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Starting up a small business in Spain

The majority of the small companies set up as a Limited Company. Using this kind of legal procedure to start a business is very common when the entrepreneur wishes to protect his or her personal assets from the business.

With regard to taxation running a small company is not easy. The legal obligations are more complex than being Self-Employed. The first thing necessary is to sign the Formation Title Deed in front of a notary, register the Company in the Mercantile Register, the Spanish tax authority and the Social Security office.

When your small company starts trading you must notify the Tax Office. The company is liable for Corporation Tax, but depending on the nature of the business, the fiscal obligations could be different.

For each period the Accountant must calculate the taxable profit to pay in the Corporation Tax, also having to prepare the book-keeping and the annual accounts for submitting to the Mercantile Register.

Solicitor and Accountant for small companies

Our Accountants can prepare your company tax returns. The Spanish tax law is very complicated and a specialist on tax affairs is necessary.

Expert Accountants can answer questions such as:

  • How much is the rate of Corporation Tax?
  • When do I have to file the taxes for my small company?
  • When do I have to pay VAT?
  • When do I distribute the dividends?

LEGAL AND TAX HELP” provides the following services for Small Companies:

  • Tax and Financial Planning.
  • Payroll and staff problems.
  • VAT registrations.
  • Tax inspections.
  • Book-keeping ( All book entries, Trial Balance, Balance Sheet, Profit and Loss Accounts, annual accounting report.
  • Preparation and submission of monthly, quarterly or annual Tax declarations for the companies (Corporation Tax).
  • All administrative tasks.

Monthly VAT Returns in Spain

Until now, companies and self-employed professionals could request the return of the VAT tax at the end of each year, in the tax return form of the last term of the year. This could cause problems when a company had just begun to exercise the professional activity or when they had performed a big investment, as there was a difference in the payable VAT and the deductible VAT.

In order to avoid this unfair situation, the Spanish Tax Authorities now allow taxpayers to request the VAT return at the end of each term. This monthly VAT return was available only for big companies and exporters until 2009. But now, the Spanish Tax Agency allows all firms and self-employed workers to benefit from the monthly VAT return. The only requisites are that the taxpayer mustn’t carry out activities that are taxed under the simplified regime and be up-to-date on their taxation obligations in Spain.

If you want to register for the monthly VAT return, you must sign up in the REDEME (Registro de Devolución Mensual) during the month of November. This can be done by filling form 036 (checking box 129) or form 039 (checking box 12). You don’t need to sign up in the REDEME if you are already registered as an exporter or other economic operator, as these are automatically included in the REDEME. If you find difficulties during this process, don’t hesitate to consult a professional solicitor or accountant.

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