Company Formation in Spain

You set up a company in Spain by obtaining a foreigner's identification number (NIE or NIF) for each owner and director, reserving a name, signing the deed of incorporation of a sociedad limitada (SL) before a notary, and registering it with the Mercantile Registry and tax agency. It suits businesses selling into Spain or Latin America, not paper holding entities.

Key points

• Most foreign-owned businesses use a sociedad limitada (SL), which since 2022 can be formed with €1 of share capital, with reserve rules until it reaches €3,000.

• The general corporate tax rate is 25%, but new companies pay 15% in their first two profitable years and smaller companies have reduced rates that keep falling to 2029.

• The ETVE regime lets a Spanish holding company exempt 95% of qualifying foreign dividends and gains, if it has a genuine management structure.

• The Beckham regime, widened by the 2022 Startups Law, taxes Spanish employment income of qualifying new residents at 24% up to €600,000 for the arrival year and five more.

• Spain's golden visa closed on 3 April 2025, so founders now use the digital nomad, entrepreneur or highly qualified professional routes.

Why do founders and groups set up a company in Spain?

Founders and groups set up in Spain to sell into a market of nearly 50 million people, hire in Madrid, Barcelona, Valencia and Málaga, and serve Latin America from a Spanish-speaking EU base. With a 25% headline rate, Spain wins on market and talent, not tax.

Typical cases: a UK software company opening a Madrid sales office, an Indian IT firm following a Spanish client, or a group wanting one European base for Latin American contracts.

Spain is a poor fit for a company with no staff or customers there, and its compliance is detailed. For the wider picture across markets, see Go Global with Greenwolf, our guide to 24 jurisdictions.

If your priority is a lower corporate rate and a smaller, tech-focused base, compare our guide to company formation in Portugal, Spain's natural alternative on the Iberian peninsula.

Which type of company can you register in Spain?

Most foreign founders and subsidiaries register a sociedad limitada (SL), Spain's private limited company. Larger businesses and those planning to raise from many investors use a sociedad anónima (SA), and some groups start with a branch.

The €1 SL came in with the 2022 Crea y Crece law. Below €3,000, 20% of profit must go to a legal reserve and owners can be liable for a shortfall on winding up, so most subsidiaries still capitalise at €3,000 or more.

What is the corporate tax rate in Spain in 2026?

The general Spanish corporate tax rate is 25%. Newly created companies pay 15% in their first profitable tax period and the next one, and certified emerging companies (startups) under the Startups Law pay 15% for their first profitable year and the following three, according to PwC's Spain tax summary.

Smaller companies now have their own reduced rates:

These reduced rates do not apply to passive asset-holding companies (entidades patrimoniales). Companies with turnover of €20 million or more also face a domestic minimum tax of 15% of taxable income.

What is the ETVE holding regime?

An ETVE (entidad de tenencia de valores extranjeros) is a Spanish company, usually an SL, whose purpose includes managing foreign shareholdings with real material and human resources. It can exempt 95% of dividends and capital gains from foreign subsidiaries, which leaves an effective rate of about 1.25% on those flows.

The conditions are a holding of at least 5% held for a year, and a subsidiary subject to a foreign tax similar to Spanish corporate tax at a nominal rate of at least 10% (a treaty with an exchange of information clause meets this). Dividends the ETVE pays out of exempt foreign income to non-resident shareholders are generally free of Spanish withholding, unless the shareholder is in a tax haven.

It is not a letterbox. Our guide to holding versus operating companies explains why the holding role needs its own board, people and decisions.

What withholding taxes and treaties apply?

Spain withholds 19% on dividends and interest paid to non-residents and 24% on royalties (19% for EU and EEA residents), reduced by EU directives or treaties. EU parents holding at least 5% for a year are usually exempt on dividends. Key treaties for our clients are:

• India: the India–Spain DTAA (in force since 1995) generally caps dividends and interest at 15%. Royalties and fees for technical services were capped at 20%, but India's Notification 33/2024 applied the most-favoured-nation clause to cut both to 10%.

• UK: the UK–Spain convention (in force since 2014) generally allows 0% on dividends to a company owning at least 10%, 15% on other dividends, and 0% on interest and royalties.

Spain has applied the OECD Multilateral Instrument since 2022, which adds a principal purpose test to most covered treaties. If treaty relief was one of the main purposes of a structure, it can be denied: see our note on the principal purpose test.

Does the 15% global minimum tax apply in Spain?

Yes, for groups with consolidated revenue of €750 million or more, which face a 15% minimum effective rate under Spain's transposition of the EU directive. Our page on GloBE (Pillar Two) explains top-up tax, and the OECD global minimum tax page has the model rules.

How do you register a company in Spain step by step?

A Spanish SL can be signed and filed within a few days once identification numbers and documents are ready. For a foreign-owned company, a realistic timeline is four to eight weeks from first instruction to an operational bank account, with NIE appointments the usual bottleneck.

1. Get NIE or NIF numbers for every individual shareholder and director (via a consulate or representative) and a NIF for any corporate shareholder.

2. Reserve the name. Obtain a name certificate from the Central Mercantile Registry.

3. Open a bank account and deposit capital. The bank issues a certificate of the cash contribution for the notary.

4. Sign the deed before a Spanish notary, in person or through apostilled powers of attorney.

5. Get the tax number. File for the company's NIF with the tax agency, the Agencia Tributaria, and register for VAT and the business activities census.

6. Register the company at the provincial Mercantile Registry, or online through CIRCE for simple SLs.

7. Declare the foreign investment. Non-resident investors file form D-1A with the Foreign Investment Register after paying in capital.

8. Register as an employer. Register with social security before the first hire.

How much does it cost to set up a company in Spain?

Notary and registry fees for a standard SL are modest, and lower through CIRCE. A foreign owner's larger costs are NIEs, apostilles, translations and professional support.

These figures are indicative only, based on what we typically see for small foreign-owned companies, and vary by city, activity and provider.

How do you open a business bank account in Spain?

Spanish banks open accounts for foreign-owned companies, but often only after an in-person meeting with a director, and they review owners and funds closely. Expect requests for NIEs of all directors and beneficial owners, notarised and apostilled corporate documents, an ownership chart, source-of-funds evidence and a description of the business.

Pain points include needing a bank certificate before the deed and long reviews of multi-layer ownership. Planning the account alongside incorporation saves weeks, as we explain in why banks challenge group structures before tax authorities do.

What substance does a Spanish company need?

A Spanish company is tax resident in Spain because it is incorporated there, but treaty partners and your home country look at where it is actually run. Real substance means local staff doing the core work, directors who take real decisions in Spain and premises that match the activity. An ETVE in particular needs genuine management of its holdings.

The other risk sits at home. An Indian founder who runs the Spanish company from Bengaluru can make it Indian resident under India's place of effective management (POEM) rules. A UK parent needs to check UK CFC rules that re-attribute offshore income, though a staffed Spanish trading company is normally exempt. Our guide to economic substance after 2022 explains the wider expectations.

Can you get residency in Spain through your company?

Owning a Spanish company does not give you residence by itself, and since the golden visa ended you cannot buy residence through investment. Organic Law 1/2025 closed the investor visa to new applications from 3 April 2025; permits granted before then remain valid and are renewed under the old rules.

The main routes linked to business or work in 2026 come mostly from the Startups Law (Law 28/2022):

• Digital nomad visa: for remote workers employed by, or freelancing for, non-Spanish clients, with income of at least 200% of the minimum wage. With the 2026 minimum wage of €1,221 over 14 payments, that is about €2,849 a month for a single applicant. Self-employed applicants can earn up to 20% from Spanish clients.

• Entrepreneur visa: for founders of an innovative business with a favourable report from ENISA.

• Highly qualified professional visa: for managers and specialists hired by a Spanish company, often the route for a subsidiary's senior hires.

• Intra-corporate transfer: for staff moved from a foreign group company to its Spanish entity.

How does the Beckham law work after the Startups Law?

The Beckham regime (the special regime for workers moving to Spain) lets qualifying new residents be taxed broadly like non-residents. Spanish employment income is taxed at a flat 24% up to €600,000 and 47% above, for the year of arrival and the next five years, and most foreign-source income is outside Spanish tax.

The Startups Law widened it from 2023. The prior non-residence period fell from ten years to five, and it now covers remote workers, directors of any company that is not a passive holding (with no shareholding limit for directors of emerging companies, and a below 25% limit otherwise), entrepreneurs with an innovative activity, highly qualified professionals serving startups, and accompanying spouses and children.

You opt in on form 149 within six months of starting work in Spain. Founders should test this with their own facts, as we explain in how founder behaviour quietly shifts tax residency.

How can an Indian resident set up a company in Spain?

An Indian company invests in a Spanish subsidiary under the overseas direct investment (ODI) rules through its authorised dealer bank, while an Indian resident individual can invest under the Liberalised Remittance Scheme (LRS) up to USD 250,000 a year, within the Overseas Investment Rules. Our guide to funding an overseas company through ODI or LRS compares the routes, and our explainer on ODI rules covers reporting.

Dividends from Spain suffer Spanish withholding of up to 15% under the DTAA, or less where the parent-subsidiary rules or domestic exemptions apply. In India they are taxed at normal rates (the old 15% concessional rate for dividends from foreign subsidiaries has gone), with credit for Spanish tax.

Royalties and technical fees paid from a Spanish subsidiary to its Indian parent are now capped at 10%, which matters for software and engineering groups.

For UK owners, a UK parent generally receives Spanish dividends exempt from UK tax, subject to CFC rules, and a founder moving to Spain must break UK residence and plan the Beckham election first.

What are the ongoing compliance requirements in Spain?

Every Spanish company must keep accounts under the Spanish General Accounting Plan and file regularly with the tax agency and the Mercantile Registry. The main annual obligations are:

• quarterly VAT (model 303) and withholding returns, corporate tax payments on account (model 202) and payroll filings;

• approving the annual accounts within six months of year end and filing them, with a beneficial ownership declaration, at the Mercantile Registry within one month of approval;

• the corporate tax return (model 200) within 25 days after six months from year end, so by 25 July for calendar-year companies;

• a statutory audit when the company exceeds two of three size limits (total assets, turnover and employees) for two consecutive years.

Spain vs Portugal vs the Netherlands: which suits your company?

Our clients most often weigh Spain against Portugal and the Netherlands.

Netherlands figures are headline rates.

The Greenwolf view

Spain is a market decision first. If your customers, partners or senior hires are in Spain or Latin America, a Spanish SL with real people is a strong base, and the reduced rates for new and smaller companies soften the 25% headline in the early years.

The ETVE and Beckham regimes are genuine advantages, but both reward substance: an ETVE without a functioning Spanish board, or a Beckham election without a checked eligibility route, creates risk. And since April 2025 there is no investment shortcut to residence.

Our order: what will the company do, who runs it and from where, how is it funded, how do profits move back, and only then which regime fits.

Setting up in Spain with Greenwolf

If you are opening a Spanish subsidiary, building an ETVE holding or relocating a senior team, Greenwolf Advisors can map the commercial role, structure the ODI or UK funding, model Spanish and home-country tax, and incorporate and maintain the company. Speak with a Greenwolf strategist before you commit to a structure.

This article is general information, not advice for a specific case.