Business in Europe: How much set up an SL in Spain?

The question of how much it costs to start a business in Europe is one of the most common among entrepreneurs aiming to expand their horizons. This article will provide a detailed breakdown of the costs of setting up an SL (Sociedad Limitada) in Spain and discuss the minimum monthly expenses that may arise when operating a business in Spain.

If you are interested in more information about the costs of starting a business in other European countries, expenses related to registration, the operations of a sole proprietor, or the cases in which it is more advantageous to register as an individual entrepreneur versus a company, please leave a comment or write to us, and we will be happy to share this information.

Contents

• Who can set up an SL in Spain

• One-time expenses for setting up an SL in Spain

• Monthly expenses for operating an SL in Spain

• Ways to save on business costs in Spain

• Frequently asked questions about social contributions for an SL

• Additional costs and services

• Conclusion

Who can set up an SL in Spain

The founders of a Sociedad Limitada can be either individuals or legal entities, including foreign nationals. Spanish or EU citizenship, including a residence permit, is not required; however, managing a Sociedad Limitada in Spain will require an entrepreneur visa (visado de emprendedor) or another work-permitting visa. To register an SL, a foreigner identification number (NIE) is necessary, which is only issued to individuals with legal grounds to stay in Spain. Those without an NIE cannot establish a company. This requirement is regulated by Ley de Sociedades de Capital, Real Decreto Legislativo 1/2010.

One-time expenses for setting up an SL in Spain

• Capital contribution (capital social) for an SL: minimum of €3000, required by Real Decreto Legislativo 1/2010. The capital remains in the corporate account and can be used after company registration.

• Notary fees: from €300 to €850, depending on the region and the complexity of the formation documents. If setting up the company by proxy, additional fees for preparing the power of attorney will increase costs by €100-200.

• Registration of the SL in the commercial register (Registro Mercantil): from €100 to €200, depending on the region.

• Legal and accounting services: from €500 to €1500, including the steps to prepare formation documents, register the organization, obtain a tax number, and plan taxes. These are essential for avoiding mistakes when setting up the commercial structure, especially if founders are unfamiliar with local regulations.

• Government fees and transfer tax (Impuesto sobre Transmisiones Patrimoniales): from €200 to €400 if assets are contributed. The tax is calculated based on the value of the transferred property and regulated by Real Decreto Legislativo 1/1993.

• Office deposit: in Spain, it is common to require a deposit of 2-3 months’ rent when signing a contract for legal entities. The price range for a small office starts at €300-500 in the provinces and from €1000-1500 in large cities like Valencia and Madrid. For formal purposes, without an actual office space, a nominal address costs €30-100 per month; an official business address with no physical office can cost €50-100 monthly. Example rates can be found on sites like Idealista and Offices and Co.

• Insurance: €300-600 annually, depending on the type of business. Generally includes third-party liability, property, and professional liability coverage. Minimal insurance in trade costs around €300, while coverage for legal or accounting firms reaches up to €600.

Thus, the one-time expenses to set up an SL in Spain amount to:

• Minimum: €300 (notary) + €100 (registration) + €500 (legal help) = €900

• Maximum: €850 (notary) + €200 (registration) + €1500 (legal help) + €4500 (office rental) + €600 (insurance) = €7650

Monthly expenses for operating an SL in Spain

• Director’s social contributions: €310 to €370 per month, depending on the Régimen Especial de Trabajadores Autónomos (RETA) tariff, paid to Seguridad Social. Reductions are not possible, and the payment is independent of the director’s salary. Note: contributions cannot be reduced by appointing the director on a part-time basis.

• Accounting services: €150 to €400 per month, depending on transaction volume, covering tax reporting, online bookkeeping, and tax management.

• Office rental: if using a home address, no rental costs apply (€0); otherwise, workspace costs range from €300 to €1500 monthly, depending on the city and office size.

• Utilities for rented space: €50 to €200 monthly, depending on office size and usage (electricity, water, gas, waste removal).

• Corporate communication and internet: €30 to €100 per month, depending on the plan. Check with your provider for internet and telecom rates.

• Corporate bank account maintenance: €10 to €50 monthly, depending on bank conditions.

• Legal services: monthly retainer fee from €50 to €100 for basic support; this cost can be avoided with budget reductions.

Thus, monthly expenses for operating an SL in Spain are as follows:

• Minimum: €310 (contributions) + €150 (accounting) + €0 (rent) + €50 (utilities) + €30 (internet) + €10 (banking) = €550

• Maximum: €370 (contributions) + €400 (accounting) + €1500 (rent) + €200 (utilities) + €100 (internet) + €50 (banking) + €100 (legal services) = €2720

Ways to save on business costs in Spain

• Using a home office: eliminates rental expenses and significantly reduces overhead costs

• Reducing accounting fees: using online accounting services can cut costs to €100-150 monthly

• Insurance: skipping insurance in the early stages is an option, but it is advisable to consider it later for company protection

Subsidies and incentives for businesses in Spain

Some autonomous regions in Spain offer subsidies for social security contributions or office rental expenses. For financial assistance, review the Plan de Garantía Juvenil Plus, which provides support to young entrepreneurs, covering expenses such as social security contributions for up to six months. Examples can be found through Servicio Público de Empleo Estatal or Mundojoven.

Frequently asked questions about social contributions for an SL

Many ask about the possibility of reducing social contributions for SL directors. In 2024, the minimum payments for SL directors are set at €310 and are non-negotiable (Reglamento de la Seguridad Social). Discounts like Tarifa Plana are available only for sole proprietors (Autónomo) and are not applicable to SL directors.

Additional costs and services not included in this analysis

When evaluating startup and operational costs for a Sociedad Limitada (SL) in Spain, some additional services and investments may arise during business activities.

• Business planning consultation: professional consultants may charge €500 to €2000, depending on project complexity and scale

• Marketing services: creating a website, ad campaigns, and other marketing efforts range from €500 to €3000, with higher costs for more complex solutions

• Taxes and fees: profit taxes and other required payments, such as value-added tax (IVA) and local taxes, depend on company revenue and can vary significantly

• Licenses and permits: vary based on business type; a trading license costs €100 to €1000, depending on business nature and location

• Occupational safety services: companies with employees must comply with occupational safety standards, requiring specialists and additional costs

• Additional legal services: a more in-depth legal review, such as contract drafting, incurs extra expenses not covered here

• Licenses and permits (if specific authorizations are needed for operation)

• Employee wages: if hiring is planned, these expenses will add to the costs

• Banking fees: potential additional charges for managing a corporate account

• Office equipment and furniture: a physical office requires initial investment in furnishings

• Software support and licensing: from €30 to €200 monthly, depending on software volume and licenses, such as accounting, inventory, or CRM software that requires ongoing support

• Document translation and legalization: if formation documents or powers of attorney are prepared outside Spain, translation and legalization costs range from €100 to €500, depending on urgency and volume

• Occupational safety and medical checks (if employees are hired): mandatory safety and medical checks cost up to €500 annually per employee, depending on the industry

Conclusion

The costs to set up a Sociedad Limitada (SL) range from €900 to €7650 as a one-time investment and from €550 to €2720 monthly. Cost optimization, especially on rent and accounting services, significantly eases the financial load on a startup. Understanding all potential expenses and optimization strategies is key to successfully running a business in Spain and accessing the European market.