Spain is one of the most attractive markets in Europe for companies looking to expand. Forming a legal entity in Spain lets you hire local employees, set up a sales operation, and establish a presence in the EU.
But it isn't a quick process. Opening an entity involves following specific procedural steps, plus ongoing administrative work and compliance requirements. All of which takes time, money, and local expertise.
Why So Many Companies Choose to Expand in Spain
Spain offers direct access to EU markets as the eurozone’s fourth-largest economy, and it has multiple thriving sectors, including tech, renewable energy, and tourism. Cities like Madrid, Barcelona, and Valencia have become international hubs with deep talent pools, making the country especially attractive for growing businesses.
The infrastructure is solid, and operating costs are lower than in many other Western European countries. Additionally, the Spanish government encourages foreign investment through programs such as Rising UP in Spain, which is geared towards startups.
Choosing the Right Type of Legal Structure in Spain
Before you register a business in Spain as a foreigner, you need to choose what legal structure is right for your business. It will depend on the size of your company, how much capital you can invest, and the scope of your intended operations in Spain.
Sociedad Limitada (S.L.)
The "Sociedad Limitada" (S.L.) is the most popular business structure in Spain, especially for small- to mid-sized companies and family-run businesses. To create a Sociedad Limitada in Spain, you need a minimum capital investment of EUR 3,000. Much of the registration process can be done online.
Your liability is limited to the capital you contribute. An S.L. can consist of just one person or can have multiple owners.
Sociedad Anónima (S.A.)
The "Sociedad Anónima" (S.A.) is designed for larger companies or those planning to raise capital. The minimum share capital is EUR 60,000, with at least 25% paid upfront.
Any company that wants to trade shares on the Spanish stock exchange must be structured as an S.A. The management and legal requirements are more complex than those of an S.L.
Branch Office or Subsidiary
A branch office lets a foreign company expand into Spain without creating a new legal entity. The branch operates under the parent company, which retains full legal liability.
Branch offices must file with the Commercial Registry and are taxed similarly to Spanish companies.
You can also set up a subsidiary in Spain, a separate legal entity incorporated under Spanish law, wholly or partially owned by the foreign parent company.
Representative Office
A representative office allows a foreign company to maintain a presence in Spain for non-commercial activities, such as research or market exploration. It cannot generate revenue directly.
Representative offices are used as a low-risk entry point before making a larger commitment.
A Step-By-Step Guide to Opening a Legal Entity in Spain
The Spanish company registration process follows a specific sequence of steps, with each step dependent on the one before it.
Step 1: Obtain a NIE number
Before anything else, every individual involved in the company needs a NIE ("Numero de Identificacion de Extranjero"). The NIE is an identification number issued to foreigners in Spain and is required for nearly every subsequent step.
You can apply at a police station in Spain or at a Spanish consulate in your home country. You'll need your passport, a completed application form, and a notarized letter explaining why you need the NIE. Getting an appointment can take time (several weeks), so plan ahead.
Step 2: Choose and Reserve the Company Name
Once you have your NIE, you can reserve your company name with the Central Commercial Registry ("Registro Mercantil Central"). The registry checks to see whether your name is available and issues a name clearance certificate, or "Certificado Negativo de Denominacion Social."
You can submit a list of up to three preferred names, ranked by priority. The registry will assign you the highest-ranked option that meets the criteria. The name clearance certificate is available within about 48 hours and is valid for three months.
Step 3: Open a Spanish Bank Account
With your NIE and approved company name, you can open a business bank account in Spain. For an S.L., you'll need to deposit at least EUR 3,000 in share capital.
The bank will issue a certificate of deposit confirming the capital has been paid.
Step 4: Draft the Company Bylaws
The company bylaws, or "Estatutos Sociales," are the rules that govern your company. They define the company's purpose, registered address, share capital, management structure, and decision-making process.
The bylaws become part of the deed of incorporation, and this step is typically done with a legal advisor.
Step 5: Sign the Deed of Incorporation Before a Notary
This is the official act of creating the company. All founding shareholders must appear before a Spanish notary to sign the public deed of incorporation ("Escritura Publica").
You'll need to bring:
- Your NIE
- The name clearance certificate
- The bank deposit certificate
- The company bylaws.
The notary verifies everything and issues the deed.
Step 6: Obtain a Tax Identification Number (NIF)
After signing at the notary, you submit Form 036 to the Spanish Tax Agency, or "Agencia Tributaria." Once the form is processed, you’ll receive a provisional "Numero de Identificacion Fiscal," or NIF. Many notaries can request this on the same day.
With a provisional NIF, you can begin basic operations and issue invoices while you complete the final registration steps.
Step 7: Register With the Commercial Registry
Once you have your NIF, the notary submits your signed deed to the Provincial Commercial Registry, or "Registro Mercantil." If you have standard bylaws, the notary can submit the deed electronically through CIRCE ("Centro de Información y Red de Creación de Empresas"). This can cut the registration time from several weeks to a few days.
Once approved, your company is established as a legal entity in Spain.
Step 8: Register for Taxes and Social Security
Once your company is registered with the Commercial Registry, the provisional NIF automatically converts to a permanent NIF. You then register for VAT and corporate tax.
If you plan to hire employees, you also need to register with Spain's "Seguridad Social" system. At this point, your company is fully operational.
Timeline Expectations
The business incorporation in Spain timeline typically takes two to four months for foreign founders. It can take longer if consular processing is slow or if any of your documents need any corrections. The two biggest factors are how fast you can get a NIE and how long the Commercial Registry takes.
If founders already have NIEs, the process can be done in as little as four to six weeks. Having your documents ready and working with a legal advisor can help you avoid unnecessary delays.
Costs to Expect
The cost to open a company in Spain ranges from EUR 1,500 to EUR 6,000. Here's a breakdown of common one-time fees:
- NIE application: EUR 500-1,000 per person
- Name reservation certificate: EUR 20-40
- Notary fees: EUR 150-800
- Commercial Registry fees: EUR 60-600
- Legal and consulting fees: EUR 800-3,500 (optional, but common for foreign founders)
Once the company is up and running, you can expect ongoing costs for accounting and tax filings, as well as annual accounts filing with the Commercial Registry. You'll also need to pay corporate tax, VAT, and social security contributions if you're hiring employees.
In addition to the fees, keep in mind that you need to deposit the minimum share capital required for your entity.
Compliance and Administrative Responsibilities
Once your entity is up and running, your company will have ongoing responsibilities. Spain requires quarterly VAT returns and income tax withholding filings. You have to prepare annual financial statements, which must also be approved by shareholders and filed with the Commercial Registry. Depending on your company’s size, you may also need a formal audit.
Spain follows the EU's GDPR and has its own data protection law, the LOPDGDD. This law adds digital rights for employees, including privacy protections for work devices.
Common Challenges Foreign Companies Face
Even with the right legal support, setting up a company in Spain can be tricky. Here are some of the most common issues foreign founders run into:
- Language barriers on legal documents and government forms
- Bureaucratic delays due to paperwork errors
- Banking hurdles when opening an account as a foreign national
- Labor law complexity due to strong worker protections
- Ongoing reporting of quarterly and annual tax filings
- Changing regulations that may impact your business
Hiring Employees in Spain Through an Entity
Once your entity is set up, hiring comes with its own set of requirements. Written employment contracts are standard and must include a Spanish-language version. Each contract must spell out salary, benefits, working hours, location, and job duties.
Employers are required to track hours worked and comply with rules governing employee benefits, such as paid leave. Social security contributions are mandatory, and late payments carry steep penalties. Employers should also be aware that Spanish labor courts tend to side with employees in wrongful dismissal cases.
If you're not familiar with Spanish labor law or don't speak the language, managing all of this on your own can be complicated.
When Opening a Legal Entity Makes Sense
Even if you know how to open a legal entity in Spain, it isn't always the right move for every company. It’s likely essential if you're planning to hire a larger team in Spain over time, or if you need to sign local contracts and generate revenue in the country.
Companies that want a permanent presence in Spain — such as opening an office or building a local brand — will likely need to open a legal entity.
However, if you're only hiring a few people in Spain or testing the market before making a bigger commitment, setting up a full legal entity may not be worth the cost or effort. There’s a much simpler way — use an Employer of Record (EOR).
An Alternative to Opening a Legal Entity
An EOR enables you to hire employees in Spain without forming your own entity. The EOR handles payroll, contracts, tax filings, and compliance with Spain’s labor laws. Your team still reports to you, but the EOR handles the legal and administrative side.
This works well for small teams, early-stage startups, or situations where you're not ready to take on the ongoing costs of running a local entity.
How RemoFirst Can Help
RemoFirst is an Employer of Record that helps companies hire in 185+ countries, including Spain.
Instead of spending months and thousands of euros on forming a company, you can start hiring in days. RemoFirst manages the details, from hiring to onboarding to benefits, so you don't have to.
Our pricing is transparent, starting at USD 199 per person per month for employees and USD 25 per person per month for contractors, with no hidden fees.
Book a demo to learn how RemoFirst can help you hire in Spain.
FAQs
How long does it take to open a company in Spain?
It can take foreign founders two to four months to establish an entity in Spain.
What is the minimum capital required to start an S.L.?
The minimum capital requirement is EUR 3,000. You need to deposit the capital and obtain a bank certificate confirming the deposit to register as an entity.
Do I need to live in Spain to open an entity?
No, you don't need to be a resident of Spain to open a legal entity. However, all founders, shareholders, and directors will need a NIE, which can be obtained through a Spanish consulate.
Is it easier to hire employees without opening a local company?
Yes, if you hire through an Employer of Record (EOR), you can hire immediately without waiting months for your entity registration to be approved.
