Are you looking for a great place to set up your business? Consider Spain! Here are ten reasons why.
As an entrepreneur, you continuously look out for the best location to establish your business. You’re always looking for a location with affordable office spaces and an abundant supply of talented experts. Spain should be on your list if you’re looking for a country with prospective customers and investment!
Spain is known for its thriving business opportunities and relaxed corporate atmosphere. The economy grew by 5.5% in 2022 and is expected to grow at 2.1% in 2023 and 1.9% in 2024. Whether starting a new business in Spain or expanding your existing one, there are many advantages to entering the Spanish market.
This article will explore why Spain is an ideal destination for your business set-up.
Spain now boasts the 15th largest economy globally and 5th within the EU. With a robust GDP of 1.897 trillion USD and a population of 47.42 million, Spain holds a prominent position on the economic stage. However, it’s important to note that it is currently ranked 30th in the Doing Business ranking, which assesses the ease of starting new businesses.
As an EU member, Spain benefits from access to the world’s largest market – the European Union, encompassing 500 million people with a per capita income of 40,910 USD. Within the EU, businesses and traders enjoy the advantages of unhindered movement of goods, services, capital, and people, alongside tariff-free trade conducted in a stable, unified currency, the Euro.
Furthermore, Spain’s trade connections extend beyond Europe to encompass markets in the Middle East, North Africa, and Latin America. These well-established trade relationships contribute to the strength of the Spanish economy and offer significant potential for business expansion.
Favorable business environment
Spain’s appeal to foreign investors is rooted in its ease and flexibility. The country imposes no restrictions on foreign citizens looking to establish businesses within its borders. Foreign investors are granted the same privileges as local entrepreneurs when launching a company in Spain.
Furthermore, Spain’s legislation regarding foreign investments aligns seamlessly with EU principles, embracing exchange controls, capital movements, and liberalization. Typically, foreign investments necessitate notification after the investment has been executed.
Spain has solidified its commitment to foreign investments by entering into bilateral agreements with more than 50 nations, establishing a robust legal framework. Moreover, businesses from EU member states are exempt from declaration requirements, regardless of the investment amount, significantly easing administrative burdens on foreign investors.
In addition to these advantages, the Spanish Government extends its support to investors through various incentives spanning various industries.
Entrepreneurs often face tax challenges regarding their business income, but in Spain, entrepreneurs have advantageous tax incentives. When you register as self-employed, you’ll benefit from a significantly lower tax rate and must only fulfill your tax obligations once annually, at the end of the fiscal year.
To illustrate, employee social security contributions hover around 6.45%, with employer social security contributions just above 30%. Meanwhile, the corporate tax rate, contingent on the company’s annual revenue, is 25%. This is notably lower than the rates prevailing in numerous other European nations.
Spain’s Tax Agency has streamlined its processes through a fully computerized system, facilitating most procedures and transactions online. Moreover, the tax burden imposed on businesses established in Spain is notably reduced and remains below the average burdens in the EU-28 and the Euro Zone.
Innovation in Technology
Spain boasts a thriving tech ecosystem, encompassing established tech hubs like Barcelona and emerging ones like Valencia and Bilbao. Notably, Google inaugurated a cybersecurity center in Malaga in 2022, committing to a substantial $650 million investment over five years.
Spain has maintained a steadfast commitment to digital transformation since the inception of the internet. Significant investments have been channeled into bolstering its digital infrastructure, while active support has been extended to entrepreneurs venturing into artificial intelligence, blockchain, and other digital domains.
This flourishing tech landscape is nurtured by a robust higher education system with prestigious technical universities renowned for their engineering and technology programs. Graduates from these institutions receive exceptional on-the-job training opportunities, thanks to the presence of Spanish and international tech firms in the region.
Investment in Research and Development
Spain’s commitment to investing in Research and Development (R&D) has yielded substantial benefits for startups and the broader innovation landscape. The country has consistently allocated resources to foster technological advancements, making it an attractive destination for entrepreneurial ventures.
One notable example of Spain’s R&D investment is its support for renewable energy startups. The Spanish government has offered incentives and grants to companies focused on green technology, promoting sustainability, and mitigating climate change. This support has led to the emergence of startups like Ecoalf, a sustainable fashion brand that recycles marine waste into clothing materials.
Moreover, Spain’s dedication to R&D has created a favorable environment for tech startups. Barcelona, for instance, has become a hub for cutting-edge technology companies, including Glovo, a delivery app, and Typeform, an online survey and form builder. These startups have thrived partly due to Spain’s commitment to fostering innovation.
Spain has emerged as a hotspot for startups seeking skilled international talent, fostering a thriving ecosystem where innovation meets a diverse and talented workforce. With a rich cultural tapestry and renowned educational institutions, Spain is an attractive destination for professionals worldwide. Figures speak volumes: Spain boasts a rapidly growing startup scene, with Barcelona and Madrid leading the charge. Barcelona alone has witnessed a 49% increase in startups between 2016 and 2020.
One of Spain’s strengths is its ability to attract international talent. The country’s vibrant tech community draws experts from various fields, and its welcoming immigration policies have made it easier for startups to tap into this global pool. Furthermore, Spain’s strong presence in industries like renewable energy, biotechnology, and artificial intelligence ensures a constant demand for skilled individuals.
Affordable cost of living
Spain offers a high quality of life at a relatively affordable cost. According to Housing Anywhere, the cost of living in Spain is approximately 123% cheaper than in the United States. Spain boasts an excellent healthcare system with both public and private options available. The country also has a well-established public transportation network, making exploring various regions and cities convenient without owning a car.
Spain has several budget-friendly cities where you can find attractive cost-saving opportunities compared to other European nations. On average, Spain is recognized as one of the most economical countries in the European Union. As of 2023, the average monthly salary in Spain is €2,250. For an individual, it is possible to maintain a comfortable lifestyle in Spain with a monthly budget of €1,000. This budget covers expenses such as rent, groceries, health insurance, occasional use of public transportation, dining out a few times a month, and moderate shopping.
Easy company registration
Tax-related requirements and responsibilities are common concerns for those considering starting or establishing a business. Fortunately, the process within Spain is straightforward and accommodating, making it accessible for foreign investors, regardless of their origin within or outside the European Union.
Spain’s regulations facilitate business formation for individuals from both EU member states and non-member states, providing a welcoming environment for international entrepreneurs. Here’s how you can register your company in Spain:
- Decide whether to form a sole proprietorship, partnership, limited liability company (SL) or corporation (SA).
- Select a unique business name and check its availability with the Spanish Company Registry.
- Identify company directors and shareholders and ensure compliance with Spanish corporate laws.
- Draft the company’s Articles of Association and have them notarized by a Spanish notary.
- Obtain a Tax Identification Number (NIF) for the company and its directors.
- Open a dedicated business bank account to manage finances.
- File the necessary documents with the Commercial Registry to officially register your company.
- Check for any local licenses or permits required for your specific business activity.
- Enroll your company and employees in the Spanish Social Security system and register for applicable taxes.
Infrastructure and communications network
Due to Spain’s substantial road and rail networks, business connections are widened, and processes are simpler.
Spain’s infrastructures have been significantly upgraded in recent decades, with the nation today boasting some of the world’s best train and underground systems. The country also provides a thriving marine sector, with 46 state-owned ports on both sides of Spain. Spain features three of Europe’s top 10 commercial ports and world-class infrastructure for ports.
Similarly, if we consider factors such as the numerous ports and airports situated in vital parts of the country, trade meetings can be conducted promptly and effectively.
Great tourist industry
Spain ranks second globally as a leading tourism destination brand and third in annual tourist arrivals. Spanish airports welcome over 230 million passengers annually, while Spanish ports cater to 8.6 million cruise passengers yearly. These statistics present significant opportunities for businesses operating in the travel and hospitality sectors.
In 2021, the tourism sector in Spain contributed significantly to the economy, generating a total of 97,126 million euros, equivalent to 8.0% of the country’s GDP. This marked a substantial increase of 2.2 percentage points compared to the previous year. Furthermore, the tourism-related industries created 127 million jobs in the last ten years.