Spain offers several routes for setting up a business, hiring staff, and relocating founders or employees, but the correct structure depends on ownership, management control, immigration goals, tax planning, and payroll compliance.
Business structures in Spain
Foreign entrepreneurs and companies generally have several options for operating in Spain:
- Autónomo: a freelancer or sole trader operating as an individual.
- Sociedad Limitada / SL: a limited liability company, commonly used by startups, small and medium-sized businesses, and many larger businesses.
- Branch or subsidiary: structures used when a foreign company expands into Spain.
The autónomo route is the fastest to start because it mainly requires registration with Spanish social security. However, income is taxed through personal income tax, and liability is not limited to business assets. Personal assets may be exposed.
The SL is the most common structure for a Spanish company. It takes longer to register and involves more ongoing obligations, but shareholder liability is limited to the company’s assets.
A branch is an extension of the foreign parent company, which means liability can travel back to the parent company. A subsidiary is a separate Spanish company owned by the foreign company, with liability generally limited to the subsidiary’s assets.
Incorporating an SL in Spain
The standard process for incorporating a Spanish limited liability company includes:
- Obtaining NIE numbers for foreign individual shareholders and directors.
- Obtaining a NIF number for foreign corporate shareholders.
- Requesting the company name certificate.
- Drafting the company bylaws.
- Preparing the incorporation deed.
- Signing the deed before a Spanish notary.
- Registering the company with the commercial registry.
- Obtaining the definitive NIF, which becomes the company’s Spanish VAT number.
- Obtaining a digital signature.
- Registering with the tax agency.
- Opening a bank account.
The commercial registry generally has around 15 working days to register the company, and registries in places such as Barcelona, Madrid, and the Balearic Islands often use the full period.
The full incorporation process normally takes 6 to 8 weeks. It may be faster if shareholders and directors already have NIE numbers, or slower if documents are delayed or the registry raises issues.
The process can be handled through a power of attorney, meaning the founder or shareholder does not necessarily need to travel to Spain. A Spanish bank account may also be opened remotely in some cases, although this depends on the bank. Santander was mentioned as one bank offering flexible remote solutions. Other banks may require the director to be physically present.
From the client side, the key documents needed are generally passports and NIE or NIF numbers. The remaining documents, including the company name certificate, bylaws, incorporation deed, registry certificate, definitive NIF, and tax registration, are part of the incorporation process.
Can foreigners own or direct a Spanish company?
A foreign individual or foreign company can own 100% of a Spanish limited liability company.
A foreigner can also be a director of a Spanish SL. Spanish citizenship, EU citizenship, or a Spanish work permit is not required if the person will not reside in Spain.
Business visas and founder relocation
For business owners relocating to Spain, the main visa routes discussed were:
- Entrepreneur visa
- Business activity visa
The entrepreneur visa is aimed mainly at tech or innovative businesses that bring innovation, job creation, or technological advancement to Spain. It requires a positive report from ENISA, the Spanish public body that evaluates whether the project is innovative enough and relevant for Spain.
The business activity visa applies to other types of businesses, including non-tech businesses such as trading or consulting. A tech company may also apply through this route, but a generic consulting or trading company cannot normally use the entrepreneur visa.
For the business activity visa, applicants need a real business plan and evidence that the business activity is ready to begin once the visa is granted. A weak or generic business plan is unlikely to be enough.
Evidence may include:
- A strong business plan.
- Financial projections.
- Proof of sufficient funds to support the applicant and the business.
- A website.
- Terms and conditions.
- Proof of active preparation for the business.
- In some cases, proof of social media presence.
There is no specific fixed income amount mentioned for the business visa. The amount depends on the business plan, projected costs, and the funds needed to support both the applicant and the business.
The business visa may be used for either a product business or a service business. The key issue is not whether the company sells products or services, but whether the business plan is credible and the applicant has taken active steps to start operations.
Autónomo route versus company route for a business visa
A business visa can be requested either through the autónomo/freelancer route or through the company formation route.
The freelancer route is possible, but it may be harder to approve because the applicant has less evidence of an already-established structure in Spain. The applicant would generally register as autónomo only after the visa is approved.
The company formation route may be stronger because the Spanish company is incorporated before the visa application, showing concrete steps toward starting business activity in Spain.
However, the correct route depends on the exact activity. Some activities may need to be performed as a freelancer rather than through a company.
The business visa cannot be applied for from Spain while on a tourist visa. It must be requested through the Spanish embassy or consulate in the applicant’s place of residence.
Once the company is incorporated and the required personal documents, business plan, and activity evidence are ready, Spanish authorities generally have 3 months to respond to the visa application. In practice, timing can vary by city and consulate. Some cases may take up to 5 months, and Barcelona was mentioned as one place that may take longer and request more proof.
Visa duration and renewals
Visa duration depends on the visa type.
In general, visas may be granted for one year and then renewed for two-year periods until reaching the five-year mark. After five years, the applicant may request long-term residence.
The entrepreneur visa may be granted for up to three years initially, depending on ENISA, and then renewed for two-year periods until the five-year mark.
For renewal of a business visa, authorities check whether the applicant actually carried out the business activity for which the visa was granted. If a person receives a business visa and then does not develop the business, but instead takes a regular job, this can affect renewal. In that case, the person would need to modify their status to a visa type that allows employment.
Employee relocation visas
For employees, two main routes were discussed:
- Highly qualified professional visa
- Intracompany transfer visa
The intracompany transfer visa applies when an employee is transferred from another company in the same group to the Spanish entity. For example, a U.S. company may incorporate a Spanish subsidiary and transfer a manager or key employee to help establish the business in Spain. This route is temporary and is not designed as a long-term immigration solution. The maximum duration mentioned was usually up to two years.
The highly qualified professional visa applies when the Spanish company directly hires the employee. This creates a new employment relationship with the Spanish company, rather than transferring the employee from another entity.
Requirements may include:
- Higher education, such as a university degree or master’s degree; or
- Relevant professional experience, generally around three years or more.
- A minimum salary, usually between €40,000 and €55,000 per year, depending on the role.
Ownership control and employment classification
Spain has strict rules distinguishing employees from business owners.
A person may be considered to have control of a company if they:
- Own 25% or more of the shares and have a management role or director position.
- Own more than 33% of the shares individually.
- Own more than 50% of the shares together with a family member.
If a person meets these control thresholds, they generally cannot be treated as an employee in Spain. They would need to consider business-owner visa routes rather than employee visa routes.
This classification can also affect access to the Beckham Law regime, described in the transcript as a beneficial tax regime allowing certain residents to be taxed as non-residents for six years. The correct structure depends on shareholding, role, visa type, and tax goals.
If a person resides in Spain and controls a company, they may need to register as a corporate freelancer with Spanish social security, even if they do not plan to receive salary or shareholder remuneration from the Spanish company.
Remuneration for directors and shareholders
Payments to directors and shareholders are classified differently depending on the role.
For administrators, remuneration for fulfilling the legal administrator role is treated as employment income, and the company must pay a monthly salary.
When shareholders or administrators perform executive or management functions, the remuneration is also treated as employment income and paid through monthly payroll, with ordinary withholding tax applied.
For shareholders who are not administrators, the treatment depends on whether they perform work inside or outside the company structure:
- If they work within the company structure, compensation is employment income and paid through payroll.
- If they provide services outside the company structure, compensation is business income, and they must issue invoices to their own company.
Hiring options in Spain
Employment arrangements in Spain may be structured as:
- Employee relationship.
- Contractor relationship.
- International assignment.
An employee relationship is the standard model under Spanish labor law. The worker becomes part of the company’s organization, the employer controls the work, pays monthly salary, withholds taxes and social security, and complies with labor regulations.
A contractor relationship applies when the person works autonomously using their own resources, issues invoices, and pays their own taxes and social security. This may work for short-term collaborations or specialized services. However, if the contractor relationship looks too similar to employment, the labor inspectorate may reclassify it as employment, with significant penalties.
An international assignment applies when an employee of a foreign company is temporarily relocated to Spain. The person remains employed by the home company but may need to register with Spanish social security depending on the assignment length. This structure often requires coordination between immigration, tax, and labor matters.
Spanish labor law basics
Employment relationships in Spain must be formalized through a written employment contract that specifies the key terms.
Spain’s employment system is highly protective of employees and includes minimum standards on working time, wages, holidays, probation periods, and collective bargaining rules.
The maximum regular working time is 40 hours per week, with a maximum daily limit of 9 hours. Companies must keep a daily working-time record showing the start and end of each workday.
As of 2025, the Spanish government had proposed reducing the legal working week from 40 hours to 37.5 hours without salary reduction. The reform was still under parliamentary debate, but many collective bargaining agreements already included working hours close to that limit.
The minimum wage for 2025 was stated as €1,184 per month paid in 14 installments. However, many employees earn above this threshold because salaries are usually determined by the applicable collective bargaining agreement.
Employees in Spain are entitled to at least 30 calendar days of vacation per year. Vacation cannot be replaced by financial compensation while the employment relationship continues.
Probation periods must be expressly stated in the employment contract and must comply with the applicable collective bargaining agreement. During the probation period, either party may terminate the contract without notice or severance.
The applicable collective bargaining agreement is crucial. It determines minimum mandatory conditions for the employment relationship. Any point not covered by the agreement is governed by the Workers’ Statute. Before drafting an employment contract, the company must identify the correct collective bargaining agreement.
Employer onboarding obligations
Before hiring employees, a Spanish company must complete several compliance steps.
The company must register with Spanish social security and obtain:
- NET: the company identification number for social security purposes.
- CCC: the contribution account code used to register employees and track company and employee contributions.
The company must also integrate a labor risk prevention plan into its management system to protect employee health and safety. This plan must be updated when working conditions change, new risks appear, or health-related incidents occur. Failure to comply can lead to significant legal and financial penalties.
If the company has a physical office or work center, it must communicate this to the labor inspectorate and social security.
Hiring and registering employees
The employment contract must be in writing and include the essential terms of employment.
Two types of contracts were discussed:
- The official SEPE contract, which is the standard employment contract approved by the Spanish public employment service.
- A bilingual private contract, which includes the required SEPE information and adds clauses adapted to the company’s circumstances.
A bilingual private contract may be useful in international contexts or when the company wants to regulate the employment relationship in more detail.
Employees must be registered with social security before they start working. Retroactive registration is not allowed. Registration gives the employee access to social security coverage, including healthcare, sick leave, maternity and paternity benefits, and retirement contributions.
After social security registration, the employer must communicate the required contract data to SEPE within 10 calendar days after the employee’s start date.
The employee must then be included in the monthly payroll system, with correct personal income tax withholding and social security contributions.
Payroll and ongoing compliance
Spanish companies have monthly, quarterly, and annual compliance obligations.
Monthly obligations include preparing and paying payroll. Salaries must be paid regularly and punctually before the last working day of each month, although labor law allows a maximum delay until the fifth day of the following month. Salaries must be paid by bank transfer, and payslips must be provided to employees.
Social security contributions must also be submitted and paid monthly.
The employee contribution is around 6.47% of gross salary.
The employer contribution is approximately 32% of gross salary. This is one of the main costs of hiring an employee in Spain. The 32% employer contribution is limited by the maximum contribution base, which for 2025 was stated as €4,995 per month.
Social security payments are made by direct debit and charged to the company bank account on the last working day of the following month. Late payments are subject to surcharges and penalties.
Quarterly obligations include submitting and paying personal income tax withholdings for employees. Companies with annual turnover above €6 million must file these forms monthly.
Payment method depends on filing date:
- If filed before the 15th of the month, payment is by direct debit.
- If filed between the 16th and 20th, payment is electronic.
At the end of the fiscal year, in January of the following year, companies must submit annual summaries of the quarterly forms. These summaries are informational only.
Salary installments
Spanish law provides that annual salary is generally distributed in 14 installments:
- 12 regular monthly payments.
- 2 extra payments, commonly paid at Christmas and in summer.
Salary may be paid in 12 installments by prorating the two extra payments, but only if the applicable collective bargaining agreement allows it.
Late-payment penalties
For social security late payments:
- A 10% surcharge applies for payments made within one month.
- A 20% surcharge applies for payments made after two months, with interest on arrears.
For tax agency late submissions:
- A progressive surcharge of 1% per month applies if submitted within 12 months after the deadline.
- A 15% surcharge plus interest applies after 12 months.
If the tax agency detects non-payment and starts an inspection, the taxpayer may face a serious violation with fines between 50% and 100% of the unpaid amount, or up to 150% if fraud is involved.
U.S. LLCs and operating from Spain
A person who is a Spanish permanent resident and operates a U.S.-based LLC from Spain may face Spanish tax issues.
If the person is the sole director of the U.S. LLC, resides in Spain, manages the business from Spain, and has no real business structure in the U.S., Spanish tax authorities may deem the company Spanish because effective management is in Spain.
In that case, authorities could request business tax payments in Spain. The fact that most clients are outside Spain does not necessarily remove the risk.
For a person staying in Spain and operating from Spain, moving the company structure to Spain may make sense to avoid future issues, but the correct approach depends on the specific structure.
Foreign university or foreign employer cases
If a person works part-time for a foreign university while in Spain, the key issue is whether the relationship is labor-based or commercial.
If the relationship is labor-based, the university may need to register in Spain to obtain a tax ID and social security contribution code.
If the relationship is commercial, a permanent establishment may not be required, but the university may still need a Spanish NIF to comply with withholding obligations.
Multiple business activities in one company
A Spanish company can have more than one activity code. For example, one company may include both trade and consultancy.
Usually, one activity is treated as the main activity and the other as secondary. If both activities grow substantially, it may later make sense to separate them into different companies. But at the start, two activities can be included in one company.
