British people have long loved running businesses in Spain – from the bar on the Costas to property-management companies or doggrooming services and yoga classes. Brexit has brought a new flurry of Britons looking to establish a base in the EU. But how easy is it? What do I need to register a business in Spain? If you are an EU citizen then you will need to obtain a NIE (foreign identification number) first. This needs to be done within the first 90 days of arriving in Spain and involves a visit to your closest police station. You will need to take your original passport and copy as well as an original and photocopy of a document to prove why you need a NIE, such as a property purchase agreement, mortgage contract, employment contract etc. A non-EU citizen will also need to have a valid visa and work permit in order to be able to start a business in Spain.
The application for your work permit is usually submitted at the Spanish embassy or Consulate in your home country.
How can I operate my business? The two main options are: Sole trader – This is the easiest, cheapest and quickest way to operate your business in Spain. It involves registration with the Spanish tax office (Agencia Tributaria), social security (seguridad social) and other licenses that may
be required from the Town Hall (Ayuntamiento) if operating from premises. It is advisable that you contract a reputable “asesoría” (business consultant) to register you as self-employed. The social security is paid monthly from the moment you are registered. This amounts to approx. €286,10 per month, which entitles you to free healthcare and contribution to your state pension. Your dependant family members living at your address can also be covered with no additional cost. Currently in Spain there is a discount in the social security contributions for the first 24 months of registering as a sole trader, which consists of €60 per month for the first year and then 50% and 30% reductions in the second year.
Limited Company – this is a more complex, formal and expensive way to register your business, however it offers a fixed general tax rate of 25% and limited liability. The first step is to obtain the company name from the Mercantile Registry – usually within 48 hours. The company bank account can then be opened where you deposit the minimum share capital of €3,000, unless you opt to issue the shares though a donation of assets. Once you have the bank certificate showing the shareholders and share capital, the deed of incorporation is signed in front of the Notary and
Registered in the Mercantile Registry.
But beware… Registering as a sole trader can be done straight away and it is very simple to de-register however the incorporation of a Limited Company could take up to one month before you can trade and it is more complex to de-register.
Can I work remotely from Spain for a UK company?
Yes, this is very popular. The new digital era means more and more individuals are able to work remotely and Spain is the perfect place to choose as a new working destination. The Social Security and
contractual obligations depend whether the company has a permanent establishment in Spain from where you can operate or not. Either way, you will be obliged to declare your worldwide wealth and income to the
Spanish tax authorities.
Residency process in Spain after Brexit.
The transition period began on 1st February and ends on the 31st December
2020. Those who are resident in Spain prior to 31st January 2020 will need to replace their existing Residence Permit with a “third county” ID card known as a TIE (Tarjeta de Identificación de Extranjeros). If you arrive in Spain during the transition period then you may be issued directly with a TIE card you may receive the older style green certificate/card depending on the area of Spain you are registering in. Each region is currently updating their system to accommodate the new requirements.
You will need to provide proof of income and proof of private health insurance. However if you wish to work in Spain after Brexit you will need to apply for the work permit in Spain, which will depend on whether you will be operating as self-employed or with an employment contract. It is advisable for you to contact a reputable asesoría to assist with your application.