Buying a Business in Spain? - a Simple Guide...

Buying a Business in Spain? - A simple guide...

There has been a vast increase in foreigners moving to Spain to begin a new life lately which means the demand for quality services and products to help people do this is ever-expanding. This makes an ideal opportunity for someone wanting to start their own business in Spain. However there are a couple of fundamental concerns that you need to address to make sure all goes as expected.

Before you start any business project in Spain you need to research the market to ensure that there is a demand for the service or product you are wanting to offer.

This may not be easy as in your home country - markets are very different. So bear this in mind.

Remember that you have every right to start a business in Spain as you have in your home country. So once you have taken these aspects on board you can get started.

Step one

Regardless of what you decide to do you need to make sure you visit the national police station to apply for your N.I.E. number or commonly known as a NIF number. This is merely an identification number for foreigners and the main purpose for this is usually Tax reasons, but is very useful for proof of residence to enable you for banking etc.

All you have to do is take along your passport and the completed form and they will have your number ready in around 4 weeks.

There are two categories of businesses in Spain; local and national.

If you have a Local business you will have to register at the town hall and you will be given an opening license (Licencia de Apertura), this will clearly explain your business and the methods of which you will trade.

If you are at National business level then you will have to register at the IVA office which is the Spanish equivalent of the Inland Revenue. The draw back with having to do this is you will have to be fluent or at least have a good knowledge of the Spanish language to be capable of filling out the forms. However don't worry if you don't speak Spanish there are services to assist you, you will need to employ a Gestoria, a Gestoria will do all the difficult work for a reasonable fee.

Step 2

The next step you will need to do; is determine the format of your business as you would find in the UK i.e. PLC, LTD companies. You will need to seek professional expertise to determine this for you.

See below:

Empresa Individual - this is the equuvilant to a sole trader and is a business run by one persons name only.

Sociedad Civil- is where several individuals will come together to form a business; similar to a partnership.

Sociedad Limitada - this is a limited company with registered shareholders and a set minimum trading capital in the bank.

Sociedad Anonima - is a much larger company which a large minimum trading capital also with registered shareholders.

Tax contributions

If you have an income in Spain you may be liable to pay taxes, whether you are a Spanish resident or not. It can be a complicated and costly situation for a foreigner, so you will need to seek professional advice; your Gestoria will be able to help you with this.

Social Security payments

All businesses in Spain are registered with the Social Security Office and are liable for social security payments. This will vary depending on the status of the business. These payments are actually very beneficial to you as they will entitle you to the local health service; doctors and hospitals. In addition the payments also contribute to your pension if you pay into the system for a minimum of 15 years.

If you are going to work for a company; the company is required to pay the social security payments on the employee's behalf. If you employ people you are required to have a written contract with them for mutual protection.

Finally, if you are buying an existing business in Spain then it is absolutely crucial that you scrutinize every aspect of the business before parting with money and signing on the dotted line.

Make sure that there are no existing debts or tax liabilities at present as these debts could be transferred with the business to you!

If you decide to go for it and start a business in Spain then you will find that you are regarded as "the foreigner" but you will be respected in the fact that you earn. You may find many Spanish procedures very different to those in your home country. Bear in mind that it is impossible to change, and there is however money to be made...