2025 ENG

In recent months, many companies have been receiving communications or recommendations from external suppliers who insist on the supposed mandatory nature of electronic time recording. This situation has caused some confusion, especially among SMEs and self-employed workers with employees. However, as of today, current labour legislation in Spain does NOT require clocking in to be done using electronic systems.

📌 What does the current legislation say?

Article 34.9 of the Workers’ Statute, following its amendment by Royal Decree-Law 8/2019, establishes that all companies must ensure the daily recording of the working hours of their employees. But the important thing is this:

🔍 The law does not establish a mandatory format for such recording.

This means that time control can be carried out either electronically or on paper, provided that it is reliable, accessible and available for possible labour inspections for at least four years.

📄 Is paper recording valid?

Yes. Manual paper recording is still perfectly legal, provided that it meets the following requirements:

• It records the start and end times of each employee on a daily basis.
• It is accessible to the employee, the company and the Labour Inspectorate.
• It is kept for the legally established period.
• It is signed or validated by the employee.

🚫 What about external platforms that require it?

Many companies that provide HR or occupational risk prevention software are promoting the implementation of digital clocking-in systems, presenting them as ‘mandatory by law’. Although these systems can offer management and control advantages, they are not legally required.

✅ Conclusion

To date (October 2025), there is no regulation requiring companies to implement an electronic time recording system. What is mandatory is to keep track of working hours, and this can be done manually, on paper or using digital tools, depending on the reality and needs of each company.

Aaron Cheung Gallardo.

Real estate investment in Spain by non-residents has become increasingly important in recent years. Many owners opt for contractual formulas that allow them to profit from their properties without giving up the possibility of a future sale. One of the most commonly used is the transfer of use with option to purchase, a concept that combines leasing with the transferee’s right to purchase the property within a specified period. In this article, we take an in-depth look at how income from this type of contract is taxed and what is involved in filing Form 210, in accordance with the provisions of the Directorate-General for Taxation (DGT) in its Binding Ruling V1141-24.

The transfer of use with option to purchase consists of a contract whereby the owner of a property transfers its use to a third party, usually through a lease, also granting them the right to purchase it in the future. This right can be exercised within a specified period and under previously agreed conditions. During the transfer period, the transferee pays a periodic rent for the use of the property. Additionally, they may pay an initial amount—known as an option premium—which guarantees them the right to purchase the property in the future. This premium, although not constituting periodic rent, has direct tax relevance.

When the owner of the property is not a tax resident in Spain, the income obtained from the transfer of use of a property located in Spanish territory is considered income obtained in Spain. Therefore, it is subject to Non-Resident Income Tax (IRNR). This includes both the periodic income derived from the use of the property, which is considered real estate capital gains, and the amount received for granting the option to purchase, which is considered a capital gain. Both types of income must be declared using Form 210, although with different deadlines and criteria.

The amount received for granting the right of first refusal cannot be considered a simple advance on the sale price. It is a change in assets that generates a gain for the owner and, as such, must be taxed in Spain. The capital gain is determined as the difference between the amount received for the right of first refusal and the expenses and taxes paid by the owner in relation to said concession. The non-resident owner must file Form 210 within one month of the date on which the amount is received. This declaration is made as a capital gain obtained without the mediation of a permanent establishment. The applicable tax rate is 19% for residents of European Union countries, Iceland, or Norway, and 24% for residents of other countries.

If the transferee decides to exercise their right and the sale is formalized, the non-resident owner generates a second capital gain, this time from the transfer of the property. This transaction must also be declared using Form 210. The capital gain is calculated as the difference between the transfer value—that is, the agreed sale price, which may include periodic rents and the option premium if they have been deducted from the price—and the acquisition value, which includes the original purchase price of the property, acquisition costs (notary, registration, taxes), and any investments and improvements made. The declaration must be made within three months of the end of the month in which the sale is formalized.

If the option premium has already been declared as a capital gain at the time of its granting, and this is included in the sale price, it is essential to avoid double taxation on the same amount. To do this, it is recommended to subtract the amount already declared from the transfer value and provide a copy of Form 210 previously submitted for the option premium.

In order to correctly comply with the tax obligations arising from this type of contract, it is essential to properly identify each type of income, file Form 210 within the established deadlines, keep all contractual documentation, and consult the double taxation agreements between Spain and the owner’s country of residence. Leasing with an option to purchase is an effective tool for making real estate in Spain profitable, but proper tax management is key to avoiding penalties, errors, or double taxation. Both the option premium and the subsequent sale generate tax obligations that must be met with precision. Having expert advice and drafting contracts clearly can make the difference between a profitable transaction and an unexpected tax burden.

Teresa Romero Navas

Everyone understands that a self-employed person is liable with their personal assets for the debts generated by their professional activity, as there is no legal separation between their personal assets and those of the business. 

This is why many entrepreneurs believe that, by setting up a limited company, they are automatically protected from the business’s debts. However, if you are a self-employed company director, you should be aware that your personal assets may be at risk if you do not manage your responsibilities as a director properly.

There are several circumstances that can lead to a partner becoming a self-employed company director, one of the most common being when they are a director of the company and own more than 25% of the share capital.

In these cases, even though the company has its own legal personality, the director may be held personally liable if several conditions are met:

– Negligent management: If the director fails to fulfil their legal duties — such as not keeping accounts, not filing taxes or acting to the detriment of the company — they may be sued by creditors.

– Debts to the tax authorities or social security: The tax authorities and the Treasury may refer the debt to the director if they detect repeated non-payment, concealment of assets or lack of cooperation.

– Company in the process of dissolution: If the company enters into dissolution (due to losses, inactivity, etc.) and the administrator does not call a meeting or liquidate the company, they may be liable with their own assets for the debts incurred from that moment onwards.

–   Lifting of the corporate veil: In serious cases, the courts may ignore the legal personality of the company if it is proven that it has been used as an instrument to defraud or evade responsibilities.

For this reason, to help you protect your assets, we recommend that you maintain rigorous and documented management, comply with all tax, accounting and commercial obligations, and act with diligence and transparency. If you need help achieving this, do not hesitate to contact MDG Advisors and we will accompany you through the process.

Isabel María Díaz Rubio

Starting a company in a foreign country always sounds like an odyssey… and Spain is no exception. But if you’re thinking of setting up a Limited Liability Company (Sociedad Limitada or SL) without being a resident, here’s the good news: it’s absolutely possible.

Who can set up an SL in Spain?

Anyone, whether a person or a company, resident or non-resident, can create an SL in Spain. You don’t need Spanish nationality, nor do you need to live in the country. But — and this is important — there are a few steps you can’t skip, and if you’re a foreigner, you’ll likely need a bit more time and patience to get through them.

What do you need?

In a nutshell, you’ll need to:
1. Get a NIE (Foreigner Identification Number).
2. Choose a name for your company and check its availability.
3. Open a bank account in Spain and deposit the minimum share capital (€3,000).
4. Sign the deed of incorporation before a notary.
5. Obtain a provisional tax ID (NIF), and later the final one.
6. Register your company and get it listed with the Spanish tax authorities.

Translation: yes, there’s paperwork, especially if you’re not physically in Spain. But the good news is, many of these steps can be handled by a legal representative (power of attorney) or even remotely with an advisor.

What about taxes?

Here’s where things get interesting: even if you don’t live in Spain, your SL will still be taxed here.
You’ll need to comply with obligations such as corporate income tax, VAT (if applicable), and
keeping proper accounting records.

And if your administrator is also a non-resident, there might be fiscal residence implications, meaning you’ll need to pay close attention to where your company is considered a tax resident.

To sum up, starting an SL in Spain without being a resident is neither impossible nor prohibitively difficult, but it does require solid planning and expert guidance.

Your best move? Surround yourself with professionals who know the system and can help you avoid common mistakes.

Spain remains an attractive gateway to the European market, and the SL structure is flexible and accessible, a great option for both entrepreneurs and foreign companies looking to set up shop here.

Complicated? Not really, especially if you get in touch with MDG Advisors.

Sandra Gámez Chaves