SPANISH IN-COUNTRY COMPLIANCE
Spain is commonly known as a country full of bureaucracy. Regardless the current COVID-19 crisis has led to a structural change, the reality is that public administrations in Spain still require loads of paperwork, especially in the business activities.
Companies and freelancers have to comply with numerous obligations, not only on the tax side, but also on the accounting, legal and corporate ones.
We summarize below main obligations (but not the only) that all companies need to look at when running business in Spain.
- Tax payer census: if you are an individual you will have to register within the Tax Office records by submitting Model 030.
- Obtaining NIF: all companies operating in Spain need to submit an application (Model 036) and request a NIF from the Spanish Tax Authorities. BY doing that, the Spanish Inland Revenue ensures that all entities are within their files.
- Social Security: no matter if you operate through a company with personnel or as a freelance, you will have to inform upfront the Spanish Social Security.
- Electronic notifications: all companies in Spain must register on the electronic notifications system. In order to do so, it is required to obtain a digital certificate beforehand.
- Model 036 or 037: before starting any economic activities in Spain, any company or freelance need to inform the Tax Office of what activities will be developed and the tax obligations that will apply by submitting an informative tax declaration called Model 036 ( Model 037 can be submitted by freelancers).
- VAT declarations (Model 303): depending on the type of activity, you may be required to submit VAT forms on month, quarter and/or annual basis. There are various VAT declarations (Model 303, Model 349, Model 390)
- Withholding tax declarations (Model 111, Model 216,Model 115…): In Spain, withholding tax is to be applied in numerous occasions. The payment of the withholding tax should be done by submitting different types of declaration.
- Corporation Tax (Model 200): all companies in Spain need to submit an annual Corporation Tax declaration, in order to report their results and financial statements to the Tax Authorities.
- Personal Income Tax (Model 100/151): all individuals (including freelancers) need to submit once a year a Personal Income Tax declaration, reporting their economic and personal situation.
All companies must maintain their accounts according to the Spanish Accounting Plan, using a double entry system.
The accounts of a company should show the true image of its activity through its financial statements, which include Balance Sheet, Profit and Loss Account and Cash-flow Statement, amongst others.
Any company must legalize Annual Accounts once a year at the Trade Register.
The information legalized at the Trade Register has public access and therefore, anyone can obtain a copy of the Annual Accounts of any company operating in Spain.
- Other legal obligations
- Data Protection Law: This legislation is mandatory for all companies/freelancers that collect and store data from individuals. The aim is to guarantee and protect, with regard to processing of personal data, public freedoms and fundamental rights of individuals.
- Risk Prevention Law: Companies and freelancers who have employees in charge need to design a prevention plan that carry out the necessary actions to avoid accidents in the workplace.
- Business Opening License: required procedure with the Town Hall, to ensure that the activity complies with the requirements and conditions established by the regulations.