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12.01.2013

Invest in a company in Spain

In spite of the crisis Spain continues to be very attractive for investors and entrepreneurs.

Each region of Spain has its own industry. The metallurgy industry is concentrated in the north of the country, and the agriculture industry in the south. Not to mention there are textile, shoe and toy industries, and we shouldn´t forget about the renewable energy industry and services.

The crisis has triggered the labor reform, which has changed a lot of the rules, converting it into a European country with a very flexible labor market.

As a result, when the crisis is over, Spain can become one of the most attractive markets for investments and company creation.

As in any other country you can invest in Spain by way of mergers, acquisitions, joint ventures, etc. or by opening a branch of your company or establishing a new entity.

Types of companies in Spain

If you have decided to set up a company of your own, you will have to choose between two of the most-used corporate forms: public limited company (S.A.) and limited liability company (S.R.L.).

The main difference between them is the registered capital necessary for their creation, for S.A. it is 60.000€ and for S.R.L. it is 3000€.

The process of a company creation now is much easier than it used to be. Your first steps must be the following:

  • Application for a certificate that states that the company name you want to use is not already taken
  • Opening of a bank account and depositing capital in the bank
  • Incorporation of the company before a public notary and entry in the Company Registry

You can avoid all the procedures mentioned above by purchasing a created entity.

This process for the time being is free of any taxes, you will have to pay only the services of the professionals involved, notary and Company Registry.

Taxes in Spain

Any business activity in Spain is subject to personal income tax (I.R.P.F.) and corporate tax(I.S.).

The I.R.P.F. is levied as a percentage of a part of a person’s wages at scale rates.

The corporate tax (I.S.) rate is 30%, but there are some exceptions: 25% for companies of a reduced size, 20% for companies of a reduced size involved in creation of employment and maintain their staff, 15% for startups.

Operations between companies (business entities) are exempt from an interior withholding tax. The corporate tax is to be paid in July following the end of the tax year (if it finishes on the 31 of December ).

The VAT rate applicable to companies depends on their activity. The standard rate is 21%, but there is also a reduced rate of 10%, and a super – reduced of 4%.

If the shareholders receive dividends, they must pay a Dividend Tax, but in some cases dividends are exempt from taxation.

Labour market in Spain

High rates of unemployment call for measures of employment creation, among them there are various types of work contracts and reductions on the social security contributions to be paid.

Both employers and employees must contribute to the Social Security. Employers pay from 30% to 35% of the gross salary and employees pay 7%.

In the case of dismissal of an employee with a permanent contract, the employer is obliged to pay them a compensation equal to 33 days’ salary per year of services rendered, if the company dismisses its employees because of economic reasons the compensation will be only 20 days .

Collective bargaining agreements establish salaries for employees, with respect to their occupation and location of the company.

The flexibility of the Spanish labor system allows companies to create Collective bargaining agreements of their own, defining labor categories and corresponding salaries.



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