Where is the best place to start a business in Spain? What should foreign nationals know about setting up a Spanish business?

According to the 2021 Barometer of the Business Climate in Spain, 73% of companies planned to increase or maintain their investments in Spain. As one of the busiest countries in Europe, Spain provides ample infrastructure for prospective business owners to start a business, or to create a Spanish branch of an existing company. There are many benefits for foreign nationals to start a business in Spain. However, it can be difficult choosing the most appropriate Spanish city to base the company in.

This guide will explore the best Spanish cities to start a business in; comparing their advantages and disadvantages, and highlighting the importance of working with multilingual and international lawyers.

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What to expect from Spanish company culture when starting a business in Spain.

Find out if Madrid is a good place to start a business in Spain, and if there are any disadvantages.

Compare the advantages and disadvantages of starting a business in Barcelona as a non-Spanish resident.

Find out whether non-Spanish nationals should start a business in Valencia.

Find out the most frequently asked questions regarding where to start a business in Spain as a foreign national.

What is the business culture like in Spain?

Spain comprises 17 autonomous communities, with some regions have their own official language. However, most businesses will communicate with you in English; unless you are dealing with local merchants.

A Spanish Flag amongst Financial Charts

Spanish business culture also appears more relaxed compared to other countries. There is a strong focus on family businesses; Spanish business owners seemingly are more likely to trust family-oriented or family-run companies. In addition, Spanish employment law dictates that companies grant their employees at least 30 days of paid leave and 12 public holidays each year, which makes a Spanish business desirable for foreign nationals to work.

Companies are typically run along the traditional hierarchical system; therefore, when operating a business in Spain, you should only communicate with your counterpart, not someone superior to your position. Spain is also ranked eighth in the European Union for gender equality in the workplace.

It is important to remember that different Spanish cities will almost certainly have their own business culture. For advice on the cultural differences, seek international lawyers who understand the different methods of establishing a business in Spain.

Contact our Spanish lawyers today for more information.

Is Madrid a popular city to start a business in?

Madrid is the capital city of Spain and is in the centre of the country. It is also the third-largest city in the European Union.

Advantages of setting up a company in Madrid

According to the European Cities Monitor Report, Madrid is the sixth best city in the European Union to do business in. This is reflected in the business infrastructure available; there are good transportation links, including the largest and busiest airport in Spain, making it easy to connect and network with international entities.

Madrid is also a good location for technology companies and start-ups to build and expand their businesses. As Madrid has various venture capital (VC) funds available, the region has plenty of opportunities for company growth.

Disadvantages of setting up a company in Madrid

Spain has one of the highest unemployment rates in the European Union, at 13.26% in the first quarter of 2023. As the Spanish capital city, Madrid has high levels of unemployment, which may affect how businesses in the area operate.

To set up a company in Madrid, various documentation is required to get started and care must be taken to avoid disruption to the formation of the company.

Giambrone & Partners, international lawyers, can advise foreign nationals aiming to start a business abroad. This includes assisting with the necessary documentation required, and ensuring the company formation process runs smoothly.

Find out more about setting up a company in Spain here.

What are the benefits of starting a business in Barcelona?

Barcelona is the capital city of the Catalonia, a region in north east Spain and is one of the busiest cities in Europe. With a record of 12 million visitors, Barcelona’s community is vastly diverse and attracts creativity.

View from balcony: Barcelona Cathedral and Plaza in El Born District.

Advantages of starting a business in Barcelona

Like Madrid, Barcelona is also well connected and has strong transport links. This includes a high-speed train system that connects the Spanish city to other European countries. Barcelona is also home to one of Europe’s major ports, which makes international trading much simpler and more attainable.

As various business initiatives have been launched in Barcelona, it is a good place for start-ups and entrepreneurs. The city hosts the Mobile World Congress, the 5th European Startup Hub.

Disadvantages of starting a business in Barcelona

Although there are many benefits to starting a business in Barcelona, it is important to consider that there may be certain obstacles that could occur. Foreign business owners may face tax issues, as Spanish taxes may differ from their home country’s tax laws. This includes a 2% wealth or an “exit tax” on unrealised capital gains.

In these cases, our multilingual and international lawyers can help you understand Spanish tax laws to ensure your business operates legally.

Find out more about our international tax services here.

Should foreign nationals start a business in Valencia?

Valencia is the busiest port in the Mediterranean, and the fifth most active in Europe. Valencia has a good business infrastructure and transport links, including Europe’s longest high-speed rail network, starting a business in Valencia has various advantages and disadvantages.

Advantages of starting a business in Valencia

Valencia is ideal for businesses looking to expand. As it is such an active port, it is an excellent location for the purposes of export. Valencia is an economically viable place to live, compared to Madrid and Barcelona, as it has affordable office space and as well as other commercial properties for business expansion.

Valencia aspires to become a part of the new European Silicon Valley, which has the potential to create future opportunities for thousands of workers.

Disadvantages of starting a business in Valencia

However, despite Valencia being cheaper than other cities, it does not offer the same “expat” culture compared to Madrid and Barcelona. This may impact on the ability to attract potential business connections.

No matter where you decide to start a business in Spain, it is important to seek legal advice from international lawyers to ensure that you completely understand the company formation process and the required documentation.

Giambrone & Partners have legal capacity in a number of jurisdictions in several countries, including Spain, Portugal, and Italy. Our team of international lawyers have years of experience in setting up international businesses, and helping our clients to understand the various laws that they will need to observe.

Contact Giambrone & Partners today to find out more information.

Frequently asked questions

Is Spain a good place to start a business?

Many advantages come with starting a business in Spain despite not being a Spanish resident. This includes a well-developed infrastructure, fewer tax burdens than in some other countries , and an economy that welcomes foreign investment.

Find out more about Spain’s potential as a good place to start a business here.

What is the Mercantile Registry?

The Mercantile Registry of Spain serves as a database for both businesses and sole trader companies engaged in commerce, similar to Companies House in the UK. Any type of business structure in Spain must be registered at the Mercantile Registry, regardless of which Spanish city or region the company is based in.

At Giambrone & Partners, our Spanish lawyers can help register your business at the Mercantile Registry; helping provide you with the necessary documentation and setting up a Spanish bank account as well.

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