Doing Business in Spain: Structures, Tax and Rules

Doing business in Spain means choosing a legal structure, completing the registration steps for that structure, and meeting Spanish tax and employment rules. Common options include an SL company, a branch, an autonomo registration or a representative office. The correct registration route and the tax, VAT and employment duties depend on the option chosen.

What Does It Take to Do Business in Spain?

Doing business in Spain starts with a structure choice: an SL company, a branch, an autonomo registration or a representative office. Each has its own registration route and its own corporate tax, VAT and employment consequences once you trade locally.

Which structure fits turns on two questions: whether you need a Spanish entity at all, and if you do, which form matches how permanently and how large you plan to operate. The registration sequence depends on that choice. Tax obligations cover corporate tax or personal income tax and VAT, while employment obligations begin after you hire staff locally.

Do You Need a Spanish Company to Do Business in Spain?

Not always. A foreign company can sell into Spain, or send staff on a short assignment there, without setting up a Spanish entity. A permanent establishment creates Spanish tax consequences, but it does not by itself impose a general incorporation duty.

Under Article 13.1.a) of the non-resident income tax law (RDLeg 5/2004), a foreign business is deemed to operate through a permanent establishment when it continuously or habitually has facilities or places of work in Spain through which it carries out its activity, or when it acts through an agent authorized to contract on its behalf who habitually exercises that power. The article names head offices, branches, factories, workshops, warehouses and shops as examples, and treats a construction or installation project as a permanent establishment once it runs past 6 months. An applicable double-taxation treaty may supply the governing permanent-establishment test instead. This is a tax-law test, and it does not track how established a business feels. Corporate tax in Spain covers how the test applies once it is triggered.

What Legal Structures Can You Use to Do Business in Spain?

Four common options are an SL, a branch, an autonomo registration and a representative office. The right one depends on liability, permanence and whether the business is starting fresh in Spain or extending an existing foreign company.

The SL (sociedad limitada) is Spain’s standard limited-liability company. It gains its own separate legal personality once it registers at the Registro Mercantil, under Article 33 of the Ley de Sociedades de Capital, and that new personality is what separates the shareholders’ own assets from the company’s debts. The same law’s minimum share-capital rule for an SL was amended by Ley 18/2022; company formation in Spain carries the current figure. A branch (sucursal) works differently: Article 295 of the Reglamento del Registro Mercantil defines it as a secondary establishment through which the parent company’s own activities are carried out. A branch creates no new legal entity; it stays part of its foreign parent. If a business is considering a representative office, it should confirm the permitted scope before trading through it. The autonomo registration is the sole-trader route: an individual trades under unlimited personal liability, with no separate legal entity between the person and the business. Autonomo vs SL in Spain covers that decision, and company formation in Spain covers SL and branch setup.

How Do You Register a Business in Spain?

An SL and a branch both use the notary and the Registro Mercantil, but registration has different legal effects for each structure.

Article 20 of the Ley de Sociedades de Capital requires a public deed before a notary, then registration at the Registro Mercantil, and the SL only gains its legal personality on that registration. Until registration, its shares cannot be transferred, under Article 34. A branch is also registered, but it remains part of its foreign parent and does not acquire separate personality. Separately, a legal person must apply for its own NIF before any tax-relevant activity or transaction and, in all cases, within one month after incorporation or establishment in Spanish territory, according to Agencia Tributaria. That rule reaches a foreign company opening a branch too. Company formation in Spain covers the full procedure, fees and timing. Looking up a company on the register covers how to verify its filing afterward.

What Taxes Does a Business Pay in Spain?

An SL or a branch pays corporate tax on its profits and VAT on what it sells; an autonomo instead pays personal income tax and a separate Social Security contribution.

A company pays Impuesto sobre Sociedades, corporate tax, on its annual profit, and separately charges and reports VAT (IVA) on most of what it sells, according to Agencia Tributaria. An autonomo is not a corporate taxpayer at all: their business profit is taxed under IRPF, personal income tax, on the same general scale as an employee’s salary, and alongside that they owe a monthly RETA contribution to Social Security that sits outside the tax system entirely. See corporate tax in Spain, VAT in Spain and VAT registration in Spain for the applicable rates and registration rules.

What Employment Rules Apply If You Hire Staff in Spain?

Hiring your first employee in Spain triggers three separate steps: employer inscription, worker affiliation or registration, and communication of the contract content.

The Estatuto de los Trabajadores governs the employment relationship itself. An employer must apply for inscription in the Regimen General de la Seguridad Social, naming the entity that will cover occupational contingencies, before starting activity, under Article 138.1 of the Ley General de la Seguridad Social. Each worker who joins is then separately affiliated and registered under Article 139.1 of the same law; registering the company is a separate act from registering an employee. Within 10 days of agreeing a contract, the employer must also communicate its content to the public employment office, under Article 8.3 of the Estatuto de los Trabajadores; in practice this runs through SEPE’s own Contrat@ system. Employment law in Spain covers notice periods and severance, and payroll services in Spain covers running payroll once staff are on board.

Can You Hire Staff in Spain Without Setting Up a Company?

Potentially, but the arrangement must avoid cesion ilegal, illegal assignment of workers.

Under Article 43 of the Estatuto de los Trabajadores, illegal assignment exists whenever a service contract between two companies amounts to no more than placing one company’s workers at the other’s disposal, or the assigning company lacks its own stable activity or means. Both companies, assigning and receiving, become jointly and severally liable for what is owed to the workers and to Social Security once that line is crossed. This does not itself mean every EOR arrangement is unlawful; the risk sits in how much genuine substance the EOR keeps. An authorized temporary-work agency operates under a separate lawful route. Payroll services in Spain’s “Is an EOR Legal in Spain?” section covers the full analysis.

Is Spain Open to Foreign Investment?

Yes, in general. Foreign ownership of a Spanish company faces no general restriction, and 100% foreign ownership of an SL is standard, under Article 1.2 of Ley 19/2003. That freedom carries one screening exception. Under Article 7 bis of the same law, the liberalization is suspended for a non-EU/EFTA investor, or an EU/EFTA investor beneficially owned from outside it, who takes 10% or more of a Spanish company, or gains control of it, in a sector affecting public order, public security or public health. An investor inside that screening rule must obtain prior authorization before completing the investment.

Investing in Spain and gaining residency through that investment are two separate questions. Spain’s investor residence visa, including its real-estate route under Articles 63 to 67 of Ley 14/2013, was left without content from 3 April 2025, under Ley Organica 1/2025. An investor who filed an application before that date can still receive the visa under the rules in force when they applied, and a visa or authorization already issued keeps the validity it was granted for. Starting a business in Spain no longer carries that residency route for a new applicant.

Invest in Spain covers that screening rule in more detail, and Golden Visa alternatives in Spain covers other residence routes that may fit.

What Ongoing Compliance Does a Business Have Once It’s Running in Spain?

Registering the company is only the start. Three recurring obligations follow, and they run every year the business operates.

Filing annual accounts at the Registro Mercantil is one of them, under Article 279.1 of the Ley de Sociedades de Capital. Company formation in Spain covers the filing deadline. Payroll brings two more, on a fixed calendar, once staff are hired: Modelo 111, the quarterly withholding return, falls due within the first 20 calendar days after each natural quarter, and Modelo 190, its annual summary, is filed each January, according to Agencia Tributaria. Corporate tax runs on its own annual filing calendar, covered in corporate tax in Spain. A branch or foreign company carries further compliance detail; company formation in Spain and accountants in Spain cover it.

Which Part of Doing Business in Spain Needs a Specialist?

A search result cannot see your structure, your numbers or how far along you already are. The table below routes each common situation to the guide, service or specialist that answers it.

Talk to a Business-Formation Specialist

Advisors in Spain handles business formation, tax and employment matters through the relevant specialist team.