Spain is a sunny country with a rich history, architecture and favorable climate. Contrary to many prejudices, its economy is among the leaders in terms of nominal GDP. There are all kinds of accelerators, technology parks and state funds for the development of IT-business here, the main purpose of which is to invest in startups. Comparatively recently, the local legislation has introduced innovations regarding digital firms and nomadic companies. In addition, a favorable tax regime is applied here, which, together with comfortable living conditions, makes Spain an excellent option for registering a business. Further we will tell you how to open an IT company in Spain, familiarize you with the advantages of such a decision, describe the taxation system, and tell you about possible pitfalls that may await future IT entrepreneurs.

 

Advantages of opening an IT company in Spain

Every foreigner wishing to enter the Spanish IT sector can count on government support to help them realize their decision. For example, if an entrepreneur proposes a well thought-out business plan for a 5-year period, the probability of receiving state support reaches 90%. The state helps startups with financing, tax incentives and attracting external investments. In return, IT companies become sustainable and expand, contributing to the country’s economic growth and technological progress.

 

The main advantage of registering a company in Spain is simplicity, accessibility and speed. Doing your own business in this jurisdiction is not burdened by comprehensive control of regulatory bodies, on the contrary, entrepreneurs can quietly do business without being distracted by numerous inspections. Paying taxes correctly and complying with Spanish legislation, it is guaranteed to avoid any problems with government agencies.

 

Access to the EU market

Spain is a member of the economic Eurozone, which opens a trade route for IT businesses to the largest and most economically attractive EU countries. The jurisdiction is also often referred to as a “trade gateway” to markets in North Africa, the Middle East and Latin America. Plus, in addition to the opportunity to travel across the EU, local business owners have excellent prospects for finding highly qualified job seekers.

 

Favorable IT environment

The main concentration of IT companies is noted in Barcelona, which the government plans to turn into a real technical hub of Europe. For this purpose, various public investments and preferential programs are being implemented to lure startups and qualified specialists from abroad. In the center of Barcelona there is the “22@” quarter, where large international companies like Amazon, N26, Skyscanner, Kiwi and small startup projects have settled, which find themselves in ideal conditions for rapid growth. Your company is also well positioned to successfully tap into such an advanced business environment.

 

Active support for startups

Private IT business is supported through the following tools:

 

  • Spain Startup & Investor Summit is an annual global summit of startups, investors in Spain, allowing them to establish business contacts and build further prospects for the development of their own business.
  • Enisa is a public institution specializing in financing innovative companies, primarily those operating in the IT sector. Entrepreneurs are offered various financial solutions in the form of loans and other products for business expansion.
  • Red.es is an organization dedicated to promoting the digital transformation of the Spanish economy. IT companies are invited to participate in various incentive programs supported by the European Development Funds.
  • Softlanding is a Spanish startup accelerator program designed to support foreign companies in the country, giving them access to financial, educational and other resources.

 

Positive attitude towards foreign investors

Spanish policy is aimed at attracting investment from abroad, as evidenced by various preferential programs for foreign entrepreneurs. Here, unlike most European countries, the least restrictive rules for international investments are applied, thanks to which various types of business, especially IT companies, banking and tourism can be organized in Spain with the least difficulties.

 

Developed banking sector

There are more banks, ATMs and branches to choose from in Spain. A number of Spain’s largest banking institutions, including Sabadell, Bilbao Bizkaia Kutxa, and Bankia, serve millions of customers every day. Here are active branches of top European and world banks, which are among the top 10 leaders in terms of reliability. By the way, this rating according to the publication “Global Finance” also includes the Spanish bank Santander. The most important thing is that the scope of services of Spanish banking institutions is almost the same as in Ukraine. That is, you can easily open an account, send or receive a transfer, use Internet banking, etc.

 

Popular destinations for the IT industry in Spain

The information technology sector, which is characterized by steady growth, offers great opportunities for foreign entrepreneurs in Spain. Here, the government has developed a plan for the digitalization of the country until 2025, within the framework of which it is planned to undertake up to 50 measures in 10 different areas. Therefore, by opening a company in the cybersecurity or artificial intelligence sector, for example, you will be able to provide your own business with government support, a steady flow of customers, increased revenues and significantly expanded prospects for the future.

 

Internet of Things (IoT)

In Spain, IT startups can find their niche in the industry of manufacturing operations, connected equipment status monitoring, cargo monitoring, smart grids, telemedicine monitoring, etc. The Internet of Things is becoming more and more in demand in the production of transportation, portable devices, smart grids. Spain is actively implementing everything related to IoT and therefore has one of the highest shares in this sector.

 

Artificial intelligence

Machine learning and natural language processing offer great opportunities for Spanish IT companies. Quite a number of businesses in the country have already implemented AI, with a significant number of Spanish firms planning to do so in the near future. Along with some other EU countries, Spain is focusing on developing AI-based applications for automotive, industrial electronics and medical applications.

 

Augmented/Virtual Reality (AR/VR)

Augmented reality devices make it possible to change a person’s current view of the environment through superimposed digital objects. In other words, the user sees the surrounding space and AR content in front of him simultaneously. A person gets access to the virtual world from a special device that transmits the necessary visual, auditory and even tactile information. Small and medium-sized companies specializing in augmented/virtual reality have been able to establish themselves in Spain. In the future, this market is expected to continue to grow rapidly.

 

Blockchain

Decentralized encryption and data storage technology is used by a range of industries and sectors. Half of blockchain startups are developing applications for financial institutions, trading platforms and e-commerce companies. Blockchain technology is also increasingly being used in agriculture and startups related to the creative industry.

 

Industrial biotechnology

Spain is one of the EU countries that has a strong technological base in the field of environmental biotechnology, waste and by-product utilization. The country pays special attention to the sustainable development of this area, supported, among other things, by the European program The European Green Deal.

 

How to open a company in Spain: key conditions and terms of registration

There are a number of requirements for a foreign business founder:

 

  • Obtain a foreigner identification number (NIE de inversores). To do this, contact either the Spanish consulate in the country of residence or the police station in Spain.
  • Before you begin maintaining commercial, operational detail, you must take care of finding an administrator. Only a resident with the right to work can be hired for this position. Data on this employee are necessarily entered in the statutory documentation or power of attorney issued by the company.
  • It is important to pay attention to opening a bank account with which the company will be able to make all payments, accept payments, etc.
  • An electronic certificate must be issued for the founder as well as for the firm itself.
  • Before you start a business in Spain, you need to make an authorized capital contribution. Its amount is determined by which legal form of organization (LFO) you choose. The number of owners and directors also depends on the legal form.

 

And, of course, every entrepreneur wishing to work in Spain legally must obtain a residence permit and a work permit. Although the registration procedure in this jurisdiction is quite simple and transparent, you will still have to spend 1-2 months to prepare the documentation and submit it to the necessary authorities. From the moment the application is submitted, it may take from 2 to 4 weeks for its consideration, and, in case of a positive verdict, the owner will be notified of the registration of the legal entity.

 

Choosing the right legal form for an IT company in Spain

Before registering an IT company in Spain, it is necessary to decide on the legal form of organization. There are many different forms of companies in this country, the activities of which are regulated by the Commercial Code. You can choose from:

 

  • Limited Liability Company (SL) is the most popular limited liability company, which is characterized by limiting the liability of partners to the amount of contributed assets. There are no restrictions when choosing a name for an SL company, and the amount of the minimum share capital is 3,000 euros. The number of partners and the upper limit of shareholder assets are not limited either. The members of the company may enter into agreements with each other. However, SL cannot be listed on stock exchanges.
  • A public company (SA) is a legal entity that is also characterized by limited liability for shareholder contributions. If necessary, this LFO may subsequently be transformed into a public company. It is possible to hold the position of CEO for a maximum of 6 years. The amount of the minimum share capital is 60,000 euros.
  • A new company (SLNE) is a limited liability company chosen by those who want to register a small business quickly. In general, the procedure can take around 48 hours. To open a SLNE, only a common corporate purpose is important and there is no obligation to maintain a register of membership. Tax deferral may be requested for the first 2 years of operation of such a SLNE. Only natural persons can be shareholders of the new company.
  • Individual entrepreneurship (IE) – suitable for self-employed workers engaged in economic activities. There are no requirements for the mandatory conclusion of a contract or separation of personal assets from those obtained in the performance of their professional services. It is much easier to formalize a sole proprietorship (literally a couple of steps), and the administrative costs are much lower in comparison with other LFO. The entrepreneur is subject to unlimited liability, and in the case of high profits it is possible to apply quite high tax rates, up to 52%.

 

It is also possible to register a branch, subsidiary, etc. in Spain.

 

Procedure for starting a business in Spain

We will tell you further how to register a company in Spain. To do this, even before arriving in the country, you need to obtain an NIE, which will be necessary for opening an account in a Spanish bank, tax identification, etc. Other stages should also be overcome:

 

  • Register the name (for all forms of LFO, except SLNE) in the Trade Central Register. Propose several variants in order of preference. The verdict will have to wait no more than 2 days.
  • Opening a bank account – company registration in Spain is not possible without the cooperation of a bank. To do this, you can either come to the country yourself and visit the banking institution of interest, or use the service of a legal representative, who will do everything necessary instead of you. The authorized capital is deposited into the opened account, the amount of which depends on the chosen LFO.
  • Determination of the number of shareholders, followed by the drafting of a governing agreement. At this stage, the entrepreneur needs to hire a director. The agreement specifies the share of participation of each shareholder.
  • Defining the scope of activity, i.e. it is necessary to clearly indicate what the legal entity will do in Spain, after which, with the help of a notary, sign the memorandum of association and register the company in the Commercial Register.
  • Registration of the company with the tax office and subsequent receipt of a CIF number.

 

When carrying out registration activities, you will need to pay municipal tax fees, buy official record books and order a seal for the company.

 

Peculiarities of obtaining Spanish business visas

Anyone wishing to start a business in this jurisdiction must obtain a residence permit. This is precisely the basis for starting a company. To choose from:

 

  • Entrepreneur visa (startup visa) – suitable for those who can convince the Spanish government that their business is innovative. That is, you must offer services or products that are innovative and at the same time create jobs. Your business activities must be based on innovative technologies, which will contribute to the social and economic growth of the country.
  • Golden Visa is a program that has been in effect in Spain since 2013. When participating in it, an entrepreneur and his family can immediately obtain a 5-year residence permit. It is enough to confirm the legality of the origin of capital and make an investment in real estate, shares, a deposit in a Spanish bank or an innovative, socially significant project.

 

In case of residence in Spain for 5 years, the foreigner has the right to apply to the state for permanent residence.

 

About Spanish taxation

One of the main taxes is on profit. For companies it is 25%, for individuals its amount is calculated on a progressive scale, i.e. the more you earn, the more you have to give to the state. Sometimes the tax for individual entrepreneurs can reach a record 52%. Corporate tax must be paid once a year.

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Spain also has a quarterly VAT (IVA) payment of 21% (can be reimbursed by the state). In the case of certain services and the sale of certain goods, the rate is reduced. This type of tax is paid only for the supply of services and goods within the country, and when purchasing goods, services within the EU.

 

Start-up companies, especially in the IT sector, can have their corporate tax reduced to 15%. When companies are based in a special economic zone called the Canary Islands, additional tax discounts and incentives are possible:

 

  • Corporate tax 4%.
  • Corporate transaction tax exemption, documented legal acts relevant to operations in the SEZ.

 

In addition, regardless of the region where the company is registered, it is possible to take advantage of deductions for initial costs represented by administrative and legal fees, the cost of patent and trademark registration. This type of benefit applies to newly registered legal entities.

 

Opening a corporate account in Spain for an IT company

If you are thinking about how to register an IT company in Spain, then you will also need to understand how to open a bank account. In this regard, the primary task of a foreign investor is to choose a commercial bank. Public banking institutions in their activities are focused primarily on working with personal savings. For the services provided by the bank there are commissions, the amount of which is determined by the bank’s policy. At the same time, the maximum allowable rates are regulated by the Central Bank.

 

The requirements for opening a corporate account with Spanish banks can vary, but a few common ones can be highlighted:

 

  • Having a business owner with an NIE.
  • Memorandum of Association registered in the Commercial Register.
  • A document identifying the beneficiary.
  • Passport details and NIE of the company’s management.

 

In case the account is opened by an official representative, a notarized power of attorney must be prepared in advance.

 

Lawrange help to start an IT company in Spain

When starting an IT company in this jurisdiction, you may face some challenges:

 

  • A mentality significantly different from the Slavic mentality.
  • Language barrier, which can only be overcome if you have a high level of Spanish.
  • Legal ignorance, which can lead not only to loss of time, finances, but even trouble with the law.
  • Thorough bank check – to open an account, as practice shows, you will have to provide no less package of documents than when registering a company in general.

 

These and other difficulties can be overcome by a team of qualified, experienced lawyers, attorneys and consultants of Lawrange Law Company.. We are ready to support the whole process of company registration in Spain, starting from submitting documents to the consulate at your place of residence, finishing with the submission of documents for registration of a legal entity and opening a bank account. We will help you to rent an office, provide notary and other services that will be necessary for the successful opening of a business in the field of IT in Spain.

 

To summarize

If you are looking for a favorable environment for starting an IT business, we recommend paying attention to sunny and innovative Spain. In this jurisdiction, foreign investors will find ample opportunities to develop their own business in various IT areas (artificial intelligence, Internet of Things, blockchain, etc.). A favorable tax regime and a number of favorable benefits will allow your company to become quite firmly rooted in the local business environment. However, before starting a business in Spain, you should carefully familiarize yourself with the local legislation and the requirements for foreign entrepreneurs when registering legal entities. To make the registration process as comfortable and expeditious as possible, we recommend to enlist the support of specialists from Lawrange. With our help, the registration of an IT company, opening of accounts and other stages of business registration in Spain will take place in a short time and without unnecessary delays.

 

 

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