general meetings and other collegiate bodies; the registered share ledger (in the case of an S.A. and a partnership limited by shares, when the shares are registered) or the register of members (in the case of an S.L.); and, in single-member companies, the register of contracts between the sole shareholder and the company, which requires them to be transcribed in full — failure to transcribe them may render such contracts unenforceable against the insolvency estate in the event of insolvency of the sole shareholder or of the company. As a general rule, the books are kept in electronic format and filed electronically for legalisation within four months following the close of the financial year; for the first financial year, once the company is registered, an initial book must be legalised recording the ownership interests of the founders.
5. Getting up and running: tax and labour obligations
On the tax side, three elements stand out: the possibility of deducting input VAT incurred before the start of activity (Article 111 of the VAT Act) if the acquisitions were made with the intention, confirmed by objective evidence, of allocating them to the business activity; registration for Business Activity Tax (IAE) via Form 036 itself — which does not require payment of any fee for the start of activity and must be completed within thirty days of the start of activity, registering under the heading corresponding to each activity to be carried out; and obtaining the final NIF, again via Form 036, which will now show the company’s name.
On the labour side, if the company is going to hire one or more employees, it must register with Social Security prior to the start of activities (Form TA.6), simultaneously register at least one employee (TA.2) and, where applicable, affiliate them (TA.1, only if they have never previously worked in Spain); these procedures are carried out through the RED system, and the deadline for registering the employee is the date of their start date or commencement of the contract. At the same time, the official will verify whether shareholders or directors must be registered under the Special Scheme for Self-Employed Workers (RETA) or under the General Scheme as assimilated employees, granting a period of ten days to arrange this. In addition, the opening of each workplace must be notified to the regional labour authority within 30 days of the start of activity — and requires having an Occupational Risk Prevention Plan in place — and the content of contracts and their extensions must be notified to the State Public Employment Service through the Contrat@ platform within ten days following the start of the provision of services.
Alternatives to incorporation: an already incorporated company, representative office and branch
1. Buying a “shelf company”: speed in exchange for a somewhat higher cost
Already incorporated companies are normally S.L.s registered with the Commercial Registry, with an NIF, the legally required minimum share capital, standard bylaws and no activity. Acquiring one is faster than incorporating a company from scratch, albeit at a slightly higher cost. After the purchase of 100% of the shares, a notarial deed declaring the change of sole shareholder or the loss of single-member status must be executed, and the usual amendments to the bylaws must be carried out — name, corporate purpose, registered office and management body — by means of sole shareholder resolutions formalised before a notary and registered with the Commercial Registry; if the name is changed, a new negative certificate must first be obtained from the Central Commercial Registry. As a general rule, the sale and purchase of shares does not give rise to VAT or ITP/AJD taxation. For an investor who needs to operate with a company already equipped with an NIF within a matter of days, this route can be decisive.
2. Representative office: minimal structure, maximum tax caution
A representative office may only carry out merely auxiliary, ancillary or instrumental activities — gathering information, market research, local support — without carrying out, either wholly or partly, the business that constitutes the company’s core purpose. It has no legal personality of its own — meaning its creditors may proceed against the company that opens it — and is not registered with the Commercial Registry. As a general rule it does not constitute a permanent establishment for Non-Resident Income Tax purposes, and without a permanent establishment it is not even required to keep accounts, being taxed on each accrual of income separately. However, the classification depends on the circumstances of each case: if the office provides information about the company’s products and its representatives have authority to conclude contracts, it could be classified as a permanent establishment, with all the resulting tax consequences. This is a risk we always recommend assessing on a case-by-case basis before choosing this option.
3. Branch: full activity without a subsidiary
A branch allows the parent company’s business to be carried out in Spain without creating a new company. It requires a resolution of the competent body of the parent company specifying, at least, the name, registered office, corporate purpose and the appointment of one or more permanent representatives, who must be legal residents in Spain; a power of attorney executed before a foreign notary, apostilled and with sworn translation; a deed before a Spanish public notary; provisional NIF; Form 600 and registration with the Commercial Registry, which takes place approximately fifteen business days after the deed is filed. There is no legal requirement for a minimum amount to be paid in at the time of creation, although funds may be deposited in a Spanish bank account.
For ITP/AJD purposes (Corporate Transactions), the treatment depends on where the parent company’s registered office and place of effective management are located: if both are outside the European Union, the branch is taxed under the same conditions as Spanish entities on the portion of capital allocated to its operations in Spanish territory, filing Form 600 within 30 business days following the execution of the deed; if the registered office and place of effective management are in another EU Member State — or if the place of effective management is outside the EU but the registered office is in another Member State — the transaction is not subject to this tax. As a permanent establishment, the branch must keep accounts in accordance with the Spanish Commercial Code.
S.A. or S.L.: the structural decision
The choice of corporate form determines capital, governance and financing. The S.A. requires a minimum capital of 60,000 euros, with at least 25% paid up at incorporation. For the S.L., the traditional reference of 3,000 euros fully paid up ceased to be the legal minimum with Law 18/2022 on the creation and growth of companies (“Crea y Crece Act”): today an S.L. can be incorporated with a capital of one euro, albeit with safeguards until 3,000 euros is reached, such as the obligation to allocate at least 20% of profits to the legal reserve until the sum of the reserve and capital reaches that figure, and, in the event of liquidation with insufficient assets, the joint and several liability of the shareholders for the difference. In practice, the 3,000-euro threshold remains a common benchmark for solvency. S.A. shares may be traded on securities markets; S.L. ownership interests may not, and are always subject to transfer restrictions — a feature that, far from being a drawback, protects shareholders from unwanted entries into the capital.
There are further differences with a direct impact in practice: the S.L. may have ownership interests with different voting rights or without voting rights (in the S.A. there can be no privileges in voting rights, although non-voting shares are permitted), its directors may be appointed for an indefinite term unless the bylaws provide otherwise (as opposed to the maximum six-year renewable term of the S.A.), and it does not require an independent expert’s report for capital increases through non-cash contributions: the Capital Companies Act provides instead for the joint and several liability of shareholders and directors, among others. Both forms share the same regime regarding directors’ duties and liability, registration disclosure obligations and the filing of annual accounts, and mandatory dissolution due to losses that reduce net assets below half of share capital, unless capital is increased or reduced sufficiently.
In the transactions we advise on, the preference for the S.L. form is clear, and the market itself confirms this: the already incorporated companies offered for acquisition are normally private limited companies. The S.A., for its part, is the only form that can trade its shares on securities markets and issue convertible bonds, making it the appropriate form for projects aiming to go public or raise capital in the markets.
Practical conclusion
Three ideas we always convey to those planning to enter the Spanish market. First: the process is predictable, but the chained deadlines (three months’ validity of the company name, 30 business days for Form 600, two months to register, one month for the foreign investment declaration) require a single calendar that coordinates the notary’s office, the bank, the Registry and the Tax Agency. Second: for non-resident shareholders and directors, obtaining the NIE/NIF is the procedure that most needs to be anticipated, as it determines everything else. Third: the choice between incorporating, buying an already incorporated company, opening a branch or simply setting up a representative office is not just a matter of speed or cost, but of tax exposure and liability; it deserves rigorous prior analysis, especially in international structures.
How can ILIA ETL GLOBAL help?
Navigating this journey smoothly — and choosing the right structure from the outset — is precisely the work we do every day. At ILIA ETL GLOBAL we advise companies, entrepreneurs and investors on company incorporation processes, branch establishment, acquisition of already incorporated companies, expansion, reorganisation and business growth, for both Spanish companies and foreign investors establishing themselves in Spain.
We combine the closeness and flexibility of an independent firm with the capabilities of a large international group: we are part of ETL GLOBAL, one of the largest professional services groups in Europe, with more than 50 years of track record and a presence in more than 60 countries. Our team brings together specialists in commercial and corporate law, tax, labour law and international taxation, allowing us to manage matters in a coordinated way — with a single point of contact — from obtaining the shareholders’ NIE through to registration, Social Security registrations and tax planning for the investment.
Furthermore, where the characteristics of the project allow, at ILIA ETL GLOBAL we can support our clients in using digitalised company incorporation procedures, such as those channelled through the CIRCE system, helping to streamline certain procedures and reduce the time needed to get the business up and running. In this regard, we currently have companies incorporated through CIRCE available for immediate acquisition by clients who need to start operating without delay.
Authors: Mario García, Mercedes Cano and Xavier Vilalta, professionals at ILIA ETL GLOBAL specialising in commercial law, company incorporation, business expansion, establishing companies in Spain and international taxation.
cloud technology axon
The transaction brings together two highly complementary hospitality t...
