Starting a company is one of the most important decisions an entrepreneur can make (it defines the future of any entrepreneur). In an increasingly globalized world, deciding where to establish that company is crucial to its success. Spain, as a prominent member of the European Union, stands out not only as a viable option but as one of the best choices (or the best) for starting a business. In this article, we will explore the unique advantages of setting up a company in Spain, while contrasting them with the disadvantages and challenges that may arise when choosing other EU countries.
1. An Attractive and Business-Friendly Environment
Establishing a company in Spain is a relatively straightforward process, although it can vary depending on the type of entity chosen. It is becoming increasingly efficient, simplified, and accessible. The typical steps include:
– Obtaining the Negative Name Certificate (once the legal form has been chosen): This document ensures that no other company exists with the same name as the one you intend to establish.
– Opening an exclusive Business Bank Account: This account is where the minimum share capital will be deposited.
– Drafting the Articles of Association: These outline essential details such as the company name, the starting capital, the corporate address, the administrative body, the distribution of dividends, and more.
– Signing before a notary: To formalize all procedures involved in creating your company.
– Obtaining the Tax Identification Number (NIF): This is essential for operating legally (via form 036).
– Incorporating the company in the Commercial Registry: This grants the company full legal capacity.
– Obtaining the definitive NIF: Also through form 036 (with box 120 checked).
In Germany, however, the situation is quite the opposite. Despite being one of the strongest economies in Europe, the process of setting up a company is notably bureaucratic, involving a large amount of documentation, multiple forms, and registration with various offices. Additionally, the cost of establishing a limited liability company is 25,000€ significantly higher than in other major European economies.
Moreover, Spain is quickly becoming a hub for startups, especially in cities like Madrid and Barcelona. These cities offer incubators, accelerators, and ample networking opportunities, as the entrepreneurial culture here fosters collaboration and the exchange of ideas, which can be crucial for a business’s growth.
2. Exceptional tax and financial advantages
Although it is true that Spain has some of the highest taxes in the EU, there are tax deductions and incentives that can greatly benefit new businesses, making this one of the most attractive aspects for entrepreneurs. For example, while a 25% corporate tax rate applies, startups enjoy a reduced rate of 15% during the first two years, which is a significant advantage.
In addition, Spanish law offers significant deductions for R&D investment, which can further reduce a corporation’s tax burden. There are also numerous regional grants and subsidies available to all kinds of entrepreneurs, providing new businesses with solid financial backing, especially in sectors such as technology, renewable energy, and tourism.
The situation is entirely different in France, which has one of the highest tax burdens for companies in Europe. In addition to its notable corporate tax rate, labor taxes are significantly high, making it more expensive to establish a company there.
Regarding financing, access in Spain is broad and varied, as there are numerous entities offering financial products specifically for startups, providing the necessary capital for growth. In recent years, access to private investors (venture capital funds and business angels) has also grown exponentially due to a shift in mindset that has led various individuals to want to back innovative entrepreneurial ideas, even in early stages and with associated risk.
In the Netherlands, for example, the high cost of living and the substantial initial investment requirements can discourage smaller or emerging entrepreneurs. Additionally, the financing market is more focused on specific sectors such as fintech, with less attention to other emerging sectors.
3. A Broad and Diversified Market in Spain
Spain, with its population of nearly 47 million people (the fourth largest country in the EU) and its strategic position between Europe and Latin America (offering great access to Spanish-speaking markets), provides an attractive market for companies across all sectors. This cultural diversity also translates into a wide range of business opportunities.
In the case of Slovenia, with a population of only 2 million, the market is extremely limited. Companies looking to expand beyond their national borders once established may encounter challenges.
Focusing on the labor market, Spain has a young and highly educated population, which facilitates access to a talented workforce. Spanish universities produce a large number of graduates in relevant fields, enabling companies to tap into a competitive talent pool.
In Sweden, although there is also considerable talent, the high salaries and associated social benefit costs pose a significant burden for companies. The same applies in Denmark, where the cost of living is one of the highest in Europe, which negatively impacts talent attraction.
4. Political and Social Stability
Spain is a country that, despite its economic challenges, offers a more stable political and social environment (safe and predictable, allowing for long-term planning) compared to other EU countries that may be experiencing political or economic tensions.
In Hungary, growing concerns about the erosion of democracy and judicial independence have led to a decline in investor confidence, creating a natural uncertainty that is far from positive.
As we can see, Spain not only offers an attractive business environment but also stands out compared to other EU countries that, despite having strong economies, present significant barriers in terms of bureaucracy, tax, and labor costs. It is the smartest choice for entrepreneurs seeking a favorable and competitive environment with a clear legal framework, tax advantages, access to financing, and a broad market…
If you ultimately decide to establish a company here in Spain, Settledown can assist you in setting up your business quickly and easily, ensuring compliance with all legal and tax obligations. Don’t hesitate to contact us if you have any questions or require additional information.