Setting up a company in Spain
Welcome to the house that sends you mad
At Remotely we're driven by the mission to connect extraordinary talent in Spain and Argentina to job opportunities in US-based software companies, without the need to move to the US. As you might guess, this requires us to "set up shop" so we can legally operate in both Spain and Argentina (as well as in the US).
Every country is quite different, but let's first talk about Spain:
To employ people in Spain, Spanish tax authorities (AEAT) ask you to obtain a NIF (Número de Identificación Fiscal), the Spanish equivalent of the EIN. This ID allows you to do two (additional) things you need to operate in Spain: to open a bank account and to register with the Seguridad Social (the social security system), which is needed to pay payroll taxes for employees. Once you've completed these tasks you can employ people in Spain. Simple, right?
Not so fast.
This post will document the process Remotely Works Inc. went through so that our customers never have to (unless they really want to!). Our own lost-in-translation journey that we hope you don't have to go through!
Step 0: Get a local admin partner
Spain is a country where almost everything requires an in-person meeting, even if the purpose is only to get the certificates/passwords that will allow you to operate online thereon-after. Unless you are interested in traveling to Spain (on multiple, separate occasions) to complete a number of administrative tasks yourself, we'd recommend finding a local partner (a law firm, for instance) to help you.
As Spaniards, one would think we would be interested in traveling to Spain more often than the average American. And yet we decided to get a lawyer to help us. This is likely to be your situation, so finding a good law firm is very important. If you need a recommendation, please contact us.
Once you've selected your administrative partner, you will need to draft and sign a power of attorney (in both Spanish and English) to give your local partner the necessary powers to operate on your behalf in Spain. This power of attorney needs to be presented alongside the certificates of incorporation that include the name of the director signing the power of attorney.
This power of attorney and certificate of incorporation need to be notarized locally in the US, and then sent to the office of the state department to obtain an Apostille. This step, alongside the cost of Fedexing back and forth, can take several weeks and be in the $850 cost range. Since you will need to repeat this process with other documents (for later steps such as opening a bank account), we recommend consolidating all the required documents and then notarizing them and obtaining the apostille all at once to reduce cost and complexity.
Many of these American documents may require a translation. We specifically say "may" because, in our experience, this is not a hard requirement and is more likely to be a matter dependent on the administrator assigned to your case.
Step 1: Get a NIF
The nice thing about Spain is that you don't need to incorporate in Spain to operate there. Instead, you can simply register your US Corporation as a foreign entity. For that, you need to apply for a NIF (número de identificación fiscal).
The process to get a NIF is pretty straightforward: your local admin partner will go to the local tax authorities' office and present the required information. Over the following weeks, you will receive a letter with your NIF.
Get a digital certificate from AEAT to operate remotely
If you want to be able to operate remotely, you will need to get a digital certificate that allows you to sign and operate on legal matters virtually. To do so, you need to have an existing NIF, and to apply for a digital certificate in person in an office of the AEAT (ie. the Spanish equivalent for the US IRS). You will need to present a copy of your certificate of incorporation, translated, notarized and marked with the Hague apostille.
Once you have your digital certificate (it took us more than a month to get it after applying in person), the AEAT will send a notification to an online inbox that can be accessed only with such a certificate. You'll have to remember to regularly log in to check to avoid missing any important notifications or requests for action. If you use a local administrator to check it on your behalf, expect it to cost around 600Eur per year.
Get a Bank Account
It's necessary to have a bank account in Spain to pay the social security contributions (payroll taxes) of the employees you have in Spain. This is because the AEAT only allows wires from a specific list of Spanish banks. (In case you were wondering, the answer is: No, online, user-friendly neobanks cannot operate with the AEAT).
For a fee, you can issue a separate power of attorney to enable them to open a bank account (or the original power of attorney has to include this ability specifically). This power of attorney needs to be either notarized and apostilled (from abroad), or in person with a notary in Spain.
To open a bank account in one of those banks, you will be asked to show:
proof of incorporation and control over the company owning the bank account. This can usually be done by showing a certificate of incorporation that states the name of a director, properly notarized and with the Hague apostille.
tax ID in the US (EIN) and in Spain (NIF)
copies of your personal IDs (people in control of the company).
Proof that you are an active company: a copy of your last tax filing. If you haven't filed taxes you'll need a certificate of Good Standing, notarized and with the Hague apostille.
With all this information, you will still need to show in person in a branch of the bank and complete the creation of the account and the delivery of your online access codes. Your bank account will be linked to that branch specifically, and it may mean that if you want to close it, you'll likely have to show up to that specific branch in person to do so.
We started this process in June 2020. As of this writing (Oct 2020) we have completed two of the three steps (getting a NIF, getting a digital certificate). We have not been able to get a bank account, and will likely take a few more months due to the requirements of showing up in person in times of Covid-19. The biggest cost of this process is mental bandwidth as you will likely be unable to check this to-do for a few months. It will linger and drag on and on for months. You will pay legal fees and will have to put the hours to travel to Spain and get things done (or at a minimum, travel to specific one of a specific set of notaries in the US to manage the paperwork and cover the costs of a local partner). There will be real uncertainty and a feeling of being lost in translation, which is likely to lead to anxiety and frustration (both of which we experienced, despite being Spaniards).
We couldn't end this post with a reference that some of you will recognize from childhood!