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Trading & Legalities in Spain
Trading in a foreign country can become a difficult task. The Spanish market is no exception. Good knowledge of the legal system is needed in order to succeed with your venture.
José Mara de Lorenzo, Managing Partner of Irwin Mitchell Abogados and Partner of Irwin Mitchell in the UK, provides a brief insight for UK businesses into some of the legal considerations when doing business in Spain.
Even in a globalised market, trading in a foreign country can become a difficult task. The Spanish market is no exception. Considering its corporate regulations, protective labour law, changes in the taxation regime and the application of local and national funds, Spain is an attractive market to invest in. However, good knowledge of the legal system is needed in order to succeed with your venture.
The different type of companies and legal forms which you could use to set up your business, include becoming self employed or a Spanish Capital Company.
In most cases, the decision about the legal form depends on the:
- business type
- number of employees
- access to finance
- licences and the administrative authorisations required to trade
- business turnover and tax implications
Depending on the type of company you opt for, the requirements that should be complied with are different. An identification number for foreigners (NIE) must be obtained and it is compulsory to register with the Tax Authorities and Social Security System if you become self employed. Trading licences and administrative authorisations should then be granted. It is also recommended that you take out an insurance policy for civil liability.
Please note the self employed are liable for all business actions. Unlimited liability covers all personal assets without any limitation of quantity.
The most common type of company is the Sociedad Annima (Public Limited Company) and Sociedad de Responsabilidad Limitada (Limited Liability Company).
To set up a company you are required to have:
- initial share capital, transferred by shareholders
- the correct preparation of the companys articles of association
- an incorporation public deed to be granted before a public notary
- appointed the companys body of administration
- company registration from the Tax Authorities (IAE)
- obtained the corresponding Trading Number (CIF)
- registered with the Corporate Office and the Social Security Office.
Similar to being self employed its also compulsory for companies to have the correct trading licences, administrative authorisations and insurance policies. For most companies, the liability is limited to the value of start-up capital, whereby, personal wealth of each partner is not affected.
Spanish law states that a company director may have responsibility for the management and direction of the companys daily activity. To avoid any liability, they have to carry out their duties with diligence and respect for all partners. Withholding taxes, VAT and Tax returns are also responsibilities of the company.
Once the company is set up, employment of staff maybe the next step. The Spanish Labour Regime is very bureaucratic and quite protective of employees. A detailed labour plan including continuity of supervision is important in order to avoid uncomfortable situations with the employees.
Other aspects that could also affect the daily running and future of the business include; industrial property rights, software licences, data protection, public contracting and town planning.
Being proactive in all these areas could help make a successful and profitable venture.
Legal specialists with real commercial insight
Our highly qualified Corporate Department team has trained in the UK and Spain and have experience in working with a wide range of companies on corporate tax and labour law in both jurisdictions. We provide an integrated service of legal assistance covering all the areas of your business, whilst considering the direct implications of day to day management.
Setting up in business in Spain
If you have a business in Spain or are considering setting one up and would like legal advice with no obligation on any of the issues discussed in this article please contact Irwin Mitchell Abogados on 0034 902 150 105 or e-mail email@example.com
40 Holborn Viaduct
Tel: 0870 1500 100
Fax: 0207 404 0208