How to Set Up A Company in Mallorca, Ibiza, Menorca & Formentera

Steps to set up a company in Mallorca, Ibiza, Menorca & Formentera

The Balearic Islands is the perfect landscape for foreigners from all around the world to start their own company. Nevertheless, the specific steps you should take in order to successfully have your company start running are not that clear. This is the reason why our Law Firm, experts in international clients, can help you with a comprehensive service. From the set up company to the payment of taxes.

Who can start a business in Spain?

No matter if you are a foreigner or a local citizen of Spain, everybody is allowed to start your business in the country. The only requirement is that you are a legal resident. If you are not a legal resident, we can help you, you can see more information here: Immigration Law.

How to get your business visa: work permit to set up a company

There are two different working residencies that can allow you to carry the process out: the entrepreneur visa and the work permit as a self-employed individual. These are the two permits that will grant you the specific type of residency that allows you to start a company.

Limited liability company (SL)

This is, without any doubt, the most popular firm structure in the Spanish territory. Why? Because of its flexibility and easiness in the registration process, just demanding € 3.000 for the constitution process as a minimum capital investment.

If you foresee that you are going to get incomes over 60.000€, directly constitute a company instead of establishing yourself as a self-employed worker.

One of its main advantages is that your liability is limited to the capital investment made. So if you just invested € 3.000, that is the maximum amount it can be requested from you in case of indebtedness.

In this case you won’t pay income tax, but corporate tax (“impuesto de sociedades”), which is equal to 25% on your profits. Filing your VAT returns (“IVA”) is also required. Nevertheless, there are several exemptions that you can benefit from which can reduce the taxable amount considerably.

That is why we recommend you rely in our team to manage your quarter and annual returns. You will really save money.

Sole trader (autónomo)

Probably the best option for small companies, as the legal process for its creation is really simple. One of its main advantages is that it does not require any type of initial investment.

Nevertheless, being a sole trader, has an important disadvantage: there is no distinction between the company’s assets and your personal assets. Hence, you are fully liable for any possible debt the company has.

Sole trader taxes

In terms of taxes, as a sole trader, you will pay income tax (IRPF). That implies that you will annually be in charge of your tax returns.

As your activities are regulated under the income tax regime, it is possible that you end up paying an unnecessary amount of taxes by using this legal structure. And that will happen if your incomes are higher than € 50.000 – € 60.000 per year.

Our advice is to go for a limited liability company. 

How to set up a company in Spain as an expat

In order to start your business in Mallorca, Ibiza, Menorca & Formentera (the Spanish territory), you will need to go through the next steps:

  1. Get your NIE number
  2. Defining the names of the company and checking its validity: certificate of uniqueness
  3. Getting your CIF or tax ID number
  4. Opening a bank account to be used by the company
  5. Establish the shareholders and creating the shareholder agreement
  6. Going to the notary and signing the public deed of incorporation
  7. Registering the company with the tax authorities
  8. Registering the company in the social security
  9. Our experts lawyers take care of everything.
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