In the face of the extraordinary unprecedented multiple challenges that are being faced worldwide it would be understandable for many businesses to adopt a pessimistic attitude, particularly those in the UK aiming to do cross-border business in Europe.  Regardless of whether a free trade agreement is reached by the UK and the European Union or not when the transition period ends, there will be a new customs border between the UK and the EU.

The governor of the Bank of England, Andrew Bailey, commented in The Times newspaper that "a no-deal Brexit would cause more long-term damage to the economy than the coronavirus pandemic."  The considerably extended negotiations do not suggest that the eventual deal struck is likely to please all parties.  Crisis creates innovation and opportunities, particularly in problematical trading environments which frequently can and do give rise to opportunities for the shrewd businessperson with sufficient perception to recognise them.

There is a long and successful history of trade between Spain and the UK.  The latest figures from UN Comtrade, the trade statistics database, indicate that the UK exported over £10 worth of goods to Spain in 2019 and almost double that amount was imported by the UK for the same period.  However, the outlook for cross-border trade between the UK and Spain in after January 2021 does not look as if it will be entirely straightforward.  There are other ways to successfully trade across the EU borders that enable businesses to circumvent at least some part of the tariffs, lorry tailbacks and paperwork that Brexit threatens.  Setting up a company and establishing commercial premises in Spain allows cross-border trade to operate in a different climate. 

Giulia Gressani, a junior associate in the corporate and commercial team based in Barcelona, commented "setting up a company in Spain provides a wide range of benefits to a businessman or woman wishing to trade across Europe. There is little difference between the corporate requirements of a limited company in Spain –  sociedad limitada  (SL)  and a English limited company." She further commented "there is a requirement for a  minimum share capital in Spain of €3,000. There is no VAT exempted threshold and registration for VAT is mandatory for all companies. One area that must be properly addressed is employment law. There is strict regulation and there are penalties for any failure to adhere to the laws."

There is a range of options regarding the type of legal structure for a commercial entity you can set up: self-employed, a sole trader, partnership or limited liability company.  Depending on whether you choose to live in Spain and the type of business you would like to set up, the steps you need to take, once you know the type of commercial entity you require, are:

  • Obtain a foreigner's tax identification number Número de Identidad de Extranjero (NIE)
  • Register the company name with the Mercantile Registry Registro Mercantil Central  (RMC)
  • Obtain a tax identification number Certificado de Identificación Fiscal (CIF) for the business
  • Open a business bank account
  • Sign the deed of incorporation, if appropriate
  • Register the company
  • Register for social security

If you intend to employ staff you will need employment law advice to guide you through the highly regulated employment laws in Spain.  Employees are paid slightly differently and there are a number of statutory rights that employees in Spain enjoy.

The highly experienced commercial lawyers in Giambrone's Barcelona office will advise and guide you through the entire process.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.