How to Set Up a Company in Spain as a Foreigner: The Complete Guide

1. Can foreigners set up a company in Spain?

Yes. Spanish law does not restrict company ownership by nationality or residence. A foreigner can be the sole shareholder and the director of a Spanish company while living abroad.

What every foreign shareholder and director does need is a foreigner identification number (NIE, Número de Identidad de Extranjero), or a tax number (NIF, Número de Identificación Fiscal) if the shareholder is a foreign company. Owning a company is a separate matter from living in Spain: non-EU founders who want to move here also need a residence permit (see section 8).

2. Which legal form to choose

A sole trader pays personal income tax at progressive rates, while a company pays corporate tax and the owner is taxed again on salary or dividends. As profits grow, the company usually becomes more efficient; where the break-even point sits depends on your figures.

3. Corporate tax rates in 2026

Corporate tax (IS, Impuesto sobre Sociedades) is regulated by Law 27/2014. Law 7/2024 introduced a gradual reduction for smaller companies:

Turnover refers to the previous financial year. The 15% rate for new companies does not apply to asset-holding companies or to businesses that continue an activity previously carried out by related persons.

Certified startups: 15% for up to four years

Under Law 28/2022 (the Startups Law), companies certified as emerging companies by ENISA (Empresa Nacional de Innovación) may pay 15% in the first tax period with a positive taxable base and the following three tax periods, provided they continue to meet the requirements. They must be innovative and scalable, among other conditions.

The startup certification for tax benefits is a different procedure from the ENISA report used for the entrepreneur residence authorisation.

Start-up losses: offsetting negative tax bases

Losses in the first years are not wasted. Negative tax bases (BINs, bases imponibles negativas) can be carried forward with no time limit and offset against future profits:

• General limit: up to 70% of the taxable base before the offset (and before the capitalisation reserve), with at least €1 million a year always deductible.
• New companies: the 70% limit does not apply in the first three tax periods with a positive taxable base before the offset.
• Large companies: 50% with turnover between €20M and €60M, and 25% above €60M (Law 7/2024).
• Change of ownership: losses can be lost if a majority of the company is acquired and it was inactive, changes its activity or is a mere asset-holding company.
• Keep the paperwork: the tax authority can review losses for ten years; after that, the company must still be able to prove them with the tax return and the accounts filed with the Mercantile Registry.

Sector incentives: film, live shows, R&D and IP

Besides the rate, the corporate tax law rewards certain activities with deductions from the tax due (Law 27/2014, articles 23, 35 and 36):

Unused R&D and innovation credits can be carried forward for 18 years and, in some cases, paid out in cash with a 20% discount (art. 39.2). Film incentives combined with other public aid are subject to aid-intensity caps.

4. Choosing the location

A common belief is that some regions, such as Extremadura, have a low corporate tax rate. In fact corporate tax is a state tax: regions cannot change its rate. In the "common territory" (every region except the Basque Country and Navarre), the rates above apply equally in Catalonia, Madrid, Andalusia or Extremadura. Real differences exist only in five territories:

A company must have its registered office where its effective management and administration take place. Registering in a low-tax territory without real activity there exposes the company to the loss of the benefit and to tax reassessments.

5. Step-by-step incorporation of a limited company

1. NIE for every foreign founder. Requested at a Spanish consulate abroad or at a police station in Spain, or through a representative.
2. Company name certificate (certificación negativa de denominación) from the Central Mercantile Registry, confirming the name is available.
3. Share capital and bank account. Where capital is contributed in cash, it is usually deposited in a Spanish bank, which issues a certificate for the notary. Account opening depends on each bank's identification checks.
4. Statutes. Standard statutes or tailored ones, covering management, share transfers and decision-making between partners.
5. Deed of incorporation signed before a Spanish notary, in person or through a power of attorney. Founders who cannot travel can grant the power of attorney abroad, apostilled and translated.
6. Provisional tax number (NIF), usually requested by the notary.
7. Registration in the provincial Mercantile Registry. The company acquires legal personality from this moment.
8. Definitive NIF and tax registration (census form 036) with the Spanish Tax Agency (AEAT, Agencia Estatal de Administración Tributaria).
9. Social Security registration of the company if it hires staff, and of the director where required.
10. Foreign investment reporting where applicable, usually form D-1A to the Investments Register within one month. When a Spanish notary formalises the incorporation, the notary files it. Some investments need prior authorisation, and investment from non-cooperative jurisdictions (tax havens) generally needs a prior declaration (form DP-1) as well.

The incorporation itself is exempt from transfer tax (ITP-AJD, Impuesto sobre Transmisiones Patrimoniales y Actos Jurídicos Documentados) in its corporate operations form. Once all founders have an NIE and documents are ready, a standard SL is usually registered within days to a few weeks; the NIE and the bank account are often the slowest steps for non-residents.

6. Capital from €1: the fine print

Since Law 18/2022 (the "Create and Grow" Law), an SL can be formed with €1 of capital. While capital plus legal reserve are below €3,000:

• the company must allocate at least 20% of each year's profit to the legal reserve (instead of the usual 10%);
• if the company is liquidated and its assets are insufficient, partners are jointly liable for the difference between €3,000 and the subscribed capital.

Many founders still choose €3,000 or more, because banks, suppliers and immigration authorities often read a higher capital as a sign of a serious project.

7. Shareholders and directors

• Sole shareholder: the company is a single-member SL (SLU) and this status must be registered and shown in its documents.
• Several partners: a well-drafted set of statutes or a shareholders' agreement prevents deadlock, regulates exits and protects minority partners.
• Corporate shareholder: a foreign company can own the SL; it needs a Spanish tax number and its legal documents apostilled and translated.
• Directors: non-residents can be directors. Social Security depends on functions, shareholding and effective control: a director with effective control is usually included in the self-employed scheme (RETA, Régimen Especial de Trabajadores Autónomos), while others may fall under the general scheme or have no registration duty.
• Shareholders in non-cooperative jurisdictions: Spain keeps a list of non-cooperative jurisdictions (tax havens), last updated by Order HAC/649/2026, in force since 28 June 2026 (the Russian Federation's international holding companies regime is added from 28 December 2026). Investment from these territories generally needs a prior declaration (form DP-1) to the Investments Register, and dividends and other payments to shareholders resident there do not benefit from the usual withholding exemptions. Check the current list before setting up the structure.
• Beneficial ownership: the individuals who ultimately own or control the company must be identified to the notary and the Registry.

8. Residence options for founders

9. Obligations after incorporation

• VAT returns (form 303), usually quarterly.
• Corporate tax return (form 200) once a year, in July for companies whose year ends on 31 December, plus instalments (form 202) where applicable.
• Accounting books legalised with the Mercantile Registry within four months of the year-end.
• Annual accounts approved within six months of the year-end and filed with the Registry within one month of approval.
• Withholdings on salaries, rents and professional invoices, and the annual summaries.
• Foreign investment annual report in the cases required by the Investments Register.

10. Common mistakes

• Choosing the region for a supposed low corporate tax that does not exist there.
• Registering in a special territory without real activity, staff or management there.
• Setting up the company first and only then discovering it does not support a residence permit.
• Using generic statutes when there are several partners.
• Leaving the NIE and the bank account until the last week.
• Forgetting that dividends and the founder's salary are taxed again personally.

FAQ

Can I set up a Spanish company without living in Spain?

Yes. You need an NIE and you can sign at the notary through a power of attorney. Living in Spain requires a separate residence permit if you are not an EU citizen.

Which Spanish region has the lowest corporate tax?

The Canary Islands Special Zone offers 4% on qualifying taxable income, but only for approved entities that meet its requirements. In the rest of the common territory, the rate is the same in every region; what matters is where the business genuinely operates.

Does Extremadura have a lower corporate tax?

No. Corporate tax is a state tax with the same rates across the common territory, Extremadura included. Extremadura competes with grants, personal income tax deductions and Social Security support instead.

What is the minimum capital for an SL?

€1. Below €3,000, the company must allocate 20% of its profits to the legal reserve and partners may be liable for the shortfall up to €3,000 on liquidation.

How long does it take to register a company in Spain?

It depends on the structure, shareholder identification, documents, notary availability, registration and any sector-specific requirements. With every founder identified and documents ready, a standard SL is often registered within a few weeks; foreign documents, bank procedures and immigration applications can extend the process.

What happens if my company makes losses in the first years?

Losses (negative tax bases) can be carried forward with no time limit. New companies can offset them in full in their first three tax periods with a positive taxable base; afterwards the general limit is 70% of the taxable base, with at least €1 million a year always deductible.

Does owning a Spanish company give me residence?

No. Non-EU founders need a permit such as the entrepreneur residence, a self-employed authorisation or the Digital Nomad Visa.

Sources

• Law 27/2014, of 27 November, on Corporate Tax (BOE, Boletín Oficial del Estado), as amended by Law 7/2024, of 20 December
• Spanish Tax Agency: corporate tax rates
• Spanish Tax Agency: Canary Islands Special Zone; Law 19/1994 on the Canary Islands Economic and Tax Regime
• Royal Decree-law 22/2026, of 1 September (Ceuta and Melilla)
• Law 28/2022, of 21 December, on the startup ecosystem
• Law 18/2022, of 28 September, on company creation and growth
• Law 14/2013, of 27 September, on support for entrepreneurs
• Royal Decree 571/2023, of 4 July, on foreign investments
• Spanish Tax Agency: Canary Islands Investment Reserve in personal income tax
• Order HAC/649/2026, of 21 June, updating the list of non-cooperative jurisdictions
• Spanish Tax Agency: offsetting negative tax bases
• Junta de Extremadura: regional investment incentives and support for self-employed workers (2026)
• Spanish Tax Agency: deductions for film productions and live shows
• Spain Film Commission: tax incentives manual

This guide is general information on company formation in Spain for foreign founders and does not constitute legal or tax advice. Tax rates refer to 2026 and each regime has conditions not fully described here. Last reviewed October 2026 by MigratioLex, Figueres (Girona).