Business in Spain

The Spanish government has implemented financial and fiscal incentives to encourage new business in the country.

After taking blows from two recessions, Spain may not spring to mind as a place to do business, but the country has worked hard to attract businesses and investors. Training and hiring incentives for workers, such as government-funded employer rebates for creating jobs, offer business owners savings on labour costs. Government bodies have implemented financial and fiscal incentives to stimulate innovation, technological improvements and research and development in sectors that have a strong growth potential and impact on the Spanish economy.

More than 12,800 foreign companies are established in Spain — 75 are Forbes Top-100 multinationals. As well, Spain’s location offers a portal to the European, Latin American and North African markets.

Madrid, in particular, offers great opportunities for investment, professional training and development. With the highest number of businesses in the country — more than 500,000 — the city is not only the political capital of Spain but is its business capital as well. Madrid grew 3.9% over the past 10 years and has an average per capita income of more than 33,000 euros ($45,638), making Madrid the third-ranking European region in terms of purchasing power and an ideal marketplace for new business projects.

Enterprising Tips

A few things you should know:

  1. For a representative office, the head office must formally authorize the establishment of a Spanish branch and appoint a representative.
  2. Sociedad Limitada is equivalent to the limited liability company. Sociedad Anónima (SA) is similar to a corporation. Accounting is more complicated for SAs.
  3. Business owners who pay value added tax (VAT ) in Spain and who reside in Canada (and other countries with reciprocity agreements with Spain) may be eligible for VAT refunds.
  4. For accounting/auditing and tax preparation purposes, the Spanish branch office of a foreign company is considered a permanent establishment in Spain.
  5. Companies in Spain on a long-term basis can attain Spanish residency status with an investment visa. Nonresident companies must have a representative in Spain as a point of contact for the tax office.
  6. Even if your target market is English-speaking, take steps to learn the language, especially if you have Spanish-speaking employees or service providers. Be aware of regional language differences, e.g., Catalan in Barcelona; Valencian in Valencia.
  7. The three main areas for startups in Spain are Madrid, Barcelona (site of District 22@ — the city’s technology centre) and the Basque Country.


  1. Clients will want to become acquainted with you before proceeding with any business. Expect questions about your background and family life.
  2. Mealtimes are for relaxing. If you want to talk business over lunch, mention this in advance to your lunch guest.
  3. Be aware of regional differences. Spanish nationals derive a sense of identity from their regional origins, not the country.

    Spain chart