Relocating your business offers many benefits, yet also comes with its share of business challenges: designing systems and processes, managing cash flow, securing the appropriate talent and training staff at large, etc. Another consideration exists that is just as critical – especially since it often presents unforeseen issues: Compliance.
Failing to remain legally compliant can unleash a huge of serious consequences for businesses, including reputational harm, administrative sanctions or company responsibility.
To prevent such consequences, it helps to have a list of the common steps that new companies in Spain may take into consideration:
- Setting up a Company
Once the decision of relocating into Spain is final, the main actions to take are:
- Asking for shareholders and director’s NIE number, or NIF instead (check this point in section 2), in case of being foreigners.
- Possibility of giving a power of attorney to your lawyer or tax advisor to speed this proceeding, mainly during these transitory times that travelling is not easy.
- Asking for the possible company name before the Central Mercantile Register. 5 possible names are needed for this proceeding.
- Prepare the complete data of the shareholders and directors of the company. Also, the share capital (deposit in a bank account, cash, any asset…) and the mainly social activity, so the Notary can make the draft of the title deed quickly and efficiently, ready to sign in the moment the client wishes.
- The Notary or tax advisor itself, will ask for the provisional Fiscal Identification of the company before the Tax Agency.
- Bringing the title deed to the Mercantile Register to its registration.
- Consider this operation may take between 2-3 weeks to be completed, bearing in mind possible difficulties (Notary’s appointment, delays in the registration before the Mercantile Register).
- And finally, bearing in mind the costs involve Notary and Mercantile Fees, along with your tax or legal advisors’ fees, to mention the principle ones.
- Obtaining a NIF for tax matters, no need of NIE
For some Tax purposes, there is no need to obtain a NIE number, it is enough the ID number that the Tax Agency provides only for these situations.
Donations, Inheritances, property transactions… all these taxable operations can be easily fulfilled by your legal or tax advisor with no need of a power of attorney.
Therefore, this NIF (Fiscal Identification Number) will give the client the possibility of not moving into Spain. There is no need of being physically here neither granting a power of attorney, with an authorization would be enough. Your advisors will take care of this proceeding on your behalf.
Quite important could be this NIF for companies to be established in Spain, whose holding is a foreign company. This foreign company will also need this kind of Identification number to complete the setting up of the Spanish company, so the Tax Agency has a registration of the holding.
- Compliance for starting companies
Starting a new company in Spain can involve many administrative proceedings. For tax matters and to be compliant, you can find here the first steps the new company will have to take care of:
- Submit Model 036 (Census declaration) of registration before the Tax Agency and the main tax obligations of the company, and ask for the definite ID of the company. Not being correctly registered can produce administrative sanctions.
- Important to ask for the registration of the company in ROI/ VIES (Census of intracommunity operators) to be able to issue and receive invoices with no VAT in the corresponding situations. This is a formal condition, but needed before the Tax Office to avoid any unpleasant inspections.
- Request your tax advisors for the information about the monthly/ quarterly tax obligations your company may have (VAT declarations, retention on payslips declarations…). It is important to give all the useful information to your advisors, so they will be able to complete your tax obligations efficiently and again, avoiding possible sanctions and tax inspections.
- Also, ask for the social security costs of your employees monthly paid. This is an important cost, together with salaries, that every company needs to control carefully. There can be sanctions by the Social Security Office if the labour matters are not correctly fulfilled.
- Collect and save in a secure file all the invoices and documents produced every month, to have a finance and accountancy control of all inputs / outputs.
- Finally, bearing in mind every Spanish company has 3 main mercantile annual obligations: prepare and submit Corporate Tax, prepare and submit Accounting Books and Annual Accounts. Even if a company is dormant, it will have these 3 obligations that will not be able to avoid, until the company is liquidated.
All these steps may prevent surcharges and sanctions before the Tax Agency, so we always recommend to have well informed your tax advisors and ask your questions with every change it may happen.