When you’re setting up a business in Spain, there’s a considerable amount of paperwork to get through and you’re responsible for dealing with it correctly, as well as for obtaining the required licences and paying all necessary taxes on time.
There are no excuses for being a foreigner and not speaking the language. If you don’t comply, even through ignorance, you’re likely to be faced with large fines. It’s therefore imperative that you use professional help.
This can be a daunting task. Where do you start? How do you find a professional in Spain that can be relied upon? One of the best ways is to do as the Spanish do: judge by recommendation and reputation. This may be easier said than done when you’ve just arrived in the country and don’t even know where to go for a recommendation. However, if you’re doing your research thoroughly, you should come into contact with plenty of businesses similar to the one you’re planning to start. Ask the owners who they recommend; ask everyone you come into contact with, so that you have several different opinions. Then you will not only know the names of the most highly recommended advisers, but also the names of those to steer clear of.
It may feel too much like stepping into the unknown, especially when your future is at stake, but it makes sense to consult a Spanish professional who has good local contacts and a reputation to protect. If you’re in an area where there’s a large foreign population, many of the advisers you come into contact with will speak good English (and often other languages as well). They will also be used to doing business with foreigners and so will be familiar with the kind of advice you need. Many people opt for professional firms who operate in their home country and Spain and who work with a local Spanish professional. You may feel safer using this option, but you must still check the firm’s credentials with previous clients, as well as those of the local professional it’s working with.
There are several types of adviser who can make your life easier in Spain if you plan to start a business, but when you arrive it can be difficult to know which one to consult and when. Probably the first legal adviser you will come into contact with, especially if you’re buying property, is a Spanish lawyer (see below). He’s likely to make use of a gestor (see below), who will guide you through the requisite Spanish red tape. It’s also imperative that you find a reliable firm of accountants, who can advise you on all the financial aspects of setting up your business as well as your personal taxation. You will need the services of all three types of adviser if you’re going to start your own business.
If you’re going to get the best start you can, especially in a foreign country, it’s vital that you find the best legal advice that’s available. Don’t commit yourself to anything – and that means anything – until you’ve found an experienced lawyer. Many foreigners are nervous about consulting a Spanish lawyer ( abogado).
Although it’s wise to be cautious, don’t forget that lawyers in Spain are qualified professionals just as they are in any other country. They must be registered with the relevant professional body, the Colegio de Abogados, before they can practise. Nevertheless, you shouldn’t engage just any lawyer. Ask other businesses, other expatriates and, most importantly, any Spanish person you know in the community to recommend one. Spaniards value personal recommendation highly and it’s the only kind of ‘advertising’ they take any notice of. A good reputation and useful contacts are everything in Spain and the lawyer you need must possess both.
When you find a lawyer who has been recommended, first check that he’s an expert in setting up businesses like yours; second, ask him for an estimate of his charges, in writing; and third, check whether he holds a professional indemnity policy and the sum that it covers. Spanish lawyers aren’t obliged to have indemnity, although most do, and it’s best to choose a lawyer who does.
If your lawyer is setting up a company for you, he should deal with all the required procedures, beginning with a check that the name you want for your company isn’t already listed in the Mercantile Registry. When the paperwork is at the appropriate stage, your lawyer will arrange for you to sign at the office of the notario and will then deal with registering your company on your behalf at the tax and social security offices. The cost of these services is usually around €1,500 but varies according to the kind of company you want to set up.
If you’re dissatisfied with the service of any Spanish lawyer, you can register a complaint with the Ilustre Colegio de Abogados, the Spanish equivalent of the Law Society, which polices standards among lawyers and sets minimum charges, which are generally lower than in Northern Europe.
If you’re planning to start a business, the services of an experienced gestor are an absolute must, especially if you speak less than perfect Spanish. The gestor is a peculiarly Spanish institution; there’s no British or US equivalent. Confused foreigners often feel that the profession was created in response to the endless, frustrating Spanish bureaucracy – and that’s partly true. The role of the gestor originated at a time when illiteracy in Spain was high and, believe it or not, Spanish red tape was even worse than it is now! It isn’t a legal requirement to use a gestor, but it’s unlikely that you will have the time, the language skills or the know-how to deal with the barrage of forms, regulations and officials that you will be faced with.
In Spain, it really does matter who you know when you’re trying to get things done, and a good gestor will have all the right contacts. Make sure that your gestor comes highly recommended, tells you in advance what his charges will be and, most importantly, is experienced in the area that you need help and advice with.
Gestores’ charges (like almost everything else in Spain) vary enormously and depend not only on the area and the individual gestor but also on the amount of work required to obtain, for example, an opening licence. If the process is straightforward, you might pay as little as €300; if not, . . .
A gestor is not a lawyer or a tax consultant but should be used alongside them. You will probably find that your lawyer has a gestor he prefers to use. Gestores should be members of the Colegio Oficial de Gestores Administrativos, which regulates the profession.
The first thing your gestor must do is check with the Technical Department of your town hall that your business activity is permitted in the area that you want to trade in. Once that has been established, you will need a form to apply for an opening licence. It’s a good idea to find out as early as possible roughly how long this process will take.
You’re strongly advised to use a specialist financial adviser ( asesor fiscal – roughly equivalent to a chartered accountant in the UK) if you’re planning a new business in Spain. Make sure you use a specialist firm (asesoria fiscal) that’s been recommended by someone who has used their services. Some companies offer both legal and accounting services, including legally incorporating your company and helping you to manage your accounting and tax obligations.
The notario is a public official (whose role is similar but not identical to that of a notary public in the UK) and doesn’t act on behalf of any of the parties involved in a transaction, although he can give them useful advice. He’s authorised by the government to draw up and certify legal and official documents. By law, a notario must be involved in property conveyance, marriage, wills, establishing limited companies and the buying and selling of businesses. In theory, it makes no difference which notario you use, as they’re all civil servants and provide the same service according to the same laws and charge the same fees. In any case, it’s likely that your gestor will have a ‘favourite’ notario (i.e. one he works with regularly) and you will simply be taken to him.
This article is an extract from Making a Living in Spain. Click here to get a copy now.