GB Abogados have assisted many UK and international companies with accountancy and payroll services in Spain.
The recent and continuing boost in the Spanish economy has led to an increase in trade opportunities for foreign companies.
There are a number of important points to bear in mind when considering trading in Spain or with Spanish companies.
Company structure options
A foreign company has a number of options with regards to the structure of such a project:
- Form a new Spanish company
- Undertake a partnership agreement with a Spanish company
- Obtain a Spanish registration number (CIF) as a non resident company
How to provide employment
Whilst addressing the various options available, a vital consideration is that of employees.
Are people going to be employed in Spain? Are they going to be based in Spain?
Much can depend upon the employment sector and nature of business.
Broadly an international company may have the following choices:
- Employ individuals in Spain
- Provide employment in Spain on self employed terms
- Continue with staff from home country
What is the best way to structure the project?
Many international companies choose to set up a company in Spain, typically this would be a limited company, which is an ‘SL’ in Spain.
The minimum share capital is €3,000
The company shares can be owned by the parent company.
The formation of a Spanish company enables formal employment in Spain and registration in the social security system for employee tax and NI contributions.
The company would have an obligation to file annual returns in Spain, quarterly VAT returns and quarterly tax withholdings.
An alternative to a company is for the foreign company to apply for a registration number (CIF) in Spain.
The tax on income generated in Spain will depend upon the applicable double taxation treaty between the respective countries.
A foreign company with a CIF would be able to employ individuals in Spain and, like an SL, would be registered on the tax and social security system.
Other than payments of income taxes and NI contributions, the company would not be required to file any accounts in Spain.
A further option would be to undertake a partnership agreement with a Spanish company, obviously this has its pros and cons, as finding a reliable partner is paramount.
However, for many international firms, this method is a low cost entry into a new market.
Methods of employment
For companies who have either formed a Spanish company, or have obtained a CIF, formally employing people in Spain is a possibility.
The employees would need to be provided with employment contracts and registered with the tax office.
The company would make payment of the net salary directly to each employee and income tax and NI to the tax office.
Employees can initially be offered a temporary contract.
At any given time there are certain employment incentives which can be taken advantage of.
Often these schemes are introduced to encourage employment of young people or university graduates in their first position.
These incentives can financially benefit the company by way of reduced taxes and social security payable.
In addition, there may be incentives available when making either temporary contracts permanent, or part time employment into full time.
For those companies who do not wish to or cannot employ people in Spain, then self employed (autonomo) status is an option.
In this way the individual would provide the company with an invoice each month.
It is important to check whether this method of employment is compliant with all regulations in Spain. It is fine for certain professions and situations, but may not suit all.
A further alternative is to utilise workers from the home country of the company.
Again whether this is viable will depend upon the circumstances and type of business being carried out.
If you or your company needs assistance with any element of trade with Spain, please don´t hesitate to contact us for a no obligation consultation.
We will review your situation and provide our advice on how best to proceed.