How to open a legal entity in Spain

Sometimes it is more profitable to register the purchase of real estate in Spain in a specially created company rather than in your own name. In which cases this is preferable, you can find out from our specialists. Here we will provide a general description of the process of creating a legal entity in Spain and the sequence of necessary steps.

What does opening a legal entity in Spain give an investor?

Opening a legal entity in Spain allows the investor to optimize taxes. This makes it possible to reduce the tax base due to confirmed expenses.

This is especially true in relation to value added tax (VAT). The individual, as the final consumer, pays full VAT, while companies can deduct from their tax the amount of VAT they have already paid, resulting in significant savings.

However, it should be taken into account that the maintenance of a legal entity is associated with additional costs, such as payment for the services of an accountant for accounting and reporting.

Instructions on how to open a legal entity in Spain

Creating a legal entity in Spain includes the following steps. Home buyers may feel more comfortable leaving these steps to a professional, but it is helpful to have a basic understanding of the process.

• First you need to select and reserve a company name in the Spanish Central Trade Register. It is recommended to prepare 2-3 options, since the selected name may already be taken.
• Then you must first open a bank account, which will be activated upon completion of the procedure.
• Prepare documents confirming the legal address of the company.
• Prepare and notarize statutory documents.
• Obtain a temporary tax number from the tax office.
• Complete basic registration with the Spanish Trade Register.
• Register your company as a taxpayer and obtain a permanent tax number.
• Receive a digital certificate to activate the company as a taxpayer.
• Activate your bank account and start your business.

Who can open a business in Spain to buy real estate

Both residents and non-residents can establish a company in Spain. If the applicant already has a residence permit, no additional steps are required and they can immediately begin setting up a business.

Non-residents will need to register with the tax authorities and obtain a Taxpayer Identification Number (ΝΙΕ) before starting.

Does registration of a company give the right to obtain a residence permit?

The mere opening of a legal entity in Spain does not guarantee the right to reside in the country. In certain cases, it is possible to convince local authorities of the need for such a business in Spain, but this is not a guaranteed result.

The situation is completely different when a legal entity in Spain is created to attract investments, for example, in real estate, where the first investor acts as the founder of the company. In this case, the process of obtaining a residence permit is greatly simplified. We recommend that you consider investing in commercial real estate in our private directory and get advice from our experts on the best options in this matter.