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The Ultimate Guide To
Employment in Spain

Spain Facts

Population size: 46,064,604
Currency: Euro €
Capital city: Madrid
Languages spoken: Spanish, Catalan
Ease of Doing Business: 32

Employing in Spain: What You Need to Know

As with other European countries, the Spanish labour market is highly regulated and heavily favours employees, making it notoriously tricky to navigate. There are numerous legislative requirements for employers to comply with, making compliance often costly and time-consuming. However, the global economic downturn has forced Spanish lawmakers to embrace political, social and legal reform in order to enhance flexibility within the Spanish job market.

Key Factors to Consider When Employing in Spain

Hiring in Spain? Here's our latest article on employment in Spain.
  1. Contracts

  2. Probation Periods

    Where a probation period is agreed (provided that the worker has not performed the same functions before at the company under any type of employment contract, in which case the trial period would be null and void), it must be put in writing.

    The time limits for trial periods may be established in the respective collective bargaining agreement. However, as a general rule and in the absence of any provision in the collective labour agreement, the probationary periods cannot exceed:

    • Six months for college and junior college graduate specialists.
    • Two months for all other employees.
    • At companies with fewer than twenty-five employees, the trial period for employees who are not college or junior college graduate specialists cannot exceed three months.
    • One month in the case of temporary fixed-term employment contracts which are less than six months. Moreover, training contracts, indefinite-term employment contract in support of entrepreneurs and special employment contracts (domestic workers, senior managers, among others) have their own specific trial periods.

    During the trial period, the employer or the worker can freely terminate the contract without having to allege or prove any cause, without prior notice and with no right to any indemnity for either the worker or the employer.

  3. Termination Procedures

  4. Statutory Leave

    Working hours

    The maximum working hours are those agreed in collective labor agreements or individual employment contracts.The legal work week is 40 hours, although many companies have reduced working hours to 37 or 38. The Workers Statute maintains a 40-hour legal work week but permits total hours to be distributed irregularly over the year if such an arrangement is part of a collective bargaining agreement.

    Overtime is time worked in excess of the maximum ordinary working hours. Overtime regulations are dictated by national law and collective bargaining agreements. Paid overtime may not exceed 80 hours per year. Overtime can be taken as time in lieu within four months of the date on which the overtime was worked. It is generally voluntary.

    Annual leave 

    Each employee has the right to a minimum of one and a half days off per week, which may be accumulated by periods of up to 14 days. Workers are entitled to a minimum vacation period of 30 days, which cannot be paid in lieu. Employees are entitled to a minimum of thirty (30) days of paid vacation per year, which may differ by contract or collective agreement. In addition, there are fourteen (14) public holidays per year, which may differ slightly by region.

    Sick leave 

    Employees who have fallen ill or have suffered an accident can have their employment contract suspended during for up to 18 months. The employer normally pays the worker this temporary sick pay, and is then reimbursed by the Social Security department.

    Maternity leave 

    Female employees who are pregnant are entitled to 16 weeks paid maternity leave. The mother must take six (6) of these full-time weeks right after birth. The remaining ten (10) can be exchanged for twenty (20) weeks of part time work if the employee reaches an agreement with the employer.

    Other leave 

    Workers may be entitled to a reduction in their working hours in certain cases, for example: to directly care for children under 12 or family members who cannot take care of themselves, during the hospitalization and continuing treatment of a child in their care with cancer or any other serious illness that entails a long hospital stay and who requires direct, continuing and full-time care, until the child reaches 18 years.

    Workers are also entitled to paid leave in certain circumstances, such as marriage, performance of union duties, performance of unavoidable public or personal duties, breastfeeding, birth of children, relocation of main residence, serious illness or accident, hospitalisation or death of relatives up to the second degree of kinship, etc.

  5. Pensions and Benefits

    Generally, all employers, their employees, self-employed workers, members of manufacturing cooperatives, domestic personnel, military personnel and civil servants who reside and/or perform their duties in Spain are required to be registered with, and pay contributions to, the Spanish social security system. Spain has a number of bilateral social security agreements in force, provide relief from double social security taxation and for assured benefit coverage.

    Workers posted to Spain under the relevant social security agreements or regulations who continue to be subject to the legislation of their country of origin will not be registered with the Spanish social security system. On the contrary, when a worker is employed in Spain to carry out services in this country on a permanent basis (i.e. has received a residence and work permit), he or she must register with the Spanish Social Security System, irrespective of the worker’s nationality.

    Social security contributions are partly paid by both the employer and employee. Employees are classified under a number of professional and job categories for the purposes of determining their social security contributions. Each category has a maximum and minimum contribution base, which are generally reviewed on a yearly basis. Employees whose total compensation exceeds the maximum base, or does not reach the minimum base, must bring their contributions into line with the contribution base for their respective category.

    The rate of social insurance contributions is generally 6.35% for employees, and the rate for employer contributions is generally 30.15% of salary.The maximum monthly contribution base for 2015 is € 3,606 and the minimum is € 756.6 per month. Therefore, although an employee receives an amount that is higher than € 3,606, the contribution should not be higher than for the said amount.

    Please refer here for a full list of the maximum and minimum contribution bases for all categories.

    The employees’ portion of contributions are deducted at source from their remuneration. Employers must notify the Social Security General Treasury in each settlement period of the amount of all the remuneration items paid to their employees, irrespective of whether or not they are included in the social security contribution base and even if single bases are applicable.

Employee Entitlements

Information Explanation
Disclosure and Confidentiality of Personal Information ?
Spanish labour relations are covered under the terms and conditions of Organic Act 15/1999 of 13 December on Personal Data Protection.
Time Off Work ?
In addition to 14 public holidays per annum, employees are entitled to a minimum of 30 calendar days of paid vacation (generally taken as equating to 22 working days).
Standard salary continues to be paid during vacation periods. It is not possible for untaken holidays to be paid for in Spain.
Medical Leave ?
Employees absent from work due to illness or accident are guaranteed payment of certain minimum percentages of their salary. This works on three levels:
  • The State stipulates the minimum levels
  • Collective bargaining agreements may oblige companies to pay additional amounts
  • Companies may also pay further additional amounts voluntarily
Maternity Leave in Spain ?
Mothers are entitled to sixteen weeks of leave, the first six weeks being obligatory.
In cases of multiple child birth, two further weeks apply for each additional child.
Salary during maternity leave is paid directly by the Social Security, although only up to a given limit (€3597 per month, in the year 2014).
Companies may pay additional differences, where appropriate.
Fathers are entitled to 2 days of company-paid leave at childbirth.
They may then take another 13 days of uninterrupted leave payable by the State.
Mothers may attribute some of their leave period to the fathers and leave may also be taken on a part-time basis under certain conditions.

Employment Termination

Information Explanation
Resignation / End of Service Payment ?
Employees are generally required to provide at least 2 to 3 weeks of prior notice, depending on collective bargaining agreements.
Employees from outside the European Economic Area, Norway, Iceland, Lichtenstein and Switzerland will require specific permits to work in Spain.
The processing of work permit applications normally takes 3 to 6 months.
Termination of Employment ?
In cases of dismissal due to economic, structural, or company production-related reasons, the company has to provide 15 days of prior notice. Indemnity is calculated as a sum equivalent to 20 days of gross salary per year of service.
In cases of dismissals for disciplinary reasons, no notice is necessary and no indemnity is to be paid. For other kinds of dismissals, companies generally pay indemnities equivalent to 33 days of gross salary per year of service (45 days of gross salary being applicable on periods of accrual up to 11 February 2012). A limit of 24 months of salary is normally applicable. In such dismissals, no prior notice is generally given.

GEO Solutions or DIY Employment in Spain?

GEO Solutions or DIY Employment

Companies entering Spain must make a decision whether to use their own resources for a Do-It-Yourself (DIY) approach, or to use a Global Employment Organization to handle payroll and employment responsibilities. A GEO or Spain Employer of Record solution makes it faster, easier and cheaper to deploy staff if they don’t have a Spanish entity established that can run payroll.

Learn how we've helped clients with employees in Spain in this case article!

A DIY approach will typically take 6-9 months until there is a properly incorporated WFOE ready to run payroll and cost up to 6 figures if registered capital is required. Shield GEO can deploy foreign staff in 4-6 weeks and local staff in 48 hours. Additionally Shield GEO is responsible for all compliance issues related to the employment.

Income Tax Rates

Resident individuals are taxed on their worldwide income while non-residents are only taxed on Spanish-sourced income. Individuals are considered Spanish residents for tax purposes if they spend more than 183 days in a calendar year in Spain or if the centre of their vital interests is located in Spain. A presumption of residence arises if an individual’s family lives in Spain. Preferential regimes may apply for individuals who are expatriates.

There are two types of taxable income for Spanish personal income tax purposes: general taxable income and savings taxable income.

Savings taxable income is basically composed of the following:

  • Dividends and other income generated from holding interests in companies.
  • Interest and other income generated from transferring the taxpayer’s own capital to third parties. As an exception, when capital transferred to a related company exceeds three times the latter’s equity, the interest corresponding to the excess is taxed as general taxable income.
  • Income generated from capitalisation transactions and life and disability income insurance.
  • Capital gains arising from transfers of assets.

Savings taxable income is taxed at the following rates:

  • 19% (20% in 2015) for the first EUR 6,000 of taxable income.
  • 21% (22% in 2015) for the following EUR 6,000 to EUR 50,000 of taxable income.
  • 23% (24% in 2015) for any amounts over EUR 50,000.

General taxable income includes:

  • All income which is not savings taxable income.
  • Capital gains not generated from transfers of assets (such as lottery prizes).
  • Income allocations, attributions, or imputations, as established by law.
  • Interest and other income generated from transferring the taxpayer’s own capital to an associated company when the capital exceeds three times the associated company’s equity and for the part corresponding to the excess.

Income derived by nonresidents is generally subject to a final tax of 24.75%.

For general taxable income, progressive tax rates are applied.The total tax liability consists of the tax liability computed under the general rates plus the tax liability computed under the autonomous community rates. Consequently, the final maximum marginal rate depends on the marginal tax rate of the autonomous community where the taxpayer resides, which may differ from region to region. The general taxable income tax rates for Spanish residents for the year of assessment 2015 is detailed below:

Grossed income Tax Rate (%)
0-€12450 20
€12451-20200 25
€202001-35200 31
€35201-60000 39
In excess of €60000 47
Tax Returns Supplied


Corporate Tax Requirements

A company’s tax period is the same as its fiscal accounting year. The tax period may not exceed 12 months.

Generally, corporations are required to make three advance payments of income tax during the year: in April, October and December at specified rates.



Companies must file a tax return and pay any tax due within the first 25 calendar days after a period of six months following the close of the fiscal year.

Can supply private health care


Can assist opening bank accounts


Work Permits

Work Permits
Can Sponsor Work Permit

Yes. There are three different types of work permits that Shield GEO can assist with. The most common is the work permit for an employee who has found a job offer in Spain. Shield GEO also offers assistance with Highly Qualified Professional work permits and a Blue Card Permit 

Work Permit cost

Please contact us for specific work permit costs.

Work Permit processing time

Usually 4 to 6 months, but it can take up to 8.

Can Work Permit be processed in country


Can employee be in host country when application lodged ?

No, for the usual work permit the employer must start the application to the Ministry of Labour on the employee’s behalf. 

For Highly Qualified Professional’ work permit, one can either be in Spain at the time of application or apply from their country of origin 

Switch Business Visa to Work Permit?

NoA Spanish business visa allows one to visit the country but not work there.  

Can Spouse work on dependent visa?

For the most common type of work permit, family members can join their relatives who have been living and working in Spain for one year by applying for a family reunification residence permit. If approved, a spouse can work without a work permit.  

Business Visas

Business Visas
Can do Business Visa


Business Visa Cost

Shield GEO does not provide business visas in Spain at this moment.

Business Visa processing time

Shield GEO does not provide business visas in Spain at this moment.

Payroll and Tax in Spain

Foreign companies operating in Spain may find it challenging to deal with the complexities of the country’s tax system. The primary concerns for a foreign company that needs to comply with tax laws in Spain are: Individual income tax (IIT) for employees in Spain, social security costs, VAT, withholding tax, business tax and permanent establishment concerns.

Here's our most recent article on running payroll and taxes in Spain.

Information Explanation
Remote Payroll ?

A remote payroll in Spain is where a foreign company, i.e. a non-resident company, payrolls a resident employee in Spain. This applies to both local and foreign employees. One option for a non-resident company to payroll its employees (local and foreign) in Spain is to use a fully outsourced service like a GEO or PEO which will employ and payroll the staff on their behalf.

Local Payroll Administration ?

In some cases, a company will register their business in Spain under one of the forms available but prefer to have another company administer its payroll. This can be accomplished through a payroll provider. It is important to note that the company, as the Employer of Record, is still fully responsible for compliance with employment, immigration, tax and payroll regulations. But the payroll calculations, payments and filings can all be outsourced to the payroll provider.

Internal Payroll ?

Larger companies with a commitment to Spain may wish to run their own local payroll for all employees, foreign and local. In order to accomplish this, they will have to complete the incorporation, register the business and then hire the necessary staff. There will be a need for in country human resources personnel who have the background needed to manage a Spanish payroll and can fulfil all tax, withholding tax and payroll requirements.

This approach carries significant cost and requires some knowledge of local employment and payroll regulations. The company will need a local accounting firm and potentially legal counsel to ensure full compliance with Spanish employment laws.

Fully Outsourced Payroll & Employment ?

Companies can outsource the employment and payroll of their staff in Spain to a GEO, like Shield GEO. This is possible for both foreign workers and Spanish nationals. This is the easiest, fastest and safest way to payroll staff in Spain.

Shield GEO manages all aspects of payroll for workers in Spain, including taxes, withholding, social security payments and other statutory requirements. Shield GEO becomes the Employer of Record and employs the staff on behalf of the client.

Staff are paid monthly with tax and social security deducted at source and paid to local authorities. Shield GEO will invoice the client monthly in advance of the payroll date. The invoice consists of the Total Cost of Employment (Base salary + Employers Statutory Contributions + Additional statutory contributions) and a Management Fee. Shield GEO provides the employees with payslips.

Read more about outsourced payroll and employment through Shield GEO.

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Setting up payroll in Spain

Information Explanation
Currency ?

Euro €

Employee Information Required ?

In addition to the details pertaining to the specific employment position, the following details are the minimum needed to set an employee up on the payroll in Spain: First name and surname(s), nationality, country of tax residence, date of birth, national identity document / passport or foreigner’s identity number, social security number, full address, marital status, number of children (with their years of birth), level of studies, and bank account number

Tax Registration Requirements ?
Resident companies must execute an incorporation deed at a notary’s office and register this at the Companies Register.
Non-resident companies require official registry documentation from their country of origin.
All companies register at the Tax Office, where a Tax Identification Code will be assigned to them.
Social Security Registration ?
Once the company has a Tax Identification Code, it may apply for a Social Security Contributions Account Code.
This will enable employees to be registered and for social security contributions to be paid on their salaries.
Documentation Required for New Employees ?
Employees must be given employment contracts on or before their first day of employment.
These contracts must then be registered at the State Employment Office, within ten days as from the start date.
Spanish employment contracts must be permanent unless there are specific and justified reasons for them being temporary.

Tax Figures

Information Explanation
Corporate Income Tax ?

Taxes are levied in Spain both at the national level (either by the central government or the regions) and at the municipal level (by the municipal authorities). Spanish entities are mainly subject to corporate income tax, branch profits tax and Value added tax (VAT). Other taxes include capital tax, transfer tax, real property tax and miscellaneous levies by the local governments. There are no excess profits or alternative minimum tax. Spain offers a special tax regime for Spanish holding companies (ETVEs).

The current corporate income tax rate is 28%.

Income Tax Rate ?
Grossed income Tax Rate (%)
0-€12450 20
€12451-20200 25
€202001-35200 31
€35201-60000 39
In excess of €60000 47
Payroll Tax ?


Sales Tax ?

Persons (individual person, partnership, company with share capital or institution, permanent establishments) making taxable supplies of goods and services in Spain (excluding the Canary Islands, Ceuta and Melilla) subject to Spanish Value Added Tax (VAT) regime are required to apply for an Spanish VAT number before commencing business.

The current VAT rate is 21%.

Withholding Tax ?

Spain imposes withholding tax (WHT) on certain classes of income earned by non-residents:-

  • Dividends: 20% (to be reduced to 19% in 2016)
  • Royalties: 24%
  • Interest: 20% (to be 19% in 2016)

A reduced rate may be available under an applicable Double Tax Treaty.

Other Tax ?

Real estate taxes, transfer taxes, tax on the erection and installation projects and construction work, tax on increase in urban land value whenever land is transferred. For more information on the Spanish tax regime, refer here.

Income Tax (Personal Allowance) ?
Personal income tax in Spain is progressive, whereby the higher the salary, the higher the rate will be.
Personal situations are also taken into consideration, with dependent children tending to cause the rate of
tax to fall, etc.
Companies withhold the respective amounts from gross employee salary each month and pay over to the tax authorities on a quarterly basis (large companies do so monthly).
An annual summary return is also due to be filed in January of each year in relation to the preceding calendar year.
Under certain conditions, employees entering Spain may be entitled to apply for a special tax system with treatment as non-residents. This entails a flat tax rate, however high the salary, and may therefore potentially be very beneficiaL
Time to prepare and Pay Taxes ?

152 hours

Time required to start a Business ?

13 days


Information Explanation
Payment Mode ?
Salary is normally paid by bank transfer into the accounts of employees.
Salary must be paid within the period of accrual (generally, by the end of each month).
Frequency of Salary Payment ?

It is most common for employees to be paid monthly. 13th and 14th payments are also paid occasionally, in addition to the 12 monthly installments. In such cases, the additional payments tend to be paid in June or July, and December.

Invoice / Payslips required ?

Monthly payslips are provided with a breakdown of salary items. Salary is to be paid within the period of accrual (generally, that is by the end of each calendar month).

Minimum Wage ?

For 2014, this is €21.51 / day or €645.30 / month (based on 30-day months).

Immigration and Work Permits in Spain

Generally, obtaining a Spanish work and residence permit is a lengthy and difficult process due to the restrictive policy adopted by the Spanish authorities. This is due in part to the current high unemployment in the Spanish labour markets and the recent spike in legal as well as illegal immigration in Spain. As such, the Spanish immigration system largely favours the hiring of Spaniards over foreign nationals. However, the Spanish authorities encourage the issue work permits to foreign applicants falling under one of the preference categories, namely investors, entrepreneurs, highly qualified professionals, researchers and employees under inter-company transfers.

Use your own company?

A foreign company that wishes to employ non-EU/EEA nationals must first set up its Spanish subsidiary / branch / representative office. This Spanish entity is then required to apply for the relevant work permit for the employee before the employee commences work in Spain.

The Spanish employer must file an Application for Work and Residence Permits (Solicitud de Autorización de Trabajo y Residencia) with the Employment and Social Issues Section of the applicable Government Delegation (Delegación de Gobierno – Área de Trabajo y Asuntos Sociales).

Applications should be sent to the:

1. Immigration Office (Oficina de Extranjería) where the company undertakes operations;

2. If the employer has more than 500 workers, the Large Companies Unit of the Directorate-General for Immigration (Unidad de Grandes Empresas y Colectivos Estratégicos (UGE-CE).

Generally, to be issued a work permit, the following conditions (amongst others) must be satisfied:-

  • The employee is “high qualified” (see Special immigration procedure for “high qualified” employees, top executives, scientists and international artists).
  • The salary is at least 1.5 times the gross annual salary corresponding to the standard industrial classification in which the company is classified.
  • Persons in the Spanish labor market cannot fill the position.
  • The Spanish unemployment rate will also be a factor in the Spanish authorities’ decision, except in cases where an employee is posted to a Spanish branch of the company or the Spanish company has the required attributes for applying for the work permit at the UGE-CE.

Step 1: Application for a work permit by the employer

Documentation required:

Documentation relating to the worker:

  • Copy of passport or relevant travel documents
  • Three passport-size photographs of the applicant
  • Applicant’s curriculum vitae, attaching proof that the employee has the appropriate training for the job and, if the profession is regulated, the professional qualification required to legally practise it
  • Documents demonstrating that the applicant falls into one or more of the preferred immigrant categories. Because the majority of the preferences are based on family relationships in Spain (that is, the applicant is descended from grandparents who were Spanish nationals by birth), these documents normally consist of certificates issued by the Civil Registry (Registro Civil). If a foreign official body issues the documents, the documents must be legalized with the Apostil of Hague Convention (under the Treaty of the Hague Convention, this is a stamp that all documents in one country must bear in order to be accepted as legitimate in another country) or the approval of the Spanish Consulate in the country of origin. If necessary, the documents must be translated into Spanish (sworn translation).

Documentation relating to the company:

  • Documentation identifying the company requesting authorization:
    • If it is an individual entrepreneur: copy of the NIF or NIE, or consent to check its relevant identification through the electronic System of Data Verification of identity and residence.
    • If it is a corporation (SA, SL, cooperative, etc.):
      – A copy of the company registration number and a copy of the articles of incorporation duly registered in the corresponding register.
      – A copy of the public document proving that the signatory of the application for authorization is the legal representative of the company.
      – Copy of NIF or NIE or consent to check the company’s identity through the electronic System Data Verification of identity and residence of the person signing the application.
  • Original and copy of the employee’s work contract, signed by the company’s representative and the employee, with a special clause stating that the contract will enter into force when the work permit is granted. The copy will be stamped by the Foreign Office and returned for subsequent presentation abroad with visa applications for residence and work. This contract must have been stamped by the relevant Immigration Office
  • A certificate from Spanish labour authorities, proving that the employer has assessed the national employment situation and has proof that the company has assessed that no Spanish worker can fill the position.
  • Proof that the company has the necessary financial solvency and capacity to recruit the foreign employee:  VAT and corporate income tax declaration or a report of the working life of the company (VILE), based on the last three years.
  • Certificates from the tax and social security authorities proving that the company has no tax or social security liabilities.
  • Power of attorney granted by the Spanish company to the individual dealing with the application on behalf of the company. This individual must also be an employee of the Spanish company.
  • A memorandum describing the Spanish company, including its characteristics, activities, offices and employees, if applicable. It would be useful to emphasize the number of Spaniards employed by the company or plans to expand its Spanish workforce in the future. The memorandum must include a description of the employee’s job on company letterhead, along with any relevant attachments emphasising the special characteristics of the position, such as international or head-office experience, familiarity with head-office procedures and strategies, and language or technical capabilities. The purpose of this document is to demonstrate that a Spaniard with arguably similar qualifications cannot fill the applicant’s job.
  • Documents showing that the Spanish company is registered with the Spanish social security system, including Form A-6 (Inscripción en la Seguridad Social) and Forms TC-1/TC-2 (Boletines de Cotización) for the last three months paid.

For applications where the employee is of senior executive / managing director-level, the following documents should also be included:

  • A notarized declaration of the executive’s position and authority
  • A certificate describing the relationship between the executive and the company (for example, member of the board of directors)
  • Evidence of the company’s inscription in the Mercantile Registry

For cross-border service arrangements, the employer is also required to attach the services contract between the two entities i.e. the services contract between the two companies as well as proof of employment between the foreign employee and the foreign company, specifying the exact length of the service, the professional category of the applicant as well as the labour conditions of the position. In addition, the Spanish authorities may also require a copy of the individual’s social security certificate of coverage, if applicable.

Important note: All documents must be translated into Spanish or the official language of the territory where the application is submitted.

The application, together with all of the documents mentioned above, must be filed with the Spanish office dealing with foreign issues that is located where the Spanish company has its registered office. If a foreign official body issues the above documents, they must be legalized. A Spanish translator must prepare certified translations of the documents if they are not in Spanish. If any of the documents are missing or incomplete, the applicant normally has 10 days to provide the missing materials.

Time: 3 months from the day the application was submitted

Please contact us for a quote.

Step 2: Application by employee for a visa

Assuming the application for a work permit is successful, the Spanish company (employer) will receive a written notification. The foreign employee then has one month from the date of the receipt to file an application for the corresponding visa at the Spanish Consulate in the country where the applicant lives if he or she does not legally reside in Spain. All applications must be made in person. If the applicant is already in Spain as a non-working legal resident, the initial application may be made directly to the Spanish labour authorities; however, the applicant may not stay in the country beyond the maximum period corresponding to the terms of his or her residence visa.

Documentation required:

  • The notification from the Spanish labour authorities granting the work permit.
  • A completed Visa Application form (Solicitud de Visado). This form is available from the Spanish Consulate. When filling out this form, it is important to state that the purpose of the visit is “To work for the company (full name) in Spain,” and to provide a local address and phone number in the country where the applicant can be contacted in the next few months if the visa is granted.
  • A copy of the employment contract which has been stamped by the Spanish labour authorities.
  • The applicant’s valid passport.
  • A certificate stating that the applicant does not have a criminal record, issued by the authorities of the home country or countries where the individual has resided during the last five years.
  • Four passport-size photographs.
  • A medical certificate from the applicant’s country of origin or from Spain if the applicant is already residing in Spain. No prescribed form exists for this certificate, but the certificate should meet the following conditions: It clearly states that it is a “Medical Certificate”, clearly and fully identifies both the doctor and the applicant, certifies that the doctor has examined the applicant and that the examination included a laboratory test and certifies that, based on this examination, the applicant shows no physical or mental defect, no disease or disability, no abnormalities in the chest X-ray, no evidence of abnormal mental conditions, no addiction to, or use of, toxic substances and no contagious diseases. This certificate must be signed and dated by the doctor performing the examination.

If the above documents are not in Spanish, they must be accompanied by certified translations prepared by an official Spanish translator.

In general, two photocopies of each of the above documents are required. However, the consular officials have the right to request additional documents as well as the number of copies that an applicant must submit.

The Spanish Consulate can require the applicant’s presence and a personal interview.

The residence visa must be collected from the Spanish Consulate where the original Request for Visa form was filed. Depending on the individual Consulate, the applicant may be notified either by telephone or in writing when the visa is available. Consequently, the applicant should check periodically with the Consulate to see if his or her visa is available.

Time: Ranges from 1 week to 4 months

Please contact us for a quote.

If the visa application is successful, the applicant must collect the visa from the Spanish Consulate within 30 days. After obtaining the visa, the individual should enter Spain within three months (this period should be always checked with the Consulate). If the application for a work permit is denied, an appeal may be filed with the Ministry of Labour and Social Issues and, if necessary, with the courts. However, in practice, such appeals are rarely successful.

Step 3: Registration of the employee with Social Security authorities in Spain 

Upon granting a work permit, the applicant’s details will be transmitted to the Provincial Directorate of the Police for processing of the residence permit. The Spanish employer will also be notified of certain administrative costs that must be paid to the Economy and Finance Ministry.

Upon receiving the applicant’s materials from the labour authorities, the Provincial Directorate of the Police analyzes the application before issuing a residence permit. Additional documents may be requested if required.

After entering Spain, the company has three months to register the foreign employee at the Social Security office. Within a month after registration at the Social Security office, or the entry of the foreigner in the case of a cross-border work permit, the applicant must go to the Provincial Directorate of the Police to pick up the work and residence permits. The applicant is normally required to bring the following items:

  • The original approval letter from the labour authorities for the granting of the work permit
  • The applicant’s passport with the visa stamp
  • Three passport-size photographs
  • The original Application for Work and Residence Permit form that was presented to the labour authorities
  • An invoice establishing that the required fees have been paid to the Economy and Finance Ministry

The Spanish authorities are generally quite restrictive in issuing work permits / visas. Applicants falling under selected preference categories will be given priority under Spanish law, which are generally based on familial ties in Spain. Some of these preference categories include:-

  • He or she was born and is legally residing in Spain
  • He or she has dependent Spanish ancestors or descendants
  • He or she previously had Spanish nationality and now intends to reside in Spain.
  • He or she is a national of a Latin American country, Andorra, Guinea or the Philippines, or is Sephardic.
  • He or she is directly related to an officer or director of the Spanish company for which he or she is working (except for domestic help).
  • He or she holds a senior executive or managing director position with the Spanish company or is considered an important employee of the company.
  • He or she has a permanent residence permit or has resided legally in Spain for the past five years.
  • He or she is a “high qualified” employee
  • He or she is a famous artist.

Expedited procedure for applying for work permits are now available for the  following types of applicants:

  • An individual holding a senior executive – or managing director- type position with the Spanish company
  • An individual holding a position that is “high qualified”
  • Scientists and international artists

The authorities will also consider the following factors when making their evaluation:

  • The reciprocity accorded to Spanish nationals with respect to granting work and residence permits in the applicant’s country of origin
  • The number of Spaniards employed by the Spanish company intending to hire the applicant
  • The Spanish company’s plans for the future expansion of its business and its workforce

Under Law 14/2013 [a new law for encouraging investments in Spain], the Spanish government grants residence visas or permits to foreigners in the following categories:

• Investors
• Entrepreneurs
• Highly qualified professionals
• Researchers
• Employees with intercompany transfers

As a general rule, all visas have a one-year term, with the option of a two-year extension.


Use the Shield GEO Employer of Record Solution ?

Please contact us for more information on sponsored work permits in Spain.

Types of visas in Spain

Category Description of Visa

Non-resident foreign investors may apply for this visa, provided they make a significant capital investment in the country. The following cases will be deemed to
constitute a significant investment of capital:

— An initial investment for an amount equal to or greater than €2 million in Spanish public debt instruments, or for an amount equal to or greater than one million euros in shares in Spanish companies or deposits in bank accounts at Spanish financial institutions.
— The acquisition of real estate in Spain with an investment of an amount equal to or greater than €500,000 per applicant.
— A business project to be developed in Spain that can be considered to be of general or public interest, taking into account the creation of jobs, the technology and scientific innovation of the project and its socioeconomic impact in Spain

Time: One year. If the foreigner wishes to reside in Spain for a longer period, a residence permit can requested from the Spanish immigration authorities in Spain.


This visa is available for any entrepreneurs pursuing an activity of an innovative nature in Spain that is considered to be of special economic interest for the country. In taking into account whether the entrepreneur meets the requirements for this visa, the Spanish authorities will evaluate the business plan (including an analysis of the market, service or product, and the financing), the professional profile of the foreigner and the economic benefits that may arise through job creation and technological innovation etc.

Highly qualified professionals

Highly qualified employees assigned to a Spanish company may apply for the Intra-Company Residence Permit (Autorización de Residencia por Traslado Intraempresarial) [covered below] while senior executive or managing director type positions involved in general interest projects for Spain may apply for the High Qualified Professionals residence permit (Autorizaciones de Residencia para Personal Altamente Cualificado). Applicants must fall within one of the following categories:

1. Executive or highly qualified personnel, where the company or group of companies must meet one of the requirements indicated in Article 71 a) of Law 14/2013 (average headcount during the three months prior to the application of 250 workers in Spain; annual net revenues in Spain in excess of €50 million; gross average annual inbound foreign investment of not less than €1 million in the three years prior to submission of the application; companies with a stock value or position in excess of €3 million; belonging, in the case of Spanish SMEs, to an industry deemed strategic).

2. Executive or highly qualified personnel forming part of a business project entailing,
alternatively and providing the circumstance alleged is deemed and evidenced to be of general interest: –

a. A significant increase in the creation of direct employment on the part of the company seeking to hire.
„b. The maintenance of employment.
„c. A significant increase in job creation in the industry or geographic region in which the labour activity is to be pursued.
„d. An extraordinary investment with a relevant socioeconomic impact in the geographic region in which the labor activity is to be pursued.
„ e. The concurrence of reasons of interest for Spain’s commercial and investment policy.
„ f. A relevant contribution to scientific and/or technological innovation.

3. Graduates and postgraduates from prestigious universities and business schools.


Foreigners looking to enter Spain to pursue training research, development and
innovation activities at public or private entities may apply for this visa provided they fall within one of the following categories:

— The research personnel referred to in Article 13 and Additional Provision no. 1 of Science, Technology and Innovation Law 14/2011, of June 1, 2011.
— Scientific and technical personnel performing scientific, development and technological innovation work at Spanish businesses or R&D&I centres established in Spain.
— Researchers taken on under an agreement by public or private research bodies.
— Lecturers hired by universities or higher education and research centers, or business schools established in Spain.

Intercompany Transfers

This visa is for foreign employees who may be transferring to Spain under a labour or professional relationship or for professional training reasons, within a company or group of companies established in Spain. Documentation must be provided as evidence of the following:-

— The existence of an actual business activity and, as the case may be, of the business group.
— Graduate qualification or the like or, where appropriate, at least 3 years’ professional experience.
— The existence of a prior, ongoing professional relationship of 3 months with one or more group companies.
— Company documentation evidencing the transfer

EU/EEA Nationals

EU nationals and their family members may live and work (as employees or self-employed workers) in Spain without obtaining a work permit. However, in general they must obtain the relevant EU citizen registration certificate or EU citizen family member residence card.

Residence and self-employed work permits

Self-employment work permits are issued to first-time applicants for specific activities, employers and geographical areas. These permits are granted for one year. They can be renewed for two additional years and afterwards for another two years.Where a foreign worker has resided legally and continuously in Spain for five years and has renewed his or her work and residence permits, he or she may obtain a long-stay residence permit.

Frontier workers

Employed or self-employed work permit for workers residing in the frontier area of a neighbouring State to which they return each day. Its validity is restricted to the territory of the autonomous community or city where the worker has his residence. The Initial duration of the permit is for a minimum of three months with a maximum of one year. It may be extended at the end of the initial period, and each successive renewal may not exceed one year.

Fixed- term employment work permits (temporary permits)

Work permits may be granted for temporary, seasonal or cyclical activities having a maximum duration of 9 months within 12 consecutive months. These permits may not be renewed. They are granted for a specific employer and are not transferable.

Work permits may also be granted for other temporary activities, such as assembly of industrial plants and construction projects for infrastructure, electricity networks, gas supply and railways.

In addition, work permits may be issued for temporary activities performed by senior management, professional sportsmen and women, artistes in public performances,
and such other groups as may be determined by legislation

Temporary work permits for the activities described in this paragraph have a maximum duration of one year and may not be renewed.

Cross-border work permits

A cross-border work permits allows a foreign employee of a non-EU company to work in Spain for a client of his or her employer (a Spanish company) or for a subsidiary of the foreign company that is located within the Spanish territory. This permit is valid for one year and renewable for an additional year. If the foreign country and Spain have entered into a social security agreement, the duration of the work permit will be equal to the period established in the social security agreement.

To qualify for a cross-border work permit, an individual must have been working for the company that posts him or her at least for nine months. The holder of a cross-border work permit must continue to belong to his or her home country’s social security system and must be paid by the foreign company.

The Spanish labour authorities may request a copy of the contract between the Spanish customer and the foreign employer or the assignment letter in the case of a subsidiary.

Blue Card work permits

Holders of EU blue cards that have resided for at least eighteen months in another EU country may obtain this permit. Blue Card work permits are generally granted to some highly qualified employees who provide evidence of higher education qualifications (which is understood as higher education of at least least three years) or, exceptionally, have a minimum of five years’ professional experience that could be considered comparable. Blue Cards have an initial period of one year, with two subsequent renewals of two years each. Subsequently, the foreigner can apply for an EU permanent residence permit.

A Blue Card allows the foreigner to do the following:
• He or she may work and reside in Spain.
• He or she may move freely for business purposes up to 90 days in EU territory.
• After holding the Blue Card for 18 months, he or she may apply for a new Blue Card in another country of the EU if he or she fulfils the internal immigration requirements for the country.

Family members can also obtain residence permits at the same time as the employee.

Family members

Family members must obtain residence permits if they intend to accompany a foreign national to Spain. Spouses of a foreign national do not automatically receive a work permit, except in the case of a Blue Card holder. He or she may file jointly with the foreign national or independently if he or she wishes to obtain a Spanish work permit.

It is possible to apply for a regrouping visa if the applicant’s spouse has a one-year residence permit that has been renewed for four additional years.

It is also possible to apply for a Non-Lucrative Residence Permit if the applicant can prove that he or she has a monthly financial support of at least 400% of the Public Income Indicator of Multiple Effects (Indicador Publico de Renta de Efectos Múltiples, or IPREM). IPREM is a Spanish economic index. The 2014 IPREM is equal to EUR532.51 (it may change each year).

Setting up a company in Spain

When setting up a company you may want to consider these factors:

  1. Business Factors

    Generally, Spain does not impose any specific requirements on foreigners wishing to establish a business presence in the country. However, it is worth noting that the Directorate-General for Trade and Investments (“DGCI”) may require Spanish companies with foreign shareholders, and Spanish branches of non-resident persons to file an annual report with it on the status of their foreign shareholders. The shareholders may also be required to provide additional information if necessary.

    In deciding on whether to invest in Spain, you may also want to consider the following when making your decision :-

    • The industry and type of business that will be conducted
    • Nationality of the headquarters / individuals (s)
    • Presence of existing trade agreements or relationships
  2. Location

    Location will be another factor. Separate cities and regions may have different rules, costs and availability. It is always recommended to seek advice from relevant professionals, such as business or legal advisors, accountants and others depending on your needs.

  3. Regional Language

    Regional language may be an influence. Although Spanish is the national language, different locations in Spain may use different languages, such as Catalan in the northeastern regions of Catalonia and the Balearic Islands, meaning some terminology may be different in various regions.

There are four types of business forms available to foreign companies in Spain. Each of these business forms has distinct advantages and disadvantages, as well as differing scope of business activities, registration requirements and minimum capital requirements. In most cases it will depend on the degree of commitment a company has to Spain and the planned business activity.

When setting up a company in Spain, you have the following options:-

  • Corporation
  • Branch Office
  • Representative Office
  • Joint venture

This article provides a general guideline for foreign businesses on entering Spain for business purposes. In particular, it looks at common pathways to establishing a business presence in Spain, generally through a corporation, branch office, representative office or joint venture. In addition, various economic, tax and regulatory factors are provided throughout as a source of useful information to assist those who will enter the Spanish economy. The guide also looks at some immigration requirements such as obtaining appropriate visa status.

Data is based on the time of writing, August 2015 or closest available dates.


Incorporation in Spain is a long and regimented procedure. However, there are several regimes in place that foreign investors may be able to take advantage of if the entity being set up is less complex.

In Spain, there are two main types of corporations that can be set up:

  • Sociedad de responsabilidad limitada (S.L.) [equivalent to a private limited liability company]
  • Sociedad Anónima (S.A.)
    [equivalent to a public limited liability company]

The most commonly selected option is the S.L. due to its organisational flexibility and lower capital requirements, however the choice largely depends on the expected activity level in Spain.

Types of corporations

1. Sociedad de responsabilidad limitada  (S.L.)

The S.L is usually the vehicle of choice for smaller to medium sized companies due to its organisational flexibility and lower capital requirements.

Investment Capital Requirements

Minimum of €3,000 which must be paid up in full at the time of incorporation. S.L.s may be founded by a single partner.

No independent expert’s report is required for non-monetary contributions. However, the founders and shareholders are jointly and severally liable for the authenticity of any contributions made.

S.L. shares are generally not freely transferable (unless acquired by other shareholders, ascendants, descendants or companies within the same group). In fact, unless otherwise provided in the bylaws of the company, Spanish law provides that the other shareholders or the company itself have a preemptive right of acquisition of the shares in question in the event of a transfer to persons other than those referred to above. S.L.s are also not permitted to issue bonds.


Minimum of 3 and maximum of 12 directors. Directors may be elected for an indefinite period of time. No nationality or residency requirements apply.

Accounting / auditing requirements

All Spanish companies are required to prepare annual financial statements and file these with the Mercantile Register. Companies are required to file their financial statements within a month after their approval in the General Meeting. The approval must not be later than 6 months after the date of the balance sheet.

Companies may have the option to file abbreviated financial statements e.g. condensed balance sheet, no statement of cash flows is required and less notes disclosures. No management report is also required. Companies falling within 2 of the 3 limits listed below for two consecutive years can file abbreviated financial statements:-

a) Balance sheet total not exceeding€4,000,000.

b) Net turnover not exceeding€8,000,000.

c) Average employees during the year not exceeding 50.

Companies falling within 2 of the 3 limits listed below for two consecutive years are not required to have their financial statements audited:-

a) Balance sheet total not exceeding€2,850,000.

b) Net turnover not exceeding€5,700,000.

c) Average employees during the year not exceeding 50

However, regardless of the size of the company, a company may still be required to be audited if it is contained in its charter, or an audit is requested by at least 5% of the shareholders.

2. Sociedad Anónima (S.A.)

A S.A. is ideally used where an enterprise conducts business of substantial scale and where there are a significant number of investors, making it the preferred vehicle of choice for medium to larger-sized enterprises. Only a S.A. may be listed on the stock exchange.

Investment Capital Requirements

Minimum of €60,000. Authorized capital must be fully subscribed and at least 25% of the face value of each share must be paid up at the time of inscription in the Mercantile Register. The remaining 75% may be paid up within the period specified in the company’s bylaws. No minimum number of shareholders is required for an SA, although a special reporting and registration system applies to single shareholder companies. Shareholders can be individuals or companies of any nationality and residence.

S.A. shares are generally freely transferable unless otherwise provided for in the company’s by-laws. S.A.s are also permitted to issue bonds.


Minimum of 3 directors, with no maximum. Directors may be elected for a maximum term of 6 years. No nationality or residency requirements apply.

Nevertheless, many foreign controlled companies prefer to appoint a Spanish national to serve as secretary or non-director secretary of the board of directors. A director needs not be a shareholder unless stipulated in the bylaws.

The company may opt for a board of directors or an administrator system made up of a sole or several administrators.

Accounting / auditing requirements

Please refer to the accounting / auditing requirements for S.L.s above. SAs must undergo external audits by a registered auditor, except for SAs that may submit abbreviated annual accounts.

Incorporation process 

Spanish law allows for three types of incorporation regimes depending on the structure of the entity in question: ordinary, simplified and super simplified.

a. Ordinary regime

Applicable to any kind of limited liability company or corporation.

b. Simplified regime

Applicable only to limited liability companies with:

  • Shareholders that are exclusively individuals
  • Share capital not exceeding €30,000, and
  • Managing body: sole director, various directors acting severally or two joint directors (therefore excluding boards of directors).

c. Super simplified regime

Applicable only to limited liability companies with:

  • Shareholders that are exclusively individuals
  • Share capital not exceeding €3,100, and
  • Bylaws in line with any of those approved by the Ministry of Justice

The steps under each regime are largely similar. For full details on the steps for each type of regime, please refer to here. The entire incorporation process for a Spanish entity takes approximately 6-8 weeks.

Step 1: Obtain certification of the proposed company’s uniqueness of name (certificación negativa de la denominación social) from the Mercantile Register

Applications are made to the Central Commercial Registry (which may contain up to three alternative corporate names). The Central Commercial Registry will issue a name reservation certificate for the new company. Names are reserved for a maximum of six months from the date of issue of the certificate. Once the certificate’s validity has expired (3 months), the certificate can only be renewed once, after which a new certificate must be requested.

Agency: Central Commercial Registry

Time: 2 days

Cost: €16.25

Step 2: Application for a provisional tax identification number (N.I.F.)

Any individual or legal entity with economic or professional interests in Spain must hold a tax identification number (in the case of legal entities) or a foreigner identity number (for individuals). A foreign investor must apply for a  N.I.F./N.I.E. when a direct investment in made in Spain or in the case of a shareholder or director of an entity resident in Spain or for a foreign entity’s permanent establishment located in Spain.

The following documents are required when submitting an application:-

  • Form 0363 (declaration of registration on, amendment to, or deregistration from the census of parties subject to tax obligations, box 110), signed by a representative of the company holding a N.I.E or Spanish national identity card 4.
  • Copy of the N.I.E. or Spanish national identity card of the signatory.
  • Name search certificate from the Central Commercial Registry.
  • Agreement of intent to form a company.

Agency: State Tax Agency

Time: Same day

Cost: No charge

Step 3: Opening a bank account

Contributions can also be directly given to the Notary Public before whom the deed of incorporation is going to be granted so that the notary can directly deposit them in the Company’s bank account. Once the founding shareholders have paid in the capital, the bank must issue payment certificates.

Step 4: Execution of anti-money laundering and terrorist financing declaration 

In accordance with Law 10/2010, the founding shareholders must execute a document containing representations by the beneficial owner under the Prevention of Money Laundering and Terrorist Financing Act.

Step 5: Execution of public deed before the Notary Public

The founding shareholders must execute a public deed before a notary, containing:

(i) Evidence of the identity of the founding shareholders. If any of the shareholders is represented at the act of formation, a notarized power of attorney to represent the shareholder must be produced to the notary. If the power of attorney is issued abroad, it must be duly legalized.

(ii) Representations by the beneficial owner (see requirement 4 above).

(iii) Evidence of contributions and whether they are to be made in cash or in kind (if applicable) using the corresponding bank documentation, as well as details of the capital stock subscribed by the shareholders.

(iv) Clear name search certificate issued by the Commercial Registry (see requirement 1 above).

(v) Company bylaws.

(vi) Identification of and acceptance by the company directors.

(vii) Subsequent declaration of foreign investment to the Register of Foreign Investment of the Directorate-General for Trade and Investment (“D.G.C.I.”) of the Ministry of Economy and Competitiveness. In some cases, limited mainly to foreign investments from countries or territories deemed to be tax havens, a prior declaration must be made.

(vii) Identification of the economic activity code describing the activity in accordance with the National Classification of Economic Activities (CNAE).

Time: Under the ordinary regime, the deed has to be executed within 3 months of issue of the clear name search certificate, however this is usually done on the same or following day under the simplified regimes.

Fees: Notary fees for company formation are charged on a sliding scale based on the capital stock. For guidance purposes, the official rates amount to approximately €90 for the first €6,010, after which rates of between 0.03% and 0.45% are applied to amounts of between €6,010,121 and €601,012.10. For any amount in excess of €6,010,121.10, the notary will receive the amount that is freely agreed upon by the executing parties.

Step 6: Registration of the office at the Commercial Registry

Deed of formation can be submitted in person or telematically.

Agency: Commercial Registry

Time: 15 days (ordinary regime), 3 days (simplified) and 7 business hours (super simplified regime)

Cost: €6.01 for the first €3,005, after which there is a sliding scale ranging from 0.005% and 0.10% for capital in excess of €6,010,121. The total fee is capped at €2,181.

Step 7: Obtain a definitive N.I.F. once the company is set up and registered

Documents required:

  • Form 0366 (declaration of registration on, amendment to, or deregistration from the census of parties subject to tax obligations, box 120), signed by a representative of the company holding a N.I.E or Spanish national identity card.
  • Original and photocopy of the power of attorney evidencing the representative authority of the person signing form 036.
  • Copy of the N.I.E. or Spanish national identity card of the signatory.
  • Original and copy of the deed of formation bearing the registration stamp.

Agency: State Tax Agency

Time: 10 business days

Cost: No charge

Alternatively, the Commercial Registry officer is able to send the company’s registration details to the State Tax Agency by telematic means. The State Tax Agency will notify the notary and registrar of the N.I.F. number.

Step 8: Other notification procedures

a. Registration for the Tax on Economic Activities through submission of the Form 036. Companies being set up must describe the activities they are going to pursue and the reason why they are exempt from this tax. Legal entities are exempt for the first 2 years of their operations, as well as  entities whose net turnover is less than one million euros. This step must be completed before the company commences operations.

b. Registration for Value Added Tax (V.A.T.).

c. Submit a notification of start of operations (declaración responsable) to a private agency authorized by the municipality (ECLU)

Agency: Town Council

Time: 1 day

Cost: €360, however this varies with the company’s location and size of premises

d. Registration of the company for Spanish social security and occupational accident insurance purposes, and registration of the hiring of employees for social security purposes.

e. Procedural formalities at the provincial office of the Ministry of Employment and Social Security:-

i. Registration with the Spanish social security authorities and obtaining a social security contribution account code: Registration must take place prior to commencement of activities. Registration is done with the Social Security General Treasury by submitting the relevant official form and documentation (deed of formation, document issued by the Ministry of Finance and Public Administration stating the company’s tax identification number and company’s economic activity, powers of legal representation of the company, document of affiliation to the occupational accident and disease mutual insurance company, among others).

ii. Notification of hiring employees: Must be done once the company has been registered with the social security authorities and before the employees commence work. Notification is generally made electronically using the RED electronic document submission system.

iii. Legalisation of the labor inspection visits book: Employers are required to have visits book available for each workplace, which are open for inspection by labour and social security inspectors. This book must be “legalised” at the Provincial Labour Inspectorate.

iv. Notification of opening of workplace: Notification of the commencement of activities at the workplace must be made to the labour authorities within 30 days of its opening in each Autonomous Community. An occupational risk prevention plan must usually also be attached.

Branch Office

Foreign corporations operating in Spain can operate as a branch office without the need to incorporate. However, it is generally advisable to incorporate rather than set up a branch office in Spain, given the numerous drawbacks associated with having a branch office. Having said that, foreign enterprises wanting to set up a branch in Spain for lower levels of activity are allowed to do so.

Branches are used primarily by oil companies (for prospecting) and by service enterprises, including banks, construction and engineering firms, insurance companies and shipping lines.

Branch Investment Capital Requirements

No minimum capital requirements.

The parent company is fully liable for the liabilities of the branch.


Representative (who acts as attorney of the branch in the name and on behalf of the parent company).

Accounting requirements

The branch will have to include a legalised copy of the registration of the annual accounts of the parent company in its country of residence. As such, it must have a legalised copy of the accounts drawn up in accordance with the accounting principles in that country. These documents do not need to be translated into Spanish. However, the signatures of the directors need to be legalised by a notary and with a note of the Hague Convention.

Things to do upon Incorporation 

Generally, incorporation of a branch takes between 6-8 weeks.

Step 1: Obtain certification of the proposed company’s uniqueness of name (certificación negativa de la denominación social) from the Mercantile Register

Same procedure as for a company.

Step 2: Application for a provisional tax identification number (N.I.F.)

Same procedure as for a company. The branch will also need to appoint an individual or legal entity residing in Spain to represent the parent company in dealings with the Spanish tax authorities regarding its tax obligations.

Step 3: Execution of anti-money laundering and terrorist financing declaration 

Step 4: Execution of public deed before the Notary Public

Documentation requirements:-

(i) documentation similar to that required for a subsidiary (that is, evidence of the identity of the person who appears before him, his power of attorney to represent the parent company, declaration of the beneficial owner, evidence of payment and whether it is to be made in cash or in kind (if applicable);

(ii) sufficient proof (translated, legalized and/or certified by apostille, as appropriate) of the existence of the parent company, its bylaws and the names and personal details of its directors; and

(iii) the resolution to form the branch adopted by the competent body of the parent company. The deed may also contain the subsequent declaration of foreign investment to the Register of Foreign Investment of the Directorate-General for Trade and Investment (“D.G.C.I.”) of the Ministry of Economy and Competitiveness.

Step 6: Registration of the office at the Commercial Registry

Same procedure as for a company

Step 7: Other notification procedures

a. Registration for the purposes of the Tax on Economic Activities (same procedure followed as for a company).

b. Registration for the purposes of Value Added Tax (V.A.T.)

c. Payment of opening license tax

d. Registration of the company for Spanish social security purposes

Representative Office

This is the easiest and least expensive type of foreign investment structure to set up and has no registered capital requirements. The defining characteristic of an RO is its limited business scope.  An RO is generally forbidden from engaging in any profit-seeking activities, and can only legally engage in purely marketing or informational activities relating to commercial, financial and economic matters but does not actually conduct any actual business.



ROs are generally considered very useful for potential investors, as it allows them to perform information gathering without having to comply with too many legal formalities. A representative office is, therefore, the ideal vehicle for conducting market research, studying the level of competition existing in the industry in which it intends to invest, compiling financial projections and profit estimates for the investment or negotiating the acquisition of companies via purchase of shares or of assets and liabilities.


Representative offices have no formal managing bodies; the representative of each office performs the activities of the representative office by virtue of the powers granted to that representative.

Things to do upon Incorporation 

In general, no commercial requirements need to be met for a representative office to be opened. However, a public deed (or document executed before a foreign notary public, duly legalized with the Hague Apostille or any other applicable form of legalization) may have to be executed, recording the opening of the representative office, the allocation of funds, the identity of the tax representative (an individual or legal entity resident in Spain) and its powers. Representative offices do need to be registered at the Commercial Registry.

Joint Venture

A significant number of joint ventures use corporations and limited liability companies as vehicles. Please refer to the section on ‘Corporations’ above.

Joint ventures may also be set up as:

  • An Economic Interest Grouping (E.I.G.) and a European E.I.G. (E.E.I.G.).
  • A Temporary Business Association (“Unión Temporal de Empresas” or U.T.E.).
  • Under a type of silent partnership arrangement peculiar to Spanish law (“cuenta en participación”) with one or more Spanish entrepreneurs.

1. Temporary Business Association (“Unión Temporal de Empresas” or U.T.E.)

Under Spanish law, U.T.E.s are defined as temporary business alliances set up for a specified or unspecified period of time, for the sole purpose of carrying out a specific project or service. U.T.E.s allow several companies to operate together on one common project. This form of association is very common for engineering and construction projects but can be used in other sectors as well.

U.T.E.s are not companies in the strict sense and have no legal personality. In order to qualify for the special fiscal transparency regime provided for U.T.E.s, they must be formed by notarial deed and registered on the Special Register of U.T.E.s at the Spanish Ministry of Finance and Public Administration. They must also comply with the bookkeeping and accounting requirements similar to those of Spanish companies.

U.T.E.s. may be also registered at the Commercial Registry. Formalities for formalization of a U.T.E are similar to those for a company or branch, adjusted to reflect the special characteristics of this type of arrangement.

2. Economic Interest Grouping (E.I.G.) / European E.I.G. (E.E.I.G.)

E.I..G.s were created with a view to facilitating the pursuit or enhancing the profitability of the activities of their members. E.I.G.s may not act on behalf of their members nor may they substitute them in their operations. They are most commonly used to provide secondary services, such as centralized purchasing, sales, information management or administrative services, within the context of a broader association or group of companies.

A key difference between E.I.G.s. and U.T.E.s is that unlike U.T.E.s, E.I.G.s are commercial entities with a separate legal personality.

Spanish law sets out certain requirements for the formation of E.I.G.s:

1. They may not interfere with their members’ decisions on personnel, finance or investment matters, nor are they allowed to manage or control the activities of their members.

2. They may not directly or indirectly hold stakes in their member companies, unless it is necessary to acquire shares or holdings in order to fulfill the E.I.G’s purpose, in which case the shares or holdings must be transferred immediately to its members.

3. They must be formed by notarial deed and registered at the competent Commercial Registry.

E.I.G. members are personally and jointly and severally liable for the entity’s debts.

E.E.I.G.s are also entities with a separate legal entity. Their characteristics are regulated by EU Council Regulation (EEC) 2137/85, which establishes the basic rules governing E.E.I.G.s.

3. Silent Participation Agreement (C.E.P.)

C.E.P.s are not subject to any legal requirements.

In essence, C.E.P.s are simply a financial collaboration where one or more entrepreneurs (silent partners) take an interest in the operations of another (the active partner) by contributing an agreed portion of capital to the active partner and sharing in his/her profits or losses. The contributions, whether cash or in kind, do not qualify as capital contributions as such, but rather simply represent the right of the silent partner(s) to share in the results of the business concerned.

Silent partners are not considered as shareholders of the active partner.

As provided for in the Commercial Code, this type of agreement does not require any legal formality to be fulfilled (public deed or registration at the Commercial Registry). However, in practice, the parties to the C.E.P. still tend to record the agreement in a public deed.

Other types of entities

Other types of entities or arrangements that may be considered for operating in Spain include:

1. Limited liability entrepreneur (ERL)

2. Distribution, agency, commission agency and franchising agreements


Outsourcing Employment Through a GEO Employer of Record Service

Whether to incorporate in Spain, and what sort of entity to setup are just two of the many choices companies must make when expanding into a new market.

If the company intends to have staff in Spain they must also decide whether they will administer that employment internally or use a Global Employment Organization to handle payroll and Employer of Record responsibilities. A GEO Employer of Record solution is an attractive alternative where

  • the company is looking to setup an office quickly
  • the company wants to work within a defined budget
  • the company wants to limit its initial commitment in Spain
  • the company needs help with tax, employment, immigration and payroll compliance in Spain

The complexity of employment regulations in Spain makes the use of a GEO advisable coupled with local legal counsel to ensure full compliance with employment laws, for example the drafting of local contracts for workers.

Shield GEO provides a comprehensive service in Spain allowing companies to deploy their staff quickly with reasonable, clearly stated costs and timeframes. The company contracts directly with Shield to employ and payroll their staff on their behalf in Spain.

Shield GEO then becomes the Employer of Record. Shield GEO assumes the legal responsibility for these employees, sponsoring them on work permits, complying with local employment law and running their monthly payroll. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Spain. Read more about outsourced employment through Shield GEO.

Glossary of terms

  • Sociedad de responsabilidad limitada (S.L.) – equivalent to a private limited liability company
  • Sociedad Anónima (S.A.) – equivalent to a public limited liability company
  • Unión Temporal de Empresas” or U.T.E. – Temporary Business Association

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Spain Employer of Record Overview

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