Starting a business in Spain gives foreign entrepreneurs access to a large European market, but the first real decision is legal, not commercial: which structure will carry the business. The structure decides who is liable for debts, how profits are taxed, how much paperwork you take on and what Social Security you pay. This guide compares the main options for a foreign founder. When you have chosen, our step-by-step company setup guide explains how to form the company, and our first-year accounting checklist covers what comes after.
Why start a business in Spain?
Spain is a large EU market, and the Costa del Sol has a long-established international community of residents, investors and visitors. Whether that suits your project depends on your plan, your customers and your own situation. What we can help with is making sure the legal and tax structure fits that plan from the start.
Before you choose: identification and immigration
Two questions sit next to the choice of structure:
- Identification. Every foreign founder, partner or director who is an individual needs an NIE, the identification number for foreigners, which also works as their personal tax number.
- Right to live and work in Spain. EU and EEA citizens have free movement. Other nationals, including UK citizens since Brexit, need the immigration authorisation that fits their plans. Owning or managing a company is a separate question from that authorisation.
Choosing a structure
The four options foreign founders ask us about most are these:
- Self-employed (autónomo, sometimes called sole trader). You trade in your own name. There is no minimum capital and the formalities are lighter, but there is no separation between business and personal assets: under Article 1911 of the Civil Code a debtor answers for their obligations with all their present and future assets. Profits are taxed under personal income tax (IRPF), and you pay Social Security as a self-employed worker.
- Limited company (sociedad de responsabilidad limitada, SL). A separate legal person whose partners are not personally liable for the company’s debts (Article 1 of the Capital Companies Law). Since Ley 18/2022 the minimum capital is 1 euro. While capital is below 3,000 euros, at least 20% of profit must go to the legal reserve, and on winding up the partners are jointly liable for the shortfall up to 3,000 euros if the company cannot pay its debts.
- Public limited company (sociedad anónima, SA). Also limits shareholders’ liability, but needs a minimum capital of 60,000 euros and has more formal rules. It is designed for larger businesses, including those that want to raise capital from many investors.
- Branch of a foreign company. A branch is not a new company: it is the foreign company operating in Spain. For tax purposes a branch is a permanent establishment, and its Spanish profits are taxed under non-resident income tax (Article 13 of the Non-Resident Income Tax Law). It is registered in the Commercial Register on the basis of documents from the parent company (Commercial Register Regulation, branches of foreign companies).
At a glance
| Autónomo | SL | SA | Branch | |
|---|---|---|---|---|
| Separate legal person | No | Yes | Yes | No (part of the foreign company) |
| Owners’ liability for debts | Unlimited | Limited, with the safeguards below 3,000 EUR of capital | Limited | The foreign company is liable |
| Minimum capital | None | 1 EUR | 60,000 EUR | Not applicable |
| Tax on profits | Personal income tax (IRPF), progressive | Corporate income tax | Corporate income tax | Non-resident income tax for permanent establishments |
| Owner’s Social Security | Self-employed scheme, contributions based on net income | Depends on role and control (see below) | Depends on role and control | Depends on the people working in Spain |
Which one fits depends on your liability exposure, partners, investment needs, expected profits, hiring plans and how you want to take money out of the business. There is no turnover figure at which one structure automatically becomes better than another; we model the numbers for each case.
How each option is taxed
Autónomo: personal income tax
An autónomo’s business profit is part of their general income for IRPF. For a resident of Andalusia the general income scale combines the state scale (9.5% to 24.5%, Article 63 of the Personal Income Tax Law) and the Andalusian scale (9.5% to 22.5%, Article 23 of Andalusian Law 5/2021), so the combined marginal rate runs from 19% to 47%, before allowances and deductions. Self-employed people do not pay corporate income tax.
SL and SA: corporate income tax
For tax periods starting in 2026, Article 29 and the 44th transitional provision of the Corporate Income Tax Law set:
- 25% as the general rate;
- 19% on the first 50,000 euros of taxable profit and 21% on the rest for companies whose net turnover in the previous period was below 1 million euros;
- 23% for other companies that qualify as small (entidades de reducida dimensión);
- 15% for newly created companies carrying on an economic activity, in their first tax period with a positive taxable base and the next one, unless a lower rate applies. Businesses taken over from related people, activities carried on by a majority partner in the previous year and group companies do not count as new.
Asset-holding companies (entidades patrimoniales) cannot use the 15%, 17% or 20% rates in Article 29.1.
VAT and Social Security apply to all structures
- VAT (IVA). The general rate is 21% (Article 90 of the VAT Law), with reduced rates of 10% and 4% for specific goods and services. VAT depends on what you sell and to whom, not on the legal structure. See our VAT guide.
- Social Security. Self-employed people contribute according to their net annual income, choosing a contribution base from tables set each year. Directors of an SL or SA who manage it and have effective control of it are generally included in the self-employed scheme too (Article 305 of the General Social Security Law). Employees of any structure are registered in the general scheme, with employer and employee contributions.
The setup steps, in brief
For an SL the usual sequence is: NIE, name certificate from the Central Commercial Register, bank account and capital, deed before a notary, registration in the Commercial Register, company tax number (NIF), census registration (Modelo 036) before trading and Social Security registration. An autónomo needs the NIE, the census registration with the Tax Agency and registration in the self-employed scheme before starting. Our company setup guide explains each step with sources.
Legal compliance after setup
Whichever structure you choose, the business must keep orderly accounts suited to its activity, keep its records for the periods the law requires and file its tax returns on time. Companies also approve and deposit annual accounts. Our first-year accounting checklist and our article on bookkeeping in Spain set out the main obligations.
Tax obligations by structure
| Structure | Tax on profits (2026) | VAT | Owner’s Social Security |
|---|---|---|---|
| Autónomo | IRPF, combined marginal rate 19% to 47% for Andalusian residents | 21%, 10% or 4% depending on the supply | Self-employed scheme, based on net income |
| SL | Corporate tax: 25% general; 19%/21% if turnover below 1M EUR; 23% other small companies; 15% for new companies in the first two profitable periods | Same | Self-employed scheme for controlling directors; general scheme for employees |
| SA | Same as SL | Same | Same as SL |
Rates and thresholds change. Check them for the tax year in question before you decide.
Ongoing business advisory
Choosing the structure is not a one-off decision. As profits, partners or plans change, a different structure can make sense, and moving from one to another has its own tax consequences. MMR Consultant’s business advisory and company formation teams can model the options for your case, and our tax services team can review the tax effect. Contact us to talk it through.
Sources
Checked on 14 October 2026.
- Boletín Oficial del Estado, Capital Companies Law, consolidated text: Articles 1 and 4.
- Boletín Oficial del Estado, Law 18/2022 (“Crea y Crece”), Article 2.1.
- Boletín Oficial del Estado, Civil Code, Article 1911.
- Boletín Oficial del Estado, Personal Income Tax Law (Law 35/2006), Article 63.
- Boletín Oficial del Estado, Andalusian Law 5/2021 on ceded taxes, Article 23.
- Boletín Oficial del Estado, Corporate Income Tax Law (Law 27/2014), Article 29 and 44th transitional provision.
- Boletín Oficial del Estado, Non-Resident Income Tax Law (Royal Legislative Decree 5/2004), Article 13.
- Boletín Oficial del Estado, VAT Law (Law 37/1992), Articles 90 and 91.
- Boletín Oficial del Estado, Commercial Register Regulation, registration of branches of foreign companies.
- Seguridad Social, contribution system for self-employed workers based on net income.
- Boletín Oficial del Estado, General Social Security Law, Article 305.
This article is general information, not legal or tax advice for your case.
