Incorporating companies in Spain. Part II: Start of the activity 🚀

This is the second part of our incorporation of the companies in Spain series. 

Through this post, we will explain the formalities needed in order to start the activity of your new company.

👆🏼 Registrations at Spanish Authorities

Before you start trading with your companies you’ll need to register at the Spanish Tax Agency and Social Security. Failing to do so on time will result in fines.

Tax Agency 💰

Declaration of commencement of activity before the Tax Agency

Companies need to have a digital certificate in order to submit tax declarations and all communication with the Spanish government. It’s important to obtain it as soon as the company is incorporated as you’ll need it for completing the following registrations.

Prior to the commencement of companies activities, you’ll have to communicate with the Spanish Tax Agency about the relevant tax details. The way of communication is through Census form 036. Part of the information you’ll have to disclose in the form is the following:

• Company’s details 
• Information on premises where you carry out the company’s activity
• VAT regime to which the company will subject

Economic Activities Tax (“IAE”)

⚠️ The Tax on Economic Activities is a tax levied on the mere performance of any business, professional or artistic activity in Spanish territory, regardless of the regularity of its practice and the existence of a profit motive. Both self-employed persons and companies are subject to this tax and are obliged to file returns.

• Accrual and tax period

The tax is always accrued on January 1 of each year, the tax period coinciding with the calendar year, except in the year of the first registration. In the first year, the period will start from the date of commencement of the activity until the end of the calendar year.

• Declaration of registration. This declaration is filed in two cases, either due to the start of a new economic activity, in which case, there is a one-month period to report the registration in the IAE, or due to the loss of the exemption, which must be declared in the month of December prior to the fiscal year in which it takes effect.

Formalities at the Social Security 📑

• Registration of the company with the Social Security

If the company will hire employees, it must be registered as an employer at the Administration of the General Treasury of the Social Security. The procedure is very straightforward and can be completed electronically through the company’s digital certificate at the Online Platform of Social Security.

• Registration of  companies directors at the Social Security

The company’s director has to be registered in the Spanish Social Security System as an “autónomo societario”. This figure is different from the “autónomo”/Freelancer and it may cause confusion. However, they are completely different figures. The director will have the obligation to pay social security contributions of approximately € 377,87 per month. However, if it is the first time you’ll be contributing to the Spanish Social Security, you’ll be able to benefit from a flat rate. This rate will be of 60 €/month approximately for the first year. You can find further information on financial aids for entrepreneurs here.

👉 In the final post of this series, we’ll deal with the communications regarding the commencement of the activity if you’ll have commercial premises. We’ll explain how to apply for an opening license at your town hall and the registration of employees.

⭐️🚀 Latest news: Start-Up Legislation coming up.

The draft of the upcoming Start-Ups Law will provide for free/reduced notary and registry fees for the incorporation of limited liability companies. Also, it will include reduced rates for the publication in the Official Gazette of the Mercantile Registry (BORME). It foresees the creation of the company by telematic means. Something that will be very helpful is the non-obligation to obtain a Foreigner’s Identification Number (NIE) for non-resident investors. It will only be required that they obtain tax identification numbers (NIF).

See our Corporate services section.