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By Travis Kliever
Updated April 15, 2024

Doing Business in Spain

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Spain’s economic evolution over recent years presents a remarkable narrative: Once predominantly reliant on agriculture, Spain has transformed into a diversified economy with a strong emphasis on services and manufacturing. This shift mirrors its transition from an insular, nationally-focused economy to one that actively engages in global trade and embraces market-oriented policies.

Spain, the Eurozone’s fourth-largest economy, boasts a resilient GDP driven by thriving sectors like tourism, manufacturing (especially in automotive and pharmaceuticals), and agriculture. Its EU membership simplifies trade, and its strategic location bridges Europe, Africa, and Latin America. With booming industries and a reputation as a top business destination, Spain is an attractive choice for businesses and investors seeking dynamic Eurozone opportunities.

This resource offers an in-depth exploration tailored for entrepreneurs, investors, and business leaders looking to establish or expand their operations in the dynamic Spanish market. From understanding the unique business landscape, cultural nuances, and legal frameworks to practical steps for setting up your limited liability company or other venture, we provide essential insights and strategies.

Whether you’re new to the Spanish market or seeking to enhance your existing operations, this guide will equip you with the knowledge and tools necessary for success in one of Europe’s most vibrant economies.

Spain Business Guides

Key Statistics on the Spanish Economy

Spain’s economy has shown resilience in recent years but faces challenges ahead. Here are some key statistics and insights into the current state of the Spanish economy:

Gross Domestic Product (GDP) Growth: Spain’s GDP growth is projected to slow. In 2023, it is expected to be around 2.1% to 2.2%, a notable decrease from the strong post-COVID recovery growth of 5.5% witnessed in the previous years. This slowdown reflects a more challenging economic environment globally.
Inflation and Labour Market: Despite the slowdown in GDP growth, the labor market remains resilient, which is expected to support household consumption. However, Spain is grappling with inflationary pressures, with the Consumer Price Index (CPI) at 3.1%. These factors and expectations of higher interest rates will likely impact the growth scenario negatively shortly.
Public Debt and Unemployment: Spain faces a high public debt at 118.6% of its GDP. Additionally, the country struggles with a relatively high unemployment rate of 15.5%, which poses a significant challenge to its economic recovery and growth prospects.
Population and Per Capita GDP: The Spanish population is approximately 47.3 million. The GDP per capita, calculated based on Purchasing Power Parity (PPP), is around $41,839, indicating the average economic output per person.
External Factors and Outlook: Spain’s economy is expected to perform somewhat better than other major European economies, partly due to its less direct reliance on the economies of Russia and Ukraine. However, the country faces soaring electricity bills and water shortages in some areas, which add to the economic challenges.

While the Spanish economy has shown signs of post-pandemic recovery, it has its challenges.

The slowdown in GDP growth, high public debt, and unemployment rates, coupled with inflationary pressures, paint a mixed picture of Spain’s economic outlook in the coming years. The resilience of its labor market and household consumption will play crucial roles in determining the path of its financial trajectory.

Key Economic Data Points

Economic Data Point	Value
Gross Domestic Product	€1.325 trillion (2022)
Growth Rate	2.4% (2023)
Unemployment Rate	12.1% (2023)
Inflation Rate	3.6% (2023)
Ease of Doing Business Ranking	30th (out of 190 countries)
Major Industries	Tourism, manufacturing, automotive, agriculture, energy
Export/Import Volume	€324 billion (exports) €348 billion (imports)
Corporate Tax Rate	25%
Average Salary	€29,620 (2022)
Foreign Direct Investment (FDI) Inflow	€34 billion (2022)

Why You Should Consider Doing Business in Spain

Spain offers a myriad of opportunities for businesses looking to expand their operations. Here are the top five reasons why you should consider doing business in Spain:

Strategic Location and Access to Markets: Spain boasts a strategic geographical location, serving as a gateway to the European market and, Latin America, and North Africa. Its excellent transport infrastructure, including major ports and a well-connected highway system, facilitates easy access to these diverse markets. This unique positioning makes Spain an ideal hub for international trade and business expansion.
Skilled and Diverse Workforce: Spain is home to a highly educated and trained workforce – some of the best in the European Union. The country has numerous world-class universities and technical institutes, producing talented professionals in various fields. Moreover, Spain’s diverse and multicultural society benefits businesses adapting to global markets and multicultural environments.
Robust Economic Growth and Business-Friendly Environment: Despite recent economic challenges, Spain has shown signs of strong economic recovery and growth. The government is actively working to create a more business-friendly environment, offering incentives and simplifying setting up businesses. These efforts and a recovering economy present a fertile ground for business opportunities.
Quality of Life and Cultural Richness: Spain is renowned for its high quality of life, a significant draw for attracting and retaining top talent. The country’s rich cultural heritage, excellent climate, world-famous cuisine, and vibrant lifestyle make it an attractive location for expatriates and employees. This aspect can significantly contribute to higher employee satisfaction and retention rates.
Growing Sectors and Innovation Opportunities: Spain has several rapidly growing sectors, such as renewable energy, technology, tourism, and automotive, which are ripe with opportunities for innovation and investment. The government’s support for innovation and technology, including tax incentives for R&D activities (some of which arise through the European Union), makes Spain an attractive destination for foreign investment in these cutting-edge sectors.

Without a doubt, Spain’s strategic location, skilled workforce, economic growth, quality of life, and opportunities in emerging sectors make it an attractive destination for businesses looking to add to their company’s worldwide income.

The country’s commitment to creating a supportive environment for business growth – including specific business-friendly provisions in Spanish law – further enhances its appeal as a prime location for global business operations.

Setting Up Your Business in Spain: A Step-by-Step Guide

Expanding or starting a business in Spain requires careful planning and understanding of the local environment. You must identify your formal obligations as a Spanish resident entity, joint venture, or foreign company. This guide provides critical steps to help you succeed with foreign investment in the Spanish market alongside native Spanish companies.

Adapting Your Business Strategy to Align with Spanish Culture

Understand Local Consumer Behavior: Research the local market to understand the preferences and behaviors of Spanish consumers. Tailor your products and services to meet their needs and expectations.
Respect Cultural Nuances: many foreign companies fail to understand Spain’s rich cultural heritage. Ensure your business practices respect these traditions and social norms. This includes understanding regional differences within Spain.
Develop Relationships: Building personal relationships is critical in Spanish business culture. Invest time in face-to-face meetings and networking to establish trust.

Building a Remote Global Team in Spain

Utilize Technology: Leverage modern communication and project management tools to keep your business activities organized and your team connected and productive.
Hire Locally and Diversely: Consider hiring local talent to bring in local market expertise. Embrace diversity to enhance your team’s creativity and innovation.
Foster a Flexible Work Culture: Spanish work culture highly values work-life balance. Offering flexible working hours can be a significant advantage.

Taxation and Financial Considerations When Doing Business in Spain

Understand Tax Rates and Obligations: Familiarize yourself with Spanish tax laws, including corporate taxes, valued-added tax, permanent establishment, standard-rate taxes, double taxation, capital gains, tax treaties, income tax, tax for foreign shareholders, and other relevant levies.
Seek Financial Advice: Consult with local financial advisors to understand the economic landscape, including potential grants and incentives for foreign businesses.
Compliance with Regulations: Ensure your business complies with all local financial regulations to avoid penalties.

Communication in the Spanish Business Environment

Language Proficiency: While many business professionals speak English, proficiency in Spanish can be a significant advantage in building relationships and understanding nuances so you can successfully conduct business in the country.
Formal Communication: Business communication in Spain tends to be formal. Use appropriate titles and maintain professionalism in your interactions.
Understanding Non-Verbal Cues: Non-verbal communication is crucial in Spain. Be aware of body language and social cues during business interactions.

Leveraging Local Resources for Your Business in Spain

Local Partnerships: Collaborate with local businesses or partners to gain insights and access to local networks.
Utilize Government Resources: The Spanish government provides resources for foreign investors, including information centres and investment support services.
Participate in Local Events: Attend trade shows, conferences, and networking events to connect with potential customers, partners, and industry experts.

Business Culture in Spain

Hierarchy and Decision-Making: Spanish businesses often have a hierarchical structure like their European counterparts. Understand the decision-making process and identify key decision-makers.
Emphasis on Personal Relationships: Personal relationships are valued in Spanish business culture. Nurture these relationships and engage in small talk where needed.
Work-Life Balance: Spanish culture values work-life balance highly. Be mindful of this when scheduling meetings or events in your business operations.

Setting up a business in Spain can be a rewarding venture. You can successfully establish and grow your business in this dynamic and culturally rich country by understanding and respecting the local culture, building a competent team, being mindful of financial and legal considerations, and leveraging regional resources.

How to Hire in Spain

Hiring in Spain can be a nuanced process, deeply influenced by local labor laws and cultural practices. The recruitment landscape offers diverse avenues for businesses looking to expand into the Spanish market.

Identifying Potential Candidates

Recruitment agencies in Spain are well-versed in the local job market and can provide valuable assistance in finding suitable candidates. These agencies have a deep understanding of the skills available in the market and can help filter candidates based on your specific needs.
LinkedIn also remains a vital tool for recruitment, offering access to a broad network of professionals. With its extensive reach, LinkedIn allows employers to tap into a wide range of talent, from young professionals to experienced executives. Job boards and local university career services can also be excellent resources for finding fresh talent and specialists.

Hiring Through an Employer of Record

Once you have identified potential candidates, the best way to proceed with hiring in Spain—just like hiring in Spain’s EuropeanSpain’ srparts—is through an Employer of Record (EOR). An EOR acts as the legal employer for your staff in Spain, handling all employment-related responsibilities, including compliance with local labor laws, payroll, taxes, and employee benefits. This arrangement is especially beneficial for companies that do not have a local entity in Spain, as it significantly simplifies the hiring process.

Setting up a local entity in Spain is indeed an option for growing businesses, but it is often the least desirable one for businesses just entering the market. On the Spanish side, establishing a local entity involves navigating complex bureaucratic procedures, understanding Spain’s intricatSpain’s laws, and managing payroll and tax compliance. This process can be time-consuming and costly, particularly for businesses unfamiliar with the local landscape.

How to Get a Work Visa in Spain

Acquiring a work visa in Spain involves a straightforward but extensive procedure. Here is a short overview:

Employer’s Role

The employer initiates the visa process, beginning with applying for a work permit on behalf of the employee. Key steps include:

Job Offer and Employment Contract: Provide a formal job offer and a compliant employment contract.
Application for a Work Permit: Submit the work permit application to the Spanish Ministry of Labour, justifying hiring a non-EU national.
Approval of Work Permit: Wait for work permit approval, which can take time.

Employee’s Role

After work permit approval, the employee takes over:

Visa Application Submission: Apply for a work visa at the Spanish embassy or consulate, supported by a work permit, employment contract, and personal documents.
Required Documentation: Gather necessary documents such as passport, accommodation proof, criminal record certificate, and medical certificate.
Application Review and Approval: The consulate reviews and issues the work visa.

Additional Considerations

Timelines: Plan, as the process can take several months.
Legal Compliance: Ensure compliance with Spanish laws to avoid delays or denials.
Renewal and Long-Term Residency: Work visas can be renewed, and long-term residency or citizenship may be possible over time.

Acquiring a work visa in Spain involves collaboration between employer and employee, meticulous documentation, and patience. It opens doors to professional opportunities for non-EU nationals.

How to Register a Company in Spain

Registering a company in Spain entails a sequence of procedures, beginning with acquiring a Company Tax Identification Code (CIF) and culminating in registration with the Mercantile Registry. This process demands the meticulous preparation and submission of various documents, notably evidence of capital deposit. Given the complexity of these procedures, it is highly recommended to consult legal experts. Their guidance will streamline the registration process, ensuring compliance with all legal requirements in Spain.

How to Acquire Real Estate for Business in Spain

Acquiring real estate for business purposes in Spain involves several key steps. Initially, conducting a comprehensive market analysis is crucial to identify the most suitable location and property type for your business needs.

Following this, securing financial arrangements, either through personal funds or via a mortgage, is essential. Engaging a local real estate agent can greatly aid in navigating the market and negotiating terms.

Furthermore, conducting a thorough due diligence process, including legal checks on the property’s title and compliance with zoning laws, is essential.

Finally, engaging a lawyer to oversee the transaction and ensure all legal and regulatory requirements are met is advisable, culminating in signing the deed and registering the property.

Summary: Your Roadmap for Doing Business in Spain

With its diverse economy and status as the fourth-largest in the Eurozone, Spain presents ample business opportunities. Indeed, it is an important strategic hub for companies in the Eurozone. The key to success here is understanding the local market dynamics, legal frameworks, and cultural nuances. SpainSpain’sembership offers streamlined operations within Europe, benefiting from a unified currency and integrated market.

For businesses venturing into Spain, leveraging an EOR can be a swift and cost-effective strategy for market entry. EORs facilitate more straightforward navigation of the legal and regulatory landscape, allowing companies to focus on their core operations while ensuring compliance with local employment laws.

Adapting to the Spanish business environment, from tax considerations to building strong local networks, is crucial. As the business landscape evolves, staying informed and adaptable is critical to thriving in Spain’s Spanish economy. This guide offers a foundational roadmap for those looking to harness SpainSpain’sntial for business growth and success.

Article By

Travis is a global business development advisor. He has spent the last 14 years supporting business establishment and development in North America, Southeast Asia, and throughout the world. With multiple degrees from the University of Oregon, Travis currently splits his time between the US, and Bali, Indonesia. At RemotePad, Travis writes about remote work, hiring internationally and PEO/EOR business models.