Spain is growing fast, with a 3.2% GDP increase in 2024. Tourism, hiring, and immigration are boosting demand. We offer clear steps and evidence for UK founders to act confidently.
Our insights combine OECD data, current negotiations, and results from the 2024–2025 Business Climate Survey of Swedish firms in Spain.
The outlook is mixed but hopeful. The OECD’s DynEmp update (February 2025) shows Spain’s start-up ecosystem is recovering from COVID-19. Start-ups make up 8.4% of manufacturing and 13.8% of services firms in 2021–2022.
While this is lower than the average, five-year survival rates are similar. However, Spain lags in post-entry job growth compared to peers.
What does this mean for us? The main challenge is scaling. Employment is mostly in micro firms, while large companies have fewer jobs than in Europe. Madrid and Barcelona attract investment, but size remains a barrier.
Law 28/2022, the Start-Up Law, and Law 18/2022 on Business Growth now offer incentives, talent visas, and scaling solutions.
Culture is key. Building trust takes time, titles are important, and meetings often last over lunch. Punctuality is flexible, but commitments are serious. We include these insights to help your first steps in Spain.
For UK investors, the mood is positive. Swedish companies report high profits and expect growth in 2025. Our guide covers legal, tax, and hiring rules, and the risks that slow scale-ups.
In this series, we provide practical advice on incorporation, tax, hiring, and funding. We balance caution with momentum. Use new incentives, plan for slower growth, and build relationships early. With the right plan, business in Spain can grow from cautious start to confident scale.
Introduction to Setting Up a Business in Spain
Starting a business in Spain is gaining momentum. The country is focusing on innovation and skills. Policy updates also make it easier for international teams to enter the market.
Spain’s GDP growth in 2024 hit 3.2%, the highest among major economies. This growth boosts confidence in sectors like tourism and tech.
Business Sweden’s surveys show most Swedish firms in Spain are profitable. They expect their turnover to increase in 2025. This shows Spain’s market advantages and why it’s a good time to invest.
Why Choose Spain for Your Business?
Spain is the EU’s fourth-largest economy. It offers access to a vast consumer base. The country’s GDP growth in 2024 is strong, thanks to tourism and a resilient labour market.
The Start-Up Law 28/2022 provides practical support. It offers lower corporate tax, larger tax-free stock option limits, and visas for engineers and digital nomads. This makes Spain a great place for founders who value speed, talent, and clear rules.
Culture is also important. Spain values trust and steady delivery. Starting a business here means building lasting partnerships through face-to-face meetings and clear communication.
Key Benefits of the Spanish Market
- Scale and access: Spain’s large EU market and connections to France, Germany, Italy, and Portugal support expansion and supply chain resilience.
- Brand lift: Spain’s positive image in fairness, equality, sustainability, and governance can boost your brand in regulated sectors.
- Start-up pathway: Although the start-up share has decreased since 2017, survival rates are still good. This means there’s room for well-prepared businesses to thrive.
- Policy tailwinds: Incentives for business angels and clear visa routes make it easier to attract talent and secure funding.
These advantages make Spain an attractive choice for UK teams. They offer scale, stability, and credible growth signals. Spain’s GDP growth in 2024 sets a solid foundation for the next two years.
Understanding the Legal Framework
Spain has strict rules for starting and growing a business. Over a hundred laws cover areas like finance, insurance, and tax. We study these to ensure our business plan fits with Spain business registration and avoids delays.
The Start-Up Law 28/2022 Spain makes it easier for new businesses to start. It offers tax breaks and a special five-year plan to attract talent. Law 18/2022 aims to reduce red tape and help with funding.
Company Structures Available in Spain
Spain offers different company types based on size and speed. The Sociedad de Responsabilidad Limitada (SRL) is good for small teams. The Sociedad Anónima (SA) is better for bigger plans. Freelancers have less protection but are personally responsible.
Choosing between a branch or subsidiary depends on control and tax. A branch keeps the parent’s identity, while a subsidiary offers more protection. The Start-Up Law 28/2022 Spain offers benefits for eligible founders.
We watch our company’s size closely to avoid extra rules. This helps us plan for audits and labour laws early on.
Registering Your Business
To register smoothly in Spain, we match names, statutes, and tax IDs. We follow the Spanish National Statistics Institute’s rules on age and employment. This ensures our filings are correct.
We also consider regional licences and sector permits. This helps us avoid delays in Spain business registration. If we qualify, the start-up framework makes things easier.
Start-Up Law 28/2022 Spain reduces costs and time at the start. Law 18/2022 helps as we grow. Using these laws well keeps our business moving forward.
Navigating Taxation in Spain
Spain’s tax system can be beneficial if we plan ahead. We compare Spain corporate tax, VAT, and equity rules with the Start-Up Law 28/2022. This helps us manage cash flow, hiring, and timing with investors.
The OECD suggests looking beyond the first four years. We forecast the step-ups that come with growing the business.
Corporate Tax Rates
Qualifying ventures get a lower Spain corporate tax rate for the first four years. This helps with runway pressure and planning revenue and capitalisation.
The law also changes tax on stock options Spain by raising tax-free limits. This supports employee ownership. Business angels incentives Spain are also improved, helping early investors and guiding seed rounds and SAFEs.
Founders with salaried roles pay less in social security. This can reduce early wage costs. We still plan for the period after incentives, as rates may increase when size thresholds are met.
Value Added Tax (VAT) Considerations
Spain VAT varies by sector and transaction type. Filing rules differ across regions. We align invoicing, place-of-supply rules, and exemptions with each region to avoid penalties and cash traps.
Early compliance choices impact margins and pricing. We plan for cross-border VAT, recurring returns, and credit recovery. This keeps cash flow smooth as receivables grow. These steps complement Spain start-up tax incentives to manage overall burden.
As incentives phase out, we review Spain corporate tax, tax on stock options Spain, and business angels incentives Spain. This ensures a clear path from seed to scale.
Choosing the Right Business Location
Where we choose to set up business in Spain affects costs, talent, and how quickly we can start. The OECD points out that rules vary by region, so it’s crucial to check permits and incentives. We also consider cultural norms and the depth of each sector to match our business model with the Spanish market.
Major Cities for Business Opportunities
Madrid is key for finance, consulting, and company headquarters. It has great access to national regulators and a big pool of skilled workers. For many, it’s one of the top places to do business in Spain.
Barcelona is a mix of design, tech, and export trade, thanks to the Port of Barcelona. The start-up scene around 22@ and Mobile World Congress helps businesses grow. Knowing English is common, but speaking Spanish and Catalan helps build local connections.
Valencia offers lower costs and a strong logistics base. It has a good supply of engineers and game developers from its universities. Tourism also boosts demand without the high costs of bigger cities.
Bilbao and Donostia–San Sebastián are great for advanced industries and design. They have strong clusters in machine tools and materials, making it easy to find reliable suppliers. This mix supports longer sales cycles in industries.
Málaga attracts digital firms with its tech park and growing air links. The tourism boom in 2024 will boost hospitality tech and e-commerce. Seville adds aerospace capabilities, thanks to Airbus, and a skilled vocational workforce.
Factors to Consider When Selecting a Location
- Regulatory landscape: Autonomous communities set rules that affect approvals and grants; the OECD flags this as a growth factor, so we map regional requirements early.
- Ecosystem structure: Spain’s firm base skews to micro enterprises, shaping suppliers and B2B partners; plan for more fragmentation in services and parts of manufacturing.
- Talent access: Assess universities, language skills, and sector schools; weigh English use against the clear edge of Spanish proficiency in sales and operations.
- Cluster gravity: Industrial shares of large-firm employment are lower than the cross‑country norm, which can alter clustering and vendor depth in heavy industry.
- Cultural fit: Cities vary in formality, titles, and lunch‑centric meetings; this affects sales cycles, networking, and event calendars.
- Demand drivers: Tourism-led growth favours retail, F&B, and travel tech; validate seasonality and local purchasing power before you locate business Spain.
- Connectivity and costs: Compare AVE and air routes, port access, and Grade A office or flex space; model TCO, not rent alone, for the Spanish market entry location.
By matching sector needs with city strengths and regional rules, we narrow down the best cities for business in Spain. This careful selection helps us focus on the right regions and reduces the risk of starting up.
Financing Your Business Start-Up
Capital in Spain is influenced by policy and market depth. We can match our plans with the Spain VC ecosystem. Recent reforms have given us tax and equity tools.
Relationships are key in sales, so we manage our cash wisely. We fund in stages and keep an eye on our runway.
Overview of Funding Options
Spain offers equity, debt, and non-dilutive funding. Seed rounds combine VC, family offices, and accelerators like Wayra by Telefónica. Venture debt and ENISA loans offer runway without diluting shares.
Spain’s business angels incentives are part of the start-up law. These incentives boost angel returns, speeding up funding at early stages. Higher tax-free stock options help us attract and keep talent.
We plan for patient capital due to slower growth. We stage our funding, set clear goals, and inform investors about our sales strategy. This approach attracts funds that value long-term growth over quick returns.
Government Grants and Support
Spanish government grants, loans, and guarantees are available. Laws like 18/2022 aim to reduce barriers for growing firms. Early-stage companies can get co-investment from regional agencies and sector schemes in digital, health, and climate.
Start-Up Law 28/2022 lowers corporate tax for the first four years. This boosts cash flow during the critical launch phase. With angel incentives, these tools create a funding mix of grants, tax reliefs, and equity.
We use each funding tool for a specific milestone. Grants for product development, angel investments for market entry, and VC for scaling. This mix diversifies risk, matches funding to needs, and supports steady growth.
Employment Regulations in Spain
We carefully plan our staffing, keeping an eye on the labour market and its rules. Spain’s labour laws set the rules for contracts, hours, and pay. As our team grows, we follow Spanish employment regulations closely.
Unemployment in Spain is 11.4% in 2024. This means hiring can attract a lot of interest. But, wages and keeping staff vary by area and industry.
Policy incentives play a big role. Law 28/2022 helps entrepreneurs with social security costs. This affects how we pay our staff and plan our growth.
Hiring Requirements and Labour Laws
We start with clear contracts and register employees with Social Security right away. Spain’s laws limit working hours and overtime. We keep track of hours and ensure fair scheduling.
We choose the right contract type and check qualifications to avoid problems. This helps us grow our team smoothly.
- Pre-employment: right-to-work checks, Social Security registration, and onboarding documents.
- During employment: tracked hours, fair scheduling, and health and safety compliance.
- Scaling: Spanish employment regulations include more than 100 size-dependent rules; we map thresholds early.
We match our HR practices with Spanish culture. This means formal meetings and clear decision-making. We also respect nonverbal cues in interviews and onboarding.
While flexibility is valued, we set clear expectations. This keeps our team working well together.
Employee Rights and Benefits
Employees have rights like paid holidays and breaks. Spain’s laws also ensure fair pay and clear dismissal procedures. We document performance and follow fair warning steps.
- Benefits: statutory leave, sick pay rules, and occupational risk coverage via Social Security.
- Founders: social security Spain entrepreneurs provisions under Law 28/2022 guide how we balance salary and contributions.
- Culture: Spanish workplace culture favours respectful tone, clear hierarchy, and direct yet courteous feedback.
We offer consistent, lawful benefits to keep staff. By paying competitively and following the rules, we build trust. This makes hiring in Spain efficient and strong.
Cultural Insights for Doing Business
Trust is key in Spanish business culture. We often start with coffee, lunch, or small talk. Building relationships is crucial as it affects how partners view risk and commitment.
Meals can last long, covering personal topics before business. Coffee breaks are great for quick updates. This helps in keeping deals on track.
Understanding Spanish Business Culture
At first, use formal titles like Señor or Señora. Titles and hierarchy are important. We focus on what senior leaders want and when.
People use gestures and stand closer than in the UK. Direct eye contact shows honesty. Being on time is important, but things can start late. We plan for delays to respect local customs.
Dress codes vary by industry. In formal sectors, wear conservative. But, adjust as you learn more. Simple Spanish phrases show respect and can open doors.
Building Relationships with Local Partners
Negotiations are a journey, not a rush. The Spanish style values patience and mutual gain. Early talks focus on goals and values, not just price.
We have follow-up coffees to keep things moving. Clear summaries help in decision-making. This approach strengthens our relationships in Spain.
To follow Spain’s business etiquette, confirm plans in writing. Be flexible with timing and respect local holidays. These habits keep trust at the heart of our deals.
Marketing Your Business in Spain
Our strategy in Spain is built on trust. We start with small deals and grow them over time. We use Spanish content to show we understand the culture.
Effective Marketing Strategies
We mix emotion with facts. Spanish people value fairness and sustainability. We reflect these values in our marketing.
For B2B marketing, we focus on personal connections. We use events and meetings to build trust. We share success stories from big brands like Unilever and Telefónica.
- Localise messaging and tone; lead with benefits, back with data.
- Align with regional priorities in Madrid, Barcelona, and Valencia.
- Show governance and privacy discipline to strengthen brand perception Spain.
Digital Marketing Trends in Spain
Digital marketing in Spain should enhance personal connections. We create content like videos and webinars. We make sure our websites work well on mobiles.
We use social media and search engines for events. We run LinkedIn ads for big events and follow up with emails. This approach works well in today’s market.
- Build topic hubs that reflect Spanish consumer behaviour and sector needs.
- Use CRM signals to sync ABM visits with content triggers.
- Track sentiment to refine brand perception Spain across channels.
Our approach aligns with how people live and work in Spain. We make promises, provide strong evidence, and keep in touch regularly. This way, we build trust and grow our business naturally.
Challenges of Doing Business in Spain
Spain’s business scene is complex, with risks and regulatory hurdles often intertwined. The economy has growth areas but also slow spots. In the post-COVID era, timing, process, and trust are as crucial as price in business success.
Building relationships takes time. Formal greetings, being on time, and clear proposals are still important. The Spanish market also faces challenges due to regional rules, as highlighted by the OECD.
Common Pitfalls to Avoid
- Don’t underestimate the time needed for deals and negotiations; we add extra weeks for stakeholder approval.
- Don’t overlook etiquette in meetings and bids; clear agendas and Spanish or bilingual materials are key.
- Be aware of regional compliance: over 100 rules can limit growth; we plan our headcount carefully.
- Don’t ignore growth data: surviving businesses see average employment growth of 67% in manufacturing and 36% in services, showing the need for discipline.
- Be cautious of labour market signals: with unemployment around 11.4% in 2024, hiring can be challenging but also beneficial.
These factors increase business risks and market pitfalls if not prepared for. We set up internal controls early to tackle regulatory challenges as we grow.
Adapting to Economic Fluctuations
We monitor the economic outlook and build buffers. We conduct stress tests for VAT timing, incentive changes, and cash needs over four years. We balance between tourism and industrial sectors, noting the lower presence of large firms in manufacturing.
- Use policy advantages: Spain’s Start-Up Law 28/2022 and Law 18/2022 can simplify processes if we meet the criteria.
- Model scenarios quarterly to manage volatility in regions and sectors post-COVID.
- Sequence hiring to avoid size-based rules; automate compliance checks and calendar renewals.
By expanding carefully and refining our sales approach, we reduce risks while staying alert to regulatory challenges. This approach helps us navigate the Spanish market under a changing economic outlook post-COVID.
Exploring Industry Opportunities
Spain’s growth in 2024 changes the market landscape. Record tourism and a strong labour market open up new opportunities. These opportunities are in travel, tech services, and advanced production support.
The supplier base is diverse, with many small firms. This means there’s room for consolidation and improvement. We aim to fill these gaps with practical solutions.
Emerging Sectors in the Spanish Market
Tourism is driving innovation in Spain. The services sector benefits from tech that helps with staff shortages. This includes booking engines and guest experience platforms.
Fintech linked to travel and retail is also growing. Solutions like split payments and instant tax refunds are popular. Working with CaixaBank and Amadeus can help businesses enter the market.
Industrial digitalisation is another area of growth. Advanced manufacturing services help plants grow. This is especially true in automotive and aerospace clusters.
Environmental solutions are also promising. Brands like Iberdrola lead the way. SMEs are adopting tools for energy management and circular packaging.
Market Demand Trends
Buyers want fast, reliable services with clear benefits. After-sales support is key, with many firms focusing on marketing and service hubs. This supports platforms for onboarding and remote support.
Data-driven marketing models are also in demand. The density of small firms in services and manufacturing makes CRM and e-invoicing attractive. These can be integrated with logistics and financing.
Hospitality and consumer services are leading the way. Next, industrial upgrades and sustainability will drive growth. This will create a balanced market across software, equipment, and managed services.
Technology and Innovation in Spain
Spain’s digital scene is growing fast. It has bold founders, strong universities, and accelerators in Barcelona and Madrid. Despite a dip in new ventures after COVID-19, there’s room for growth. This can be achieved by focusing on ICT investment Spain and using policy tools to support scale-up.
Recent OECD work shows that survival is solid, but growth can lag. This is due to weak R&D spend, low ICT capital, and uneven rules. Matching product roadmaps with innovation Spain priorities can help reduce these issues and unlock market traction.
Tech Start-Ups and Ecosystems
Spanish start-ups cluster around hubs like Barcelona Tech City and Madrid’s Google for Startups Campus. They focus on fintech, traveltech, and climate tech. Names like Cabify, Glovo, and Wallbox show their ambition.
Founders who invest in ICT and R&D see better growth after launch. Angel networks and seed funds focus on capital efficiency. Using corporate pilots with Telefónica and Banco Santander can de-risk adoption.
Government Support for Innovation
Start-Up Law Spain innovation, formalised by Law 28/2022, offers tax reliefs and stock option reforms. It also includes talent visas, including digital nomad permits. Law 18/2022 reduces admin and finance hurdles that slow scaling.
Public lenders and grant makers support private funds. ENISA loans, CDTI programmes, and regional agencies reward innovation Spain projects. By aligning claims with ICT investment Spain and audited R&D spend, start-ups can improve their growth curve.
We find that disciplined reporting and transparent cap tables speed decisions. Founders who join accelerators and comply with regional rules early cut friction. This sharpens their case for follow-on capital in the Spain tech ecosystem.
Key takeaways for operators:
- Map incentives from Start-Up Law Spain innovation to hiring plans and equity grants.
- Prioritise ICT investment Spain that raises productivity and supports data-led scaling.
- Leverage public–private pilots to validate demand and reduce regulatory risk for Spanish start-ups.
Sustainable Business Practices
Spain is moving towards low-carbon growth, changing how businesses operate. This change links innovation, finance, and operations to a green future. For UK founders and investors, focusing on sustainability in Spain is key for market access, talent, and brand value.
Importance of Sustainability in Spain
OECD research shows a link between business growth and cleaner innovation. Yet, Spain’s slower business turnover hinders this shift. Still, Spanish consumers are becoming more eco-conscious, considering energy costs when buying products.
Strong ESG disclosures by companies like Iberdrola and Acciona set the standard. This helps shape supply chains and expectations. Brand perception is crucial, with Nordic labels seen as credible on climate action.
Examples of Sustainable Business Models
Spain’s micro-firms benefit from practical, scalable sustainable solutions. Energy-saving services for SMEs, like smart lighting and heat pumps, reduce costs. Circular models, like repair and remanufacture, are also effective in retail and appliances.
Digital tools are essential for monitoring and reducing waste. The Start-Up Law 28/2022 supports climate tech ventures by offering equity incentives. This attracts talent and aligns growth with outcomes.
Companies that focus on lifecycle data, low-carbon logistics, and supplier training meet consumer expectations. They also prepare for stricter regulations on packaging, energy, and disclosures. Sustainability can lead to export success and stable profits.
Networking and Business Associations
Building relationships is key in Spain. We achieve more by planning our networking with care and respect for local customs. Longer lunches and mid-morning coffees help us connect. Being formal and showing respect for hierarchy builds trust.
Spanish chambers of commerce and trade associations are essential. They help us understand the market. With many small firms, these groups connect us with partners, distributors, and after-sales services. Combining business events with follow-ups the same week leads to success.
Key Networking Events in Spain
We focus on major fairs and sector weeks. Then, we fill our calendars with coffees and meals. This approach keeps the momentum going after each event.
- Mobile World Congress in Barcelona for digital and IoT deal flow.
- FITUR in Madrid to reach travel, hospitality, and tech service buyers.
- Alimentaria in Barcelona for food, drink, and retail innovation.
- SMOPYC in Zaragoza and SIL Barcelona for logistics and industrial leads.
Team Sweden in Spain shows the power of coordination. The Embassy of Sweden in Madrid, Business Sweden, and the Swedish-Spanish Chambers of Commerce align events. UK firms can follow this by timing their outreach around business events and structuring their touchpoints.
Joining Business Associations
Membership is worth it when we join the right groups and attend regularly. Spanish chambers offer regional reach, while sector associations provide technical insights and vetted contacts.
- Begin with the British Chamber of Commerce in Spain and the Spanish Confederation of Business Organisations (CEOE) for a broad base.
- Add industry groups like SERNAUTO for automotive or AMETIC for digital to deepen pipelines.
- Use bilateral groups in Madrid, Barcelona, Valencia, and Bilbao to localise networking and secure introductions.
We formalise first meetings, keep titles correct, and confirm action points the same day. This approach, combined with strategic networking, turns introductions into partnerships.
The Future of Business in Spain
There are clear signs of a strong recovery in Spain’s economy. This boost has increased confidence among businesses. They are now adjusting their plans for hiring, pricing, and investing.
Our focus is on Spain’s growth outlook for 2025. We’re looking at demand, investment, and trade across different areas and sectors.
Post-Pandemic Economic Recovery
GDP grew by 3.2% in 2024, thanks to tourism, logistics, and ICT services. Spain’s economy is expected to grow faster than the Eurozone by 2026. However, unemployment at 11.4% is still a challenge for wages and skills.
Spanish productivity is key. The market is mostly made up of small firms, which limits growth and digital adoption. Laws like 18/2022 and the Start-Up Law 28/2022 aim to improve finance access and attract talent.
Start-ups are crucial for job creation. GEM surveys show many founders start businesses when jobs are hard to find. They focus on retail-tech, travel-tech, and green services. But, growing these businesses is still a challenge, so support is vital.
Long-Term Business Trends
By 2025, Spain’s growth is expected to stabilise, driven by service expansion and tourism. Long-term trends include more ICT use, stronger R&D, and greener industries in energy, mobility, and construction.
Productivity will depend on scale, skills, and investment. Cloud, AI, and automation can boost output if matched with training and export goals. As businesses grow, start-ups will focus more on B2B and clean-tech.
In the long run, growth should align with EU averages. Investment will target skills and infrastructure bottlenecks. These steps will support a wider economic recovery and build resilience across regions and supply chains.
Conclusion
Spain is a promising place for growth. In 2024, output went up by 3.2%. Foreign investors are seeing good profits, and the outlook for 2025 is positive.
However, the market mainly focuses on small businesses. Growing bigger is slower compared to other countries. Rules can change based on the size and area of your business. A well-thought-out plan and strategy are key to investing in Spain with confidence.
Our Final Thoughts on Business in Spain
Building strong relationships is as important as the price in Spain. Laws 28/2022 and 18/2022 help new businesses with lower taxes and other benefits. These laws are great for UK companies looking to grow slowly and steadily.
To stay strong, we compare our progress with other countries. We also keep an eye on sales, hiring, and following the rules as we grow.
Taking the Next Steps in Your Journey
First, make a plan to start your business in Spain. Choose the right structure and understand local taxes and rules. Make sure your plan includes speaking Spanish.
Building trust is crucial. Use meetings and formal etiquette to make connections. Make sure your funding matches the long time it takes to get deals.
Focus on sustainability and good governance. This appeals to both public buyers and big companies. Use UK chambers and trade groups for advice. Then, update your business strategy regularly to avoid surprises.
