Lexidy LegalTech Boutique: Startup Fuel: Starting a Business in Spain & Portugal | Lexidy Webinar

Portugal and Spain offer different routes for entrepreneurs, founders, remote workers, and companies expanding into Southern Europe. The best choice depends on the business model, relocation plans, visa route, tax position, family situation, hiring needs, and where the company will actually be managed.

Both countries are presented as attractive expansion markets because of economic growth, lower operating costs compared with Northern Europe, available multilingual talent, and specific tax incentives for startups, founders, and qualifying individuals. The decision is not simply whether Portugal or Spain is “better,” but which jurisdiction fits the company’s structure and the founder’s personal plans.

Why companies consider Portugal and Spain

Spain and Portugal are both positioned as growing Southern European markets with several practical advantages:

• Spain is described as having strong GDP growth forecasts for 2025 and 2026.
• Portugal is also described as one of the higher-growth economies in Europe.
• Tech and other professional talent can be 40% to 50% cheaper than in parts of Northern Europe.
• Both countries have graduates seeking job opportunities, often with English and other language skills.
• Spain has a larger and more mature business and investment ecosystem.
• Portugal is described as faster and simpler for company formation, especially for tech and startup activity.

Spain may suit companies that want a more mature investor ecosystem, stronger links to Latin America, and access to larger cities such as Madrid, Barcelona, Malaga, and others. Portugal may suit founders looking for faster setup, lower minimum share capital, startup community access, and a fintech-friendly environment.

Planning should start before incorporation

A recurring point is that founders often incorporate too early, before aligning the company structure with immigration, tax residency, and personal tax benefits.

The recommended sequence is to consider the full structure from the beginning:

1. Business idea, product, or service.
2. Brand and trademark protection.
3. Initial activity as a freelancer, if appropriate.
4. Decision on whether a company is needed.
5. Relocation strategy.
6. Visa route.
7. Tax strategy.
8. Hiring and labor compliance.
9. Import/export or fiscal registrations, if needed.
10. Investment readiness, shareholder agreements, and profit arrangements.

Trademark and brand protection should not be treated as a later step. If a business is already using a brand publicly, it should be considered early, because the brand is part of the commercial asset being built.

Company incorporation in Spain

Spain is described as highly regulated, but also secure and attractive for businesses seeking a mature legal and investment environment.

Key points for Spain:

• Spain has a strong investor ecosystem.
• Madrid is highlighted as a major destination for foreign investment.
• Spain offers a strategic connection between Europe, Africa, and Latin America.
• The Spanish language connection can make Spain attractive for companies targeting Latin American markets.
• Opening a corporate bank account can take around 1 to 4 weeks, depending on the bank and whether the founder is physically in Spain.
• If the founder is in Spain, banking timelines may be shorter.
• Remote bank account opening can take longer.

Spain also offers startup-related tax benefits, but only if the company meets specific requirements.

Spain startup certification and corporate tax benefits

Spain’s startup law can reduce corporate income tax from 25% to 15% for four years for qualifying companies.

To qualify, a company generally needs to be certified as a startup by ENISA, the public entity that evaluates whether a project is innovative enough.

Startup certification may apply where the business has:

• A technological or innovative product.
• A new business model.
• A solution to a market problem not currently addressed.
• A scalable business plan.
• Characteristics that make it a genuine startup rather than a standard business.

The benefits may include:

• Reduced corporate income tax from 25% to 15% for four years.
• More attractive treatment for stock options.
• Tax incentives for investors.
• Better positioning for hiring and fundraising.

A caveat applies where the Spanish company is incorporated as a subsidiary of a foreign parent company. If the company belongs to a group, the other companies in the group may also need to qualify as startups. If startup certification is the goal, incorporating the Spanish entity directly as an individual shareholder may sometimes be more practical than using a foreign parent company.

Company incorporation in Portugal

Portugal is described as one of the faster countries in the EU for company formation. A newer urgent procedure can allow company registration in around five working days.

Key points for Portugal:

• Minimum share capital can be as low as €1 per shareholder.
• A higher share capital is often recommended for credibility, initial costs, and financial protection.
• Portugal is described as fintech-friendly.
• The startup ecosystem includes incubators, programs, workshops, events, investors, and founder networks.
• Corporate banking has become more flexible.
• Revolut and other online banking options may now be accepted for Portuguese companies, whereas previously a Portuguese corporate bank account was generally required.

Portugal may be especially attractive for founders who want a fast setup, lower initial capital, startup community access, and easier operational banking.

Visa routes for founders and entrepreneurs in Spain

Spain has two main routes for business owners:

• General business activity visa, also described as a self-employed or business visa.
• Entrepreneur visa, also described as a startup visa.

The general business visa is for ordinary business activities, such as opening a restaurant, consulting business, or other standard commercial activity.

The entrepreneur visa is for innovative and scalable projects. The project is reviewed by ENISA. If ENISA issues a favorable report, the applicant may obtain residence in Spain to develop the business.

Important details of the Spanish entrepreneur visa:

• It is intended for innovative projects with a scalable business plan.
• ENISA evaluates whether the project qualifies.
• The initial residence permit is for three years.
• It can later be renewed for another two years.
• The applicant does not need to incorporate the Spanish company before applying.
• Family members can be included.
• The process is generally faster than the general business visa.
• The labor authorities have 20 working days to respond while ENISA reviews the business report.

This route can be more efficient because the founder does not need to create a Spanish company before knowing whether the visa will be approved.

By contrast, the general business visa often requires the company to already be incorporated and may take three to eight or nine months for approval. Family members are not automatically included in the same way and may need another visa route.

Visa routes in Portugal

Portugal has two main routes discussed for entrepreneurs and company-linked workers:

• Tech Visa.
• D2 visa.

The Tech Visa is focused on highly qualified employees. It applies where a Portuguese company is certified by IAPMEI as an innovative business and wants to hire a qualified employee.

The D2 visa is for founders of Portuguese companies. It applies where the founder has a Portuguese company already in place, with activity and a solid business plan. The visa is applied for through the consulate in the applicant’s country of residence or country of birth.

Once the D2 visa is issued, the founder can come to Portugal. Family members can also be included.

The D1 visa was also mentioned for employees or managers of a Portuguese company.

Spain’s Beckham Law

Spain’s Beckham Law is a six-year special tax regime. It applies for the year it is granted plus five additional years and is not renewable.

Key benefits:

• A fixed 24% tax rate on qualifying work-related income.
• Protection from Spanish wealth tax and great fortune tax on non-Spanish wealth.
• Foreign dividends are generally not taxed in Spain if they come from foreign companies, subject to exceptions.
• Spanish-source income and Spanish assets may still be taxed in Spain.

The regime is especially relevant for:

• Tech founders with an entrepreneur visa approved through ENISA.
• Employees relocating to Spain for work.
• Remote workers employed by foreign companies.
• Directors of Spanish companies, if there is real business activity.
• Certain family members, including spouses, who should apply separately where relevant.

A major warning is that the spouse should also be considered. If a married couple has joint assets and only one spouse applies for the Beckham Law, the other spouse may be taxed under the normal Spanish rules on part of the income or assets.

Remote workers may qualify only if they are employees. Freelancers generally cannot use the Beckham Law through the remote worker route.

For directors of Spanish companies, the company must have real business activity. If the company is only a vehicle for the founder’s personal freelance work, the tax agency may argue that the activity should be performed as a freelancer and deny the regime.

Timing issues for the Beckham Law

Timing is critical. For the entrepreneur visa route, the founder must request the entrepreneur visa from abroad and should relocate to Spain only after receiving the favorable ENISA report and residence approval.

Relocating too early can create problems. One requirement for using the entrepreneur visa as a basis for the Beckham Law is that relocation occurs after the residence approval.

The Beckham Law application window is generally linked to registration with Spanish social security. The legal window is described as six months from social security registration, but in practice the recommendation is to apply as early as possible, ideally within the first three months after arriving in Spain.

Holding a Schengen tourist visa does not by itself affect eligibility. The issue is not tourist access, but whether the person has officially relocated to Spain and whether the correct visa and tax steps were followed.

Portugal’s EFC / NHR 2.0 tax regime

Portugal’s EFC, described as the replacement or new version of the former NHR regime, can provide a flat 20% personal tax rate for qualifying Portuguese employment-source income for 10 years.

The normal Portuguese personal tax rate can reach up to 48%, so the difference can be significant.

The EFC may also provide an exemption on foreign-source income, except pensions.

To access EFC, the person must be a Portuguese tax resident. The structure must be planned early because the deadline is linked to becoming tax resident and applying by January 15 of the following year.

Two routes were highlighted:

• Export route.
• Startup route.

Under the export route, the Portuguese company must export at least 50% of its products or services. This must be supported with evidence such as clients abroad, invoices, contracts, and accounting documents.

Under the startup route, the person must be an employee, founder, or manager of a Portuguese company certified as a startup. Employees of that certified startup may also qualify.

Portuguese startup certification

For a Portuguese company to be certified as a startup, several requirements were mentioned:

• The company must be less than 10 years old.
• It must have fewer than 250 employees.
• It must stay below a turnover threshold, stated in the transcript as “less than millions of turnover,” but the exact amount is unclear.
• Certain financial requirements may apply.
• If financial requirements are not met, a prior declaration may be requested from Startup Portugal to show that the business is innovative and tax-driven.

Startup certification can provide more than market positioning. It may also allow:

• Access to the EFC route for founders, managers, and employees.
• A reduced corporate tax rate of 14% on the first €50,000 of profit.
• Stronger positioning when speaking with investors, founders, and institutions.

Freelancer versus company in Portugal

In Portugal, a person who receives income without being employed or operating through a company must open activity with the tax authority. This creates a formal registration linked to a specific activity code.

For freelancers:

• Social security is based on income rather than a fixed monthly fee.
• The first year of activity may be exempt from social security contributions.
• Later, normal taxation and social security apply.
• A withholding rate of around 25% was mentioned.
• The Portuguese “recibos verdes” system is the usual framework for freelancers.

The decision to remain a freelancer or incorporate a company depends on income level, tax treatment, branding, risk, dividends, and whether corporate taxation is more efficient.

Freelancer versus company in Spain

Spain has a stricter distinction between freelancer activity and company activity.

Some activities should be performed as an autónomo, not through a limited liability company, especially where the individual is the main asset and the service cannot be rendered without that person.

For example, if a consultant relocates to Spain and is the only person providing consulting services, the activity may be treated as freelance activity regardless of income.

A company structure becomes more appropriate where there is a real business structure, such as:

• Employees.
• A team.
• Clients beyond the individual founder’s personal services.
• Business operations that can continue without the founder personally rendering the service.

For consulting businesses, the key question is not only income but whether the business is genuinely more than the individual’s personal work.

Permanent establishment risk

A major risk for companies expanding into Spain or Portugal is creating a permanent establishment without realizing it.

A company may believe it has no local entity, but if it has employees, contracts, revenue, decision-making, or business activity in a country, the tax authority may treat it as having a taxable presence there.

Examples include:

• A company incorporated in Ireland but managed from Malaga.
• A company incorporated in Spain but managed from Portugal.
• A foreign company with employees making decisions in Spain.
• A business selling to Spanish or Portuguese clients without local tax registration.
• A company using another country only for tax reasons while the real business is operated elsewhere.

If management and business decisions are made from Spain, Spanish tax authorities may argue the company is effectively Spanish. This can lead to corporate tax liability, penalties, delayed-payment charges, and possible sanctions.

If a company wants to incorporate in Spain but the founder wants to live in Portugal, the Spanish company may need real management and decision-making in Spain. The founder should not simply run the Spanish company from Portugal without considering permanent establishment risks.

Market testing before expansion

Serving users in Spain or Portugal from abroad does not automatically mean a local company is required, but risk increases with activity.

Relevant factors include:

• Where the founder is based.
• Whether there is already a foreign company.
• Whether the service is online only.
• Whether revenue is received from Spain or Portugal.
• Whether there are local employees.
• Whether employees can make decisions.
• Whether sales are performed locally.
• Whether clients are B2B or B2C.
• Whether contracts, revenue, or operations are tied to the country.

If sales are minimal and the company is only testing the market, exposure may be low, but it is not zero. Once traction appears and the market becomes important, local structuring should be considered quickly.

B2C activity may create additional obligations because consumer protection and GDPR rules become more relevant.

Digital nomad workers in Spain and entity risk

Sending employees to Spain under the digital nomad visa does not usually create a Spanish entity by itself, but it depends on the employee’s role.

Lower-risk roles include:

• General support.
• Technical roles.
• Administrative support.

Higher-risk roles include:

• Directors.
• Decision-makers.
• Sales staff.
• Employees negotiating or closing Spanish business.
• Employees acting on behalf of the foreign company in Spain.

If a person in Spain makes decisions for the foreign company, sells into Spain, or generates Spanish revenue, permanent establishment risk increases.

For employee digital nomad visas, social security coverage matters. If the foreign country can issue an A1 or similar coverage certificate, the employer may not need to register in Spain. If no certificate is available, the foreign company may need to register in Spain as a foreign employer, obtain a tax ID, register with social security, and complete related steps.

The UK was mentioned as a case where an A1 may be available initially but may not be available for renewal, potentially requiring the employer to register in Spain later.

Business expansion without relocation

A company expanding into Spain without relocating founders may still access certain company-level benefits if it incorporates a Spanish entity.

For Spain, startup certification may be available if the Spanish company is a qualifying innovative project. However, if it is part of a foreign corporate group, certification may be difficult unless the other group companies also qualify as startups.

For Portugal, company and tax benefits depend on whether there is a Portuguese company, whether the activity qualifies, and whether the person is relocating and becoming tax resident.

Online business, payment systems, and crypto in Portugal

For an online business using international payment systems or mobile app payments, several concepts must be separated:

• Company taxation.
• Founder personal taxation.
• EFC eligibility.
• Foreign-source income.
• Portuguese-source income.
• Crypto income.
• Startup or innovative company qualification.

For EFC, the exemption discussed applies to qualifying individuals who become Portuguese tax residents and receive foreign-source income, except pensions. Whether the foreign company is high-tech does not by itself determine the exemption.

If income is received through crypto, the tax treatment must be analyzed separately because Portugal has specific rules for crypto taxation. The transcript does not provide detailed crypto tax rates or rules.

If the owner relocates to Portugal and qualifies under EFC, Portuguese-source employment income may be taxed at the flat 20% rate for 10 years. Other structures, such as a Portuguese startup, holding company, or foreign company, require case-by-case planning.

Registered builder or sole trader activity

For Portugal, builder activity may require licensing through IAPMEI. A legal entity may not be mandatory in every case, but it is strongly advised because construction activity carries risk. A company can help protect the founder’s personal assets.

For Spain, operating as a sole trader would generally mean registering as an autónomo. If the person already has an existing business and wants to expand into Spain, an SL may be possible, but the structure should show a real team, employees, or business organization rather than only the founder personally performing the activity.

Choosing between Portugal and Spain

The decision should combine personal and business factors.

Spain may be more suitable where the founder wants:

• A larger and more mature startup ecosystem.
• Stronger investor access.
• A strategic base for Latin America.
• Startup certification through ENISA.
• Entrepreneur visa eligibility.
• Beckham Law planning.

Portugal may be more suitable where the founder wants:

• Faster company formation.
• Lower minimum share capital.
• A fintech-friendly setup.
• A growing startup ecosystem.
• D2 visa planning.
• EFC / NHR 2.0 tax benefits.
• Potential 14% corporate taxation on the first €50,000 of startup profit.

Personal preference also matters. If the founder’s long-term goal is to live in Spain, choosing Portugal only for technical advantages may create operational and tax problems. If the founder wants to live in Portugal, incorporating in Spain purely for benefits may also create tax risks unless management and operations are properly structured.

The practical approach is to choose the country where the founder can align residence, company management, tax residency, banking, hiring, and long-term business plans.