Doing Business in Spain
|GDP||1314.58 billion USD|
|Average Monthly Gross Salary in Euro||€2,189|
|World Bank Doing Business Ranking||28 (USA Ranking 6)|
Most Common Form of Business Entity
A foreign business can establish their operations in Spain as a company, partnership or branch. The most common form of legal entities are:
|Limited Liability Company (Sociedad Limitada “S.L”)||Joint Stock Company (Sociedad Anonima “S.A”)|
|Capital Requirements||€3,000 minimum
Share Capital needs to be paid in full when entity is formed.
At least 25% to be paid when entity is formed
|Directors||Minimum of 3 board members required||Minimum of 3 board members required|
|Shareholders||1 or more individuals or legal entities||1 or more individuals or legal entities|
In 2018 the standard Corporate tax rate is 25%.
Employment / HR Requirements
Employment Contracts: An employment contract can be verbal but it is recommended to execute employment contracts in writing. A written contract is required in the case of specific types of employment, such as a training contract, temporary jobs for some specific roles or contracts for employees working abroad for a Spanish company.
Employee Tax: Employees whose residence or usual place of abode is in Spain, are considered tax residents unless they are subject to a special regime for impatriates. The income tax rate ranges from 19% to 48% with the maximum rate varying depending on the region of Spain. The taxation is progressive and is applied in bands. The lowest band is 19% on the portion of income between €0 to €12,450, with the highest being 48% on the portion of income exceeding €60,000.
Social security contributions are paid by both employer and employee. Employee contributions are deducted at source from salary payments, with employee contributions being 6.35% of the gross salary.
Employers: Employers must withhold tax income tax and social security contributions on behalf of their employees. In addition to the employee’s contributions, the employer must pay social security contributions of 29.90% of the employee’s gross salary.
Valued Added Tax:
The standard rate of VAT is 21%; one reduced rate of 10% and one super reduced rate of 4% applies to basic necessities such as bread, milk, books and medicines.
Valued Added Tax on Digital Services:
All Non-EU based businesses that provide electronic services or download to individuals or non-business consumers in Spain must register for VAT either in Spain or in another EU state.
Spain has yet to adopted the EU General Data Protection Regulation. The key variations from the GDPR Requirements are:
- Reduces the age of consent for minors to 15 years old.
- Restricts the use of legitimate interests as a lawful ground for processing personal data to certain circumstances where consent is impractical, such as whistleblowing, CCTV for crime prevention, and credit references.
- Permits anonymous reports for whistleblowing.
- Imposes a requirement to notify the data protection authority within ten days if a data protection officer is appointed.