Basic information to start up a business in Barcelona

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1 24 Basic information to start up a business in Barcelona Barcelona Activa SAU SPM,

2 Table of contents 01 Introduction Residence and work permits Legal forms for setting up a company Procedures for setting up a company Municipal business licence Start of operations Other important issues 2 / 19

3 01. Introduction With this report we would like to offer you a basic guide about the steps you will have to follow to set up a business in Barcelona or the rest of Catalonia and Spain or officially report to the different public administrations the beginning of operations of your business, in order to help you with a process that may be difficult and expensive. Basic points about Spanish public administration: Spain is a country with an almost federal structure, and its territory is divided into 17 Autonomous Communities (which are like the länder in Germany or the states in the United States of America). Barcelona is located in the Autonomous Community of Catalonia. Catalonia is divided territorially into 4 provinces: Barcelona, Tarragona, Lleida and Girona. Barcelona is the capital city of both Catalonia and the province of Barcelona. Because of this State structure, in Barcelona in particular and in Catalonia in general there are three levels of public administration each with its own powers: 01. The Administration of the State (Administració de l Estat/Administración del Estado): it runs several public institutions such as, for example, the Spanish Tax Agency, the Central and Provincial Business Registers and the Social Security Administration, the Ministry of Labour and Social Affairs, the Ministry of Industry, Trade and Tourism, etc. 02. The Government of Catalonia (Administration of the Catalan Autonomous Community): it runs several institutions such as the Directorate General of Finances, the Catalan Cooperatives Register, the Tourism Companies Register, the Catalan Department of Labour, etc. 03. Local government (Barcelona City Council): the municipal government of the city of Barcelona. Barcelona City Council runs public agencies including Barcelona Activa, S.A. 3 / 19

4 Official languages in Catalonia: The Spanish Constitution and the Catalan Statute of Autonomy state that the two official languages in Catalonia are Catalan and Spanish. In addition, under the Catalan Parliament s Language Policy Law 1/1998 a company s customers have the right to be served in either of these two official languages. Hence if you are planning to start up business in Barcelona or elsewhere in Catalonia, it is a good idea to take one of the free Catalan and Spanish courses offered by a number of non-governmental institutions and organizations. Call 012 (Catalan Government citizen information line) to learn more about them. 4 / 19

5 02. Residence and work permits (Only necessary for citizens of countries not belonging to the European Union plus Norway, Iceland, Liechtenstein and Switzerland) To carry out any kind of gainful entrepreneurial or professional activity by means of selfemployment or salaried work in Spain, foreigners who are not citizens of European Union countries, Norway, Iceland, Liechtenstein and Switzerland need to apply for a work permit in addition to a residence permit. EU citizens and citizens from Norway, Iceland, Liechtenstein and Switzerland, can live and work in Spain with no further requirements but they do have to apply for their Foreigners ID card (N.I.E) during their first 30 days in Spain. Types of work permits When someone wants to set up their own company (whether as a self-employed sole trader or as a civil code partnership, private limited company or public limited company) they have to apply for a self-employed work permit. Self-employed permit This type of permit entitles the person to do self-employed work. The application procedure is similar to that required for a residence and work permit as an employee, although it also includes an initial permit valid for one year with two possible renewals of two years each. The requirements for obtaining a temporary residence and work permit as a self-employed worker are as follows: - Meeting the requirements demanded by current legislation of Spaniards for the establishment and operation of the planned activity. - Being professionally trained or having enough proven experience in the professional activity as well as having the requisite qualification for occupations which require specific approval and membership of a professional association if need be. - Demonstrating that the investment anticipated for establishment of the project is sufficient as well as its impact on job creation if required. - Having certification confirming membership of a professional association in the case of carrying out independent professional activities which require it. - Proof that carrying out the activity will generate sufficient economic resources to house and support the applicant from the first year. 5 / 19

6 - Not having a criminal record in Spain or in other countries where they have previously lived for crimes recognised in Spanish legislation. - Not being in Spain in an irregular situation. Access to a temporary residence and work permit as a self-employed worker is open to people who are resident and non-resident aliens in Spain. Permanent residence permit Once the temporary residency period is over (as mentioned previously, it is valid for one year plus two extensions of two years each), it is possible to apply for permanent residency which entitles the person to live in Spain indefinitely and work in the same conditions as Spanish citizens. The requirement to be eligible for this type of residency is having lived legally and continuously in Spain for the past five years (continuously means that the person has not been outside Spain for periods longer than six months, as long as the total sum of the periods of absence does not exceed one year out of the five that are being considered for the calculation, except when these absences have taken place irregularly). Foreigners holding a permanent residence permit have to apply to renew their identity card every five years. Where to apply for it When the applicant is in Spain, the procedure can be carried out at: - Oficina de delegació i subdelegació del Govern. Carrer Marquès d Argentera, Barcelona Phone: infoext@oue.barcelona.map.es Furthermore, the General Secretariat of Immigration and Emigration of the Ministry of Employment and Social Security provides information to foreigners about the various procedures on the website: More information about work permits for foreigners is available in our Start-up Doc Work and Residence Permits for Foreigners at 6 / 19

7 03. Legal forms for setting up a company There are two basic ways of carrying out a business activity in Catalonia: by setting up a company, with liability limited to the company's assets, or on a self-employed basis. Choosing the appropriate type of legal form for the activity depends on the entrepreneur s strategy and interests. Under the current legal framework there is a broad range of possibilities with flexibility to adapt to the particular needs of each entrepreneur. Spanish legislation provides various legal forms for companies. The main ones are the public limited company (Sociedad Anónima, SA) and the private limited company (Sociedad Limitada, SL), which are characterised by the limitation of their investors' liability to their contribution to the company. - A public limited company (S.A.) is recommended for large commercial and industrial companies and/or projects which need substantial capital investment that can be obtained by offering shares to the public. However, many medium-sized companies also choose this legal form due to the ease with which the shares can be transferred. It should be borne in mind that there are certain sectors in which investment has to be through a PLC: banking, insurance, television, etc. - A private limited company (S.L.) is the form usually adopted by small and medium enterprises due to lower minimum capital requirements. However, its high degree of management and organisation flexibility also makes it attractive for setting up large companies where these factors are relevant, such as joint ventures or holding companies. Furthermore, foreign legal entities commonly set up an entity with no legal personality, such as a branch office or a representative office. - Other less-used structures may be useful for specific projects, such as civil code partnerships, economic interest groupings and cooperatives. Their flexibility of operation and specific tax features can bring benefits for certain projects. - Another corporate form is the new business limited company (SLNE societat limitada de nova empresa), a new subtype of private limited company which can be set up very easily and quickly (48 hours) using standard forms and electronic media. In addition, it simplifies accounting obligations and is extremely flexible. It is designed for small businesses and sole traders. 7 / 19

8 - A self-employed worker or freelance is the ideal way for an individual to carry out a regular business activity for themselves. The only legal requirements are that the person who is to carry out the business activity must be of full legal age (18 or over) and have sufficient legal capacity to carry it out. Summary of the main legal forms that a company can adopt in Spain Private limited company Public limited company Branch office Representative office Selfemployed Legal personality The company s The company s Parent Company Parent Company Does not have one Incorporation procedures Notarial instrument. Business register Notarial instrument. Business register Notarial instrument. Business register Notarial instrument. Business register Not required Liability Limited to contributions Limited to contributions Unlimited for the parent company Unlimited for the parent company Unlimited Minimum capital requirement 3,000 paid up at incorporation 60,000, 25% at incorporation Allotted funds Capital and reserves. Not classified as foreign investment Enough to carry out the activity Divided capital Participation units Shares No share capital of its own No share capital of its own Does not have any 8 / 19

9 Legal equivalents in other countries Country Societat Limitada Societat Anònima (plc) Sucursal Oficina de representació Spain Societat Limitada Societat Anònima Sucursal Oficina de representació France Societé Limitée (SL) Societé Anonyme (SA) Succursale Bureau de Represéntation UK Private Limited Company Public Limited Company (plc) Branch Office Representative Office USA Limited Liability Company (L.L.C.) Incorporated Company (Inc) Branch Office (or Dependency) Representative Office Portugal Sociedade Limitada (Lda) Sociedade Anónima (SA) Sucursal Delegação Germany Gesellschaft mit beschränkter Haftung (GmbH) Aktiengesellschaft (AG) Niederlassung Repräsentanzbüro Netherlands Besloten Vennootschap (BV) Naamloze Vennootschap (NV) Bijkantoor Vertegenwoordigingskantoor Japan Yugen Gaisha Kabushiki Gaisha Shiten Chuzai-in-jimusho Italy Società a Responsabilità Limitata (SrL) Società per Azioni (SpA) Succursale Officina di rappresentazione 9 / 19

10 04. Procedures for setting up a company Warning! Incorporation procedures are only necessary if you want to set up a company with the legal forms of S.A., S.L., S.A.L., S.L.L. and S.Coop. If you want to set up a company as a sole trader or SCP go straight to part 4. Certificate stating the corporate name has not already been taken (S.A., S.A.L., S.L., S.L.L.) Where: Central Business Register Cost: Between 16 and 30 Duration of the process: about 15 days. - Enquiries do not guarantee anything as they may say the name is available but the registration officer may refuse to grant it because it may have phonetic similarities with or clearly resemble another registered name. - Cooperatives have to apply for name reservation at the Catalan Central Register of Cooperatives. Opening a current account Minimum capital deposit (S.A., S.A.L., S.L., S.L.L., S.Coop.) Where: Bank or savings bank. - SL/SLL: 3,000 - SLNE: 3,000 - SA/SAL: 60,000 (minimum 25% paid up 15,000) - S. Coop.: 3,000 Cost: 0 (share capital contributions do not carry any costs). Duration of the process: immediate. - Non-monetary contributions will require an audit report certifying their value. 10 / 19

11 Incorporation of the company Execution of the Notarial Instrument (S.A., S.A.L., S.L., S.L.L., S.Coop.) Where: notary s office Documentation: Cost: - Certificate stating the corporate name has not already been taken. - Share capital deposit certificate. - Articles of association. 01. Share capital less than 6,000: Certified copy 3.00 per page (30 pages x two copies): Noncertified copy 0.60 per page (30 pages x three copies): 54 TOTAL: Variable: the cost of the notarial instrument depends on: 01. Share capital: between 6,000 and 30,050.61: 4.5 x 1000 between 30, and 60,101.21: 1.5 x Number of certified/noncertified copies 03. Powers: 30 plus copies Duration of the process: it is signed immediately, but the notary will take approximately 5 days to prepare and issue it. Obtaining the tax identification code (CIF) (S.A., S.A.L., S.L., S.L.L., S.Coop.) Where: at the Tax Agency office for the company s postcode. Documentation: 01. Noncertified copy 02. Photocopy of the signing director s national identity card (DNI) 03. Form 036 Cost: form 2, although it can be downloaded free of charge online Duration of the process: immediate. 11 / 19

12 - Ask for tax identification labels. Payment of Transfer Tax (S.A., S.A.L., S.L., S.L.L., S.Coop.) Where: autonomous community tax office (Carrer Fontanella, 6/8) Opening hours: cash desk 8:30 to 2, office 8:30 to 2, Tuesdays 4 to 8 pm. Documentation: 01. Noncertified copy 02. Certified copy 03. Form Photocopy of the tax identification code (CIF) Cost: form 0.30 (the form can be downloaded from + 1% of share capital for the tax on capital transfers and documented legal acts (called the ITPAJD) Duration of the process: immediate (there are long queues every day) Term: 30 working days from the date of execution of the notarial instrument. Remarks: - Exemption from the tax: - 1. COOPERATIVE: cooperatives are exempt and therefore do not have to pay the tax, although they do have to file Form 600 at the Catalan Tax Agency to state the exemption WORKER-OWNED COMPANIES: they are exempt from paying the 1% if they are classified as a worker-owned company and allocate 25% of net profit to the Special Reserve Fund during the year when the taxable event takes place SLNE: The law that regulates them allows payment of the accrued fee to be deferred for a year but this does generate interest on arrears - In addition SLNEs do not need to file Form 600 with the Catalan Tax Agency as they do everything online. Registration in the Business Register (S.A., S.A.L., S.L., S.L.L..) Where: at the Business Register for the business activity s registered address (Barcelona: Gran Via 184, next to Campana de trànsit ) Deadline to submit the notarial instrument for registration: 1 month SA/SAL, 2 months SL/SLL from the signature of the notarial instrument. Documentation: 12 / 19

13 01. Certified copy Cost: 6.97 for filing + registered items + BORME publication Legalisation of official books Which books? Annual accounts and inventory book, journal, minutes book and partners book. On: Provincial Business Register. Cost: 50 Time: immediate. 13 / 19

14 SLNE (New Business Limited Company) Electronically: Advice and Processing Start Points (PAIT). - Barcelona Activa Centre per a la iniciativa emprenedora Glòries C/Llacuna, Barcelona. Metro: line 1, Glòries Example: TOTAL COST SL Share capital 3,006, two partners and a sole director: - Previous check of company name: Certificate stating the corporate name has not already been taken: to 30 - Notary: Register/books: 50 - Forms: 2 - TOTAL (approx.) / 19

15 05. Municipal trading licence Where: Barcelona City Council Citizens Advice Offices (OAC) Reporting scheme For activities in Appendix III.3 of the Environmental Administration Comprehensive Intervention Law (for example: clothing shop with less than 120 m 2 of floor area) and Appendix III.2 (for example: grocery shop between 120 m 2 and 400 m 2 ), reporting with draft of a certificate from an EAC*. Cost: % of budget for systems (electrical and fire protection). Where: Citizens Advice Office (OAC) of your District. Answer: online. - EAC: Environmental Control Entity Opening licence scheme Appendix III.1, for example: a restaurant. Cost: % of budget for systems + drafting technical plan (about 1,300) + favourable report from an EAC (about 600) Deadline for ruling: 3 months Environment licence / authorisation scheme Appendix II (e.g.: Department Stores) / Appendix I (e.g.: Industrial Activities). Cost: 1, / 2, % of budget for systems + drafting technical plan (about 1,800) + favourable report from an EAC (from 800 to 1,100) Deadline for ruling: 6 months Construction works licence scheme Major: 6.52 per m 2 of works % of the cost of the works Minor: licence (with plan): Communication (without plan): / 19

16 06. Start of operations Census declaration, joining the tax scheme and start of operations Where: Tax Agency office for the company s tax address. Deadline: Before start of trading. Form: 036 (census registration) Cost: Form 2 - The selected VAT option should be indicated along with part payments of personal income tax or corporation tax and reason for exemption from IAE (Spanish tax on commercial and professional activities for turnovers lower than 1 million). Social security treasury Where: at the Social Security Treasury office for the company s tax address. Deadline: 30 days from tax registration. Documentation: 01. Noncertified copy of the registered notarial instrument or the one pending registration 02. Photocopy of the national identity card of the director signing/powers 03. Copy of Form TA 0521/1 /4 (working members of cooperatives) /5 (SL/SA) /6 (SCP) 05. Form TA-6 in triplicate Cost: 0 What needs to be done? - Registration of working members in the appropriate scheme. - INEM provincial office: legalisation of inspection visits book. - Find out which Social Security scheme is applicable in each case. - The company must be registered at the Business Register. - Self-employed have to choose their contribution amount (minimum: / maximum 3,425.70). - General scheme: the contribution amount is fixed by the collective agreement. 16 / 19

17 - You have to previously enrol in the Catalan Government Employment Office (Oficina de Treball de la Generalitat) as job seekers if you want to apply for a grant to help with hiring staff or for the self-employed. Special procedures when forming a civil code partnership (SCP) With the Spanish Tax Agency: 01. Submit the partnership agreement (there are free model partnership agreements at Form 036 for each member and one for the company. 03. Apply for the tax identification code (CIF). 04. SCPs only pay VAT. With the Catalan Government s Directorate General of Finance: 01. No minimum share capital is required. Tax on capital transfers and documented legal acts (ITPAJD) is 1% of capital contributed. 02. The partnership agreement only has to be formalised in a notarial instrument if any of the members contribute real estate as part of the share capital. 17 / 19

18 07. Other important issues Register of trademarks, trade names and signs Where: Barcelona Oficina de Gestió Empresarial (Avinguda Diagonal, , Edifici Planeta) It is a good idea to make an appointment. Cost: - Trademark or trade name: (online application) - EU trademark application: Hiring staff A) Registration of the business owner. Application for contribution account number. Where: at the Social Security General Treasury office nearest the workplace. Documentation: 01. Documentation in proof of incorporation and starting operations. 02. Powers or national ID of the person signing. 03. TA.6 + plan for signing up with an occupational accident mutual insurer for temporary disability. B) If a workplace is opened: report of the opening. C) Registration of the employee in the Social Security scheme - Form TA.2 Where: nearest Catalan Government Employment Office (OTG): submit noncertified copy of the employment agreement. Documentation: two copies of the employment agreement. Deadline: 10 days from signing the agreement. - Model agreements: - Checking collective agreements: 18 / 19

19 - Written by the Barcelona Activa team using the following sources of information: - Agència Catalana d Inversions Barcelona Activa SAU SPM, Last update: 13/01/2014 While every effort has been made to ensure the accuracy and reliability of the above information and data, Barcelona Activa SAU SPM cannot accept any legal liability for any consequences that may arise from business decisions taken as a result of any conclusions that may be drawn from this report. 19 / 19

Costs and Procedures to Set Up a Company

Start-up Docs 21 Costs and Procedures to Set Up a Company Barcelona Activa SAU SPM, 1998-2011 Table of contents 01 Introduction 02 03 04 05 Other Constitution of the Legal Form Trading Licence Start of