Legal support for UK business owners

Legal support for UK business owners in Spain

Establishing a business in a new country presents both exciting opportunities and significant legal complexities. For UK entrepreneurs and investors looking towards Spain, the Valencian Community offers a compelling proposition. Navigating the Spanish legal landscape, however, requires precise local knowledge. This is where expert legal support for UK businesses in Valencia, Spain, becomes not just beneficial, but essential. Delaguía y Luzón, with over 65 years of experience, provides comprehensive guidance to ensure a smooth and compliant transition for your UK-owned enterprise into the Spanish market. 

Legal and regulatory framework in Spain

Spain’s business environment is shaped by a layered legal framework that foreign companies need to understand before entering the market.

• Based on national laws, regional regulations, and EU directives
• EU influence remains strong in areas such as consumer protection, data privacy, and competition
• Still relevant for UK businesses despite Brexit
• Understanding these frameworks is essential for foreign companies setting up in Spain

The Spanish Civil Code forms the bedrock of private law, influencing commercial contracts and obligations. Company formation is primarily governed by the Capital Companies Act (Ley de Sociedades de Capital), which outlines the different legal forms a business can take, such as a Sociedad Limitada (S.L.) or Sociedad Anónima (S.A.). These structures dictate liability, capital requirements, and governance. For foreign entities, the most common choice is the S.L., due to its flexibility and limited liability for shareholders. Beyond company law, businesses must adhere to a broad spectrum of regulations. Labour law, governed by the Workers’ Statute (Estatuto de los Trabajadores), sets out employment conditions, contracts, and social security obligations. Tax laws, administered by the Agencia Estatal de Administración Tributaria (AEAT), define Corporate Income Tax (CIT), Non-Resident Income Tax (NRIT), Value Added Tax (VAT), and other levies. For UK business owners, navigating this multi-layered legal environment without expert legal support for UK businesses in Valencia, Spain, can lead to unforeseen complications and delays. Delaguía y Luzón guarantees that all aspects of Spanish and regional law are meticulously considered, providing a solid legal foundation for your venture.

How the legal support for UK businesses in Spain applies in practice

The application of specialised legal support for UK businesses translates into tangible benefits and streamlined processes for UK entrepreneurs. This support starts before your business is officially set up and continues throughout its operation, particularly during the company formation stage. Key areas of support include:

• Guidance on the Spanish Mercantile Registry, which differs from the UK’s Companies House
• Selection of the most suitable legal structure (S.L., S.A., or branch office)
• Advice on minimum capital requirements and incorporation rules
• Support with shareholder agreements and director responsibilities
• Ensuring compliance with the Capital Companies Act (e.g. €3,000 minimum capital for an S.L.)

Furthermore, obtaining a Spanish Tax Identification Number (NIE for individuals, CIF for companies) is a fundamental step.

Tax, financial, or cost implications

Understanding the tax, financial, and cost implications is paramount for any UK business establishing itself in Valencia. Spain’s tax system can be complex, involving national, regional, and municipal levies. Expert legal support for UK businesses is crucial for navigating these financial landscapes effectively.

Comparison table 1: Estimated company formation costs (S.L.)

Cost Item	Estimated Range (EUR)	Notes
Notary Fees (Public Deed of Incorporation)	€300 – €800	Varies with capital and complexity
Mercantile Registry Fees	€150 – €400	Registration of the company
Tax on Capital Operations (Exempt as of 2010, but still involves administrative steps)	Exempt	No direct tax, but legal work required
NIE/CIF Application	€50 – €150 per person/company	Required for all directors/shareholders
Legal & Administrative Fees (Initial Setup)	€1,500 – €3,500+	Includes drafting articles, tax registration, initial advice
Registered Office Services (Annual)	€300 – €700	If no physical office initially

Comparison table 2: Key tax rates in Spain

Tax Type	General Rate	Notes for UK Businesses
Corporate Income Tax (CIT)	25%	15% for newly formed companies for the first 2 years of profit
Non-Resident Income Tax (NRIT)	19% (EU/EEA) / 24% (Other)	Applies to income without permanent establishment; UK now 24% generally, subject to DTT
Standard VAT (IVA)	21%	Reduced rates apply to specific goods/services
Social Security Contributions (Employer)	Approx. 28-30% of gross salary	Varies by employee category and base salary

Delaguía y Luzón’s legal support for UK businesses includes detailed tax planning, ensuring your business benefits from all applicable deductions, incentives, and favourable tax treaties. The Double Tax Treaty Spain–UK, for instance, is crucial in preventing income from being taxed twice in both jurisdictions, a significant consideration for cross-border operations. Proper financial structuring from the outset can lead to substantial long-term savings and compliance.

Foreign and UK-specific considerations

The UK’s departure from the European Union has introduced a new layer of complexity for British individuals and businesses looking to establish themselves in Spain. Post-Brexit, UK citizens are generally treated as third-country nationals, which impacts immigration, residency, and certain aspects of cross-border trade and services.

Post-Brexit implications for UK business owners

Visa and Residency Requirements: UK citizens can no longer automatically live and work in Spain. A visa is now required for stays exceeding 90 days within any 180 days. For entrepreneurs, this often means applying for a specific business visa, such as the Entrepreneur Visa or the Golden Visa (Investor Visa), which requires a significant investment. Company Directors and Shareholders: While UK citizens can still be directors and shareholders of Spanish companies, obtaining a NIE (foreigner’s identification number) is mandatory. The process for obtaining a NIE for non-EU residents can be more involved, often requiring in-person appointments or a power of attorney. Cross-Border Services and Goods: The free movement of services and goods between the UK and the EU has ended. Businesses must now contend with customs declarations, potential tariffs, and new regulatory hurdles for importing and exporting. Understanding the trade agreement between the UK and the EU, and how it impacts your specific business model, is vital. Recognition of Professional Qualifications: The automatic recognition of UK professional qualifications in Spain has ceased. This can affect businesses in regulated professions, requiring new validation processes or local accreditations.

When professional legal advice becomes essential

While the prospect of opening a business in Spain is exciting, the journey is fraught with legal and administrative complexities that can quickly overwhelm even seasoned entrepreneurs. Professional legal advice transitions from being merely helpful to essential at several critical junctures, especially when navigating the intricacies of legal support for UK businesses.