Procedures for setting up a company in Spain

Spain, with its strategic location and one of the largest economies in the European Union, has always been an attractive destination for international investors and entrepreneurs. However, to establish a legal entity here, it is extremely important to master the process and legal procedures. Viet An Law would like to briefly present the procedures for establishing a company in Spain through the article below.

Procedures for applying for an Foreign Identification Number (NIE) for setting up a company in Spain

The NIE (Número de Identificación de Extranjero) is the only identification number issued to foreigners. It acts as a tax identification number and personal identification number for every legal and administrative transaction in Spain. Foreigners investing in Spain are required to:

• Become a shareholder/capital contributor of a Spanish company.
• Hold the position of director/administrator of the company.
• Sign the Company Establishment Contract before the notary.
• Open a personal or corporate bank account.
• Fulfillment of tax obligations.
• Buying and selling assets, signing labor contracts, etc.

There are two main ways to apply for a NIE:

• Apply for a NIE from Abroad (At the Spanish Consulate/Embassy): The investor applies at the consulate or Embassy of Spain with jurisdiction for the consular area where you are legally residing (e.g. Embassy of Spain in Hanoi if you are in Vietnam).

Documents to be prepared:

Application for NIE (Modelo EX-15);

Passport;

Documents proving the reason for applying for a NIE: You need to prove that you need a NIE for the purpose of establishing a company. Example: Letter of explanation clearly stating the intention to establish the company in Spain, Draft of the company’s charter (if any).

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• Apply for a NIE Direct in Spain: You must be legally present in Spain (e.g. valid travel, have a residence permit, etc.). However, you cannot apply for a NIE if you are overstaying your visa or do not have valid documents.

Where to apply: At the National Police Stations with the Foreign Case Processing Department, or at the Foreign Case Processing Office of the province where you intend to establish.

Documents to be prepared:

Application for NIE (Modelo EX-15);

Passport;

Documents proving the reason for applying for NIE;

Procedure for applying for a company name certificate for setting up a company in Spain

Obtaining a company name certificate from the Registro Mercantil Central (Central Commercial Registration Authority) is an essential step in the process of establishing a business in Spain.

According to Spanish regulations, the company name must be unique and not confusing with existing businesses. When submitting your company name confirmation application, you will need to provide your intended company name, alternate names (if applicable), and business type. Registro Mercantil Central will conduct a database audit to determine the availability of the name you choose. If approved, you will receive a company name certificate, which is valid for a period of time to be able to carry out the company incorporation procedure.

Drafting the company’s charter and notarization

The drafting and notarization of the Company’s Charter is an indispensable step in the process of establishing a business in Spain. The Articles of Incorporation, also known as Estatutos Sociales, serve as a foundational legal document, detailing the company’s operations and organizational structure. To ensure validity, this document needs to be drafted in Spanish, including all important information such as company name, type of business (S.L., S.A.,…), head office address, business objectives, charter capital, share division, management structure, etc  regulations on profit sharing and dissolution provisions.

To ensure legality, the Company’s Charter needs to be notarized by a notary public in Spain. The notary will confirm the legality of the document and ensure that all parties involved understand the content. The notarization process involves the founding members going to the notary’s office to sign, after which the notary will check and confirm the signature.

Opening a bank account and contributing capital for setting up a company in Spain

You need to open a bank account with the company’s name “in the process of being established.

Next, you need to contribute charter capital to the opened bank account. The minimum charter capital is stipulated as follows: 3,000 EUR for Sociedad Limitada (S.L.) and 60,000 EUR for Sociedad Anónima (S.A.), of which at least 25% (15,000 EUR) must be contributed from the outset. After contributing capital, the bank will issue you a “Capital Contribution Certificate” to submit the company establishment dossier.

Procedures for setting up a company in Spain

Apply for a Temporary Tax Identification Number (NIF)

Immediately after the charter is notarized, you need to apply for a temporary NIF. You need to file a Modelo 036 form to notify you of the start, change, or termination of your business. You can submit this declaration online or in person at an AEAT office.

Payment of transfer tax (if any) and notarization fee

• Property Transfer Tax (ITP)
  • As a general rule, the establishment of a company in the form of cash capital contribution is usually exempt from ITP tax.
  • However, if the contributed capital is made with assets (e.g., real estate, transportation, or other valuable assets), the company will have to pay ITP tax.
• Notarization Fee (AJD)
  • The AJD fee is a fee payable for the notarization of legal documents, including the company’s charter.

Proceed with the application for setting up a company in Spain

Documents to be prepared

• The company’s charter has been notarized;
• Temporary NIF code certificate;
• Certificate of ITP/AJD tax paid/exempt;
• Company name certificate;
• Certificate of bank capital contribution.

Filing: You submit your application at the Provincial Commercial Registry (Registro Mercantil Provincial) where the company is headquartered.

Apply for an official NIF code

Once your company has been recorded in the Commercial Register, the next step is to obtain an Official Tax Identification Number from the Internal Revenue Service. This number is used for all financial transactions and business activities of the company. Having an official NIF is mandatory under Spanish law.

To apply for an official NIF, you need to notify the Internal Revenue Service (AEAT) that the company has been incorporated and recorded in the Commercial Register. Typically, you will reuse the used Modelo 036 return to apply for a temporary NIF. In this declaration, you need to provide your company’s commercial registration information to AEAT so that they can update and convert their NIF from temporary to official.