The long and arduous task of setting up a company in Spain

Entrepreneurship is growing stronger all over the world and Spain is no exception. However, despite the advances in business promotion policies, starting a business in Spain still presents significant challenges. In this article, we explore the difficulties entrepreneurs face when starting a business in Spain.

What are the steps to follow to set up a company in Spain?

One of the biggest obstacles for entrepreneurs in Spain is the heavy bureaucratic burden and complex regulations. The process of setting up a company can be slow and stressful, and requires a lot of paperwork and documentation. Additionally, labor and tax regulations can be confusing and difficult to comply with, adding to the uncertainty for new entrepreneurs.

Adriana Maria BarbaPartner Manager Vasquez and Barba International Legal Consultantsexposes it “Today, it is essential to have an expert consultant to make the process of setting up a company without incident. The steps to create it are too many, and the information received from the institutions is incomplete or conflicts with that of another institution that is part of the process and there are many details that are the requirements of the process that are not explained anywhere ».

Here are the steps to establish a company in our country:

• Obtain a label certificate.
• Open bank account.
• Draft company documents, among which we find: identification of shareholders, officers or partner agreement.
• Obtaining a tax identification certificate.
• Submission of documents to the public before the notary public.
• Send the documents to the Commercial Registry.
• Ask the IRS to register the officials.

In addition, if the official is a foreigner, he or she must first obtain a Alien Identity Number (NIE).

Spanish difficulties in setting up a company

Why is this happening? Why does our country put so many obstacles when it comes to opening new companies that enrich the economic fabric? Barba, who has more than 10 years of experience opening companies in Spain for foreigners, confirms that there is “Too much bureaucracy”.

in your opinion, “The officials, both in the Tax Authority and the Commercial Registry, in addition to being far too numerous, are generally ineffective.”. He adds: “Because the process of setting up a business has to go through many agencies that don’t communicate efficiently with each other, it makes starting a business unnecessarily long and tedious.”.

“The excessive security of a permanent job enjoyed by civil servants in Spain means that the responsible person has no incentive to do their job at the pace required by the economy to advance.”– concludes the expert.

Setting up a company in Spain takes about a year

How much real time are we talking about creating a community within national borders? According to the report Doing business affiliate world bankSetting up an SME in Spain requires an average of seven procedures, 12.5 days time and a cost that is 3.9% of the economy’s per capita income.

Although, unfortunately for the fabric of the business, the reality is much worse than it is on paper. Barba asserts that he has worked on corporate openings that have continued to 11 months to become 100%. Almost a year between paperwork, money entering banks, issuance of a certificate of deposit, and delays on the part of institutions in issuing relevant documents.

A study conducted by the e-Residency Program revealed that 63% of Spanish entrepreneurs would like to set up their company outside of Spain. Among the main reasons, they cite first the reduction in bureaucracy (44%), followed by the reduction in costs associated with the company (42%) and the possibility of working remotely with complete geographical independence (36%).

Starting a business is not so complicated in other countries

“In my experience, I believe that apart from Italy, there is no other country where it is more difficult to open a business.”categorically confirms.

After these words, V.I 3 economy We have looked at some examples from countries where the task of starting a business is somewhat less daunting.

he United kingdom It has been noted for its strong entrepreneurship ecosystem and business-friendly approach. Setting up companies in this country is generally faster and less bureaucratic than in Spain. The registration and certification process is more flexible, with simplified procedures and greater availability of online services.

In addition, the British government has implemented support and financing programs for entrepreneurs, facilitating access to start-up capital and business advice. This combination of factors has contributed to the thriving entrepreneurial environment in the UK, attracting entrepreneurs from all over the world and promoting business growth in various industries.

also France It has implemented measures to simplify bureaucratic procedures and encourage entrepreneurship. In addition, it has financial support programs and a more risk-taking business culture.

across the pond, United State It is known for its entrepreneurial environment and culture of innovation. The business creation process is relatively flexible and agile, with financing widely available through investors and government programs.

foreign investment

In spite of everything, there are still many foreign entrepreneurs who choose Spain when setting up a company. Foreign investment in 2022 exceeded €34,178 million in total value. This is the second highest number reached for any recorded data (1993), as evidenced by data published in Register of foreign investment data affiliate Minister of State for Trade. Compared to 2021, this is an increase of 13.9%.

“In my own case, and I am dedicated to attracting foreign investment to Spain, many investors prefer to open their companies in other countries of the European Union as a first step to opening them directly in Spain, because of these delays.”he explains.

Yes in deed , «The excellent Spanish quality of life has always attracted them, and as soon as they arrived in Europe, they decided to move to the country. If there is an efficient process of setting up a company, I am sure this number will increase exponentially.”.

Once opened what

Congratulations, your company is now registered and ready to go. Does the Spanish “bureaucratic saga” end here? What about the tax liabilities that entrepreneurs have to take on once the company is up and running?

“To create a company in Spain you must have some previous capital already dedicated to the maintenance of the company because the obligations start before the moment of creation”Add.

as expressed, “Tax rates are relatively high, both for the official and for the company, and the tax liabilities are basically: corporate tax, value-added tax and personal income tax, not only at the end of the year but throughout its activity”. We are talking, then, about the average need to declare 10 different forms to justify the company’s activity.

Optimista Barba contributes what, in his opinion, would be a possible solution: “It is necessary to modernize organizations by taking advantage of the digital tools that exist for this purpose. All the steps described above should be doable electronically, and not in a matter of days, but in a matter of hours. The technology that makes all the steps of creating a company digital is already there. It is essential for the country’s economy that Spain modernize its institutions ».