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NIE, is a tax identification number which identifies you to the Spanish tax
authorities. The NIE number is necessary for buying a home in Spain, opening a
bank account, identifying before the Spanish Tax Agency (AEAT) and even
forming a company in Spain.
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Any foreigner can obtain a NIE applying in person in the Chief Police Office
in Spain or in the Spanish Consulate / Embassy in your country. All the shareholders or directors need to have 'D.N.I' (Spanish
Identification Document) or 'N.I.E.' (foreigners identification number).
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For any deed to be recognized in Spain, must be authorized by an
Spanish Public Notary, or by a foreigner Public Notary. If you have a foreigner
Public Notary deed the document also will need the Hague Convention Apostille
and an certificate translation.
Only Spanish public notaries may issue deeds regarding to real state placed
in Spain, be aware, if you try to sell any real state in Spain using a foreign
public Notary deed, it will not enter the Property Registry Office (Registro
de la Propiedad).
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Put simply an Apostille certificate authenticates the signature of the public
official who has signed the document in your home state. The Apostille
certificate confirms the person that signed the document has the authority to do
so and that the document should therefore be recognised as legal without further
evidence in another member state. A member state being any country which has
joined the Hague Convention.
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Since October 21, 1976, Spain is part of 1961 Hague Convention abolishing the
Requirement of Legalization for Foreign Public Documents. The Convention
provides for the simplified certification of public (including notarized)
documents to be used in countries that have joined the convention.
With this certification by the Hague Convention apostille, the document is
entitled to recognition in the country of intended use, and no certification by
the Authentications Office or legalization by the embassy or consulate of the
foreign country where the document is to be used is required.
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• Commercial Code (Código de Comercio) Royal Decree 22-8-1885, revised by Law
18/1989
• Spanish National Chart of Accounts (Plan General de Contabilidad) Royal Decree
1643/1990
• Corporations Law (Ley de Sociedades Anónimas) Royal Decree-Law 1564/1989
• Limited Liability Companies Law (Ley de Sociedades de Responsabilidad Limitada)
Law 2/1995
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The Spanish National Chart of Accounts (Plan General de Contabilidad),
aproved by Royal Decree 1643/1990 is of obligatory application for all
companies.
Contents of the Spanish National Chart of Accounts:
Part I Accounting principles
Part II Chart of Accounts
Part III Accounting definitions and relationships
Part IV Financial statements
Part V Valuation rules
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Principle of prudence
Going-concern principle
Recording principle
Cost principle
Accrual principle
Matching principle
No-offset principle
Consistency principle
Materiality principle
Spanish "Generally Accepted Accounting Principles" are very similar to the US
GAAP.
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Commercial Code requires all enterprises to keep orderly accounts that are
suitable for their business activities, to keep a book of inventories and
balances and to keep a journal.
Also enterprises must submit the statutory books to the Mercantile Registry in
the place in which their registered office is located, in order to be
authenticated.
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The annual financial statements are consisting of the balance sheet, the
income statement and the notes to financial statements. These documents jointly
form a single body of information.
The whole mercantile regulation about accountant concentrate its efforts in
these documents, as expression of the enterprise’s networth, financial situation
at a given moment, and the annual results.
Enterprise’s directors must submit the financial statements to the Mercantile
Registry in the place in which their registered office is located, in the next
month after the approval of the annual financial statements for the ordinary
stock holder’s meeting.
The annual Statements and the management report placed in the Mercantile
Registry are public documents and any body can ask for a copy of them. Six years
is the deadline to access to this information.
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There are three levels of tax authority: the State (national); "Comunidad
Autonoma" (regional); and Towns (local).
All residents (both individuals and corporate bodies) must pay taxes on all of
their worldwide income. Non-residents are subject to taxation only on incomes
earned or paid on Spanish territory.
The Spanish taxation system classifies tax payments as Taxes, Levies and
Contributions.
The main direct taxes applicable in Spain are:
- Corporate income tax
- Personal income tax
- Non-resident income tax
The main indirect taxes applicable in Spain are:
- Value added tax (VAT)
- Transfer and stamp tax
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Resident legal entities must pay tax taking into account all of their
worldwide income. Non-residents are subject to taxation for this tax solely for
the income accrued or paid on Spanish territory.
In general accounting principles coincide with corporate tax principles, very
little non-accounting adjustments must be made.
There are two rates: general 35% and 30% for small size companies.
Calculation: Incomes - Expenses = Profit Before Taxes
Profit Before Taxes x 35% / 30% = Net Profit
There is a system of tax incentives for small-sized enterprises, exclusively
applicable to companies whose net turnover in the tax period immediately prior
thereto is less than 8 million euros:
- A tax rate of 30%, applicable to the first 120,000 euros of taxable income
- Accelerated depreciation if the asset unit value does not exceed 601.01 euros.
- Deduction in repayment of 10% of the investments or expenses: Access to
Internet, Presence on Internet, E-commerce...
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Individuals shall be deemed to have their principal residence in Spain if
they meet any of the following conditions: They spend more than 183 days per
calendar year in Spain or or when the core of their economic interests lies in
Spain.
A body corporate shall be deemed to be a resident of Spain if it meets any of
the following conditions: It was incorporated in accordance with Spanish law, it
has its registered office in Spain, it has its effective headquarters in Spain.
A body corporate shall be deemed to have its effective headquarters in Spain if
management and overall control of its activities are based in Spain.
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When, by any legal means, a non-resident has continuous or habitual work
facilities in Spain or a place to do any kind of work where he/she/it performs
all or part of his/her/its activity, or when he/she/it acts in Spain through an
agent with powers to enter into an agreement in the name
and on behalf of the non-resident individual or body corporate, provided said
powers are exercised on a regular basis, it shall be considered that the
non-resident is acting in Spain through a PE.
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Generally Non-residents’ tax contributions in Spain are lower if they use a
PE in Spain. Also generally speaking branch and PE are equivalent concepts.
Non-residents that obtain income through an PE in Spain shall be taxed for the
total amount of income attributable to said PE, regardless of where it was
obtained.
The tax base of the PE is calculated in accordance with the provisions on the
general system of the Corporate Taxation Act (Ley del Impuesto sobre
Sociedades, LIS). General tax rate 35%
Income not obtained through a permanent establishment (EP): In general, the
tax base shall be the gross tax base due, i.e. without deduction of any
expenses, and tax rate general applicable is 25%. (aeat.es)
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Employee gross annual salary 33.000,00
€
Employee Social Security 6.35%: 2.095,50
€
Company Social Security 24%: 7.920,00
€
Employee income tax 18%:
5.940,00 €
Employee annual net salary:
24.964,50 €
Company annual employee cost: 40.920,00 €
Salaries vary according to the sector, the professional category, the
location of the business, the size of the business, etc. Labor costs in Spain
are below EU and USA average.
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 The regulation of work relationships is basically contained in the Workers
Statute (Estatuto de los Trabajadores) , collective agreements and work
contract.
Collective agreements are those concluded either within a
company or group of companies or one or more company organizations, or within
one or more worker syndicates or representative organizations. Collective
agreements, in their application, are binding. Collective negotiation can be
carried out at different levels: agreements in companies, state sectors,
provincial sectors, etc.
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Salary is determined in collective negotiation or individual contracts. Collective agreements
agree a minimum
professional salary level. This minimum can be increased with an
individual contract.
Failing a decision in collective agreements or work contracts regarding minimum
salary for professionals, the government annually sets a minimum
inter-professional salary for the legal working day.
2006 minimum inter-professional salary:
Daily:..............................18,03 €
Monthly:.......................540,90 €
Yearly:...................... 7.572,74 €
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The average duration of the ordinary working day is 8 hours, 40 hours a week,
and about 1.800 hours a year. It can be irregularly distributed if business
activity requires it.
Employees can take at least 30 calendar days of paid holidays for a year
period, which cannot be substituted with economic compensation.
Also there are 12 publics holidays, along the year.
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Company can terminate the work contract for disciplinary reasons in this case
not severance payment is due to the employee.
If the company can not accredit the reason for the disciplinary termination, ,
or breaches the formal and procedural communication requisites, it will have to
opt to either pay the employee severance pay equivalent to 45 days salary per
year worked, up to a maximum of 42 monthly payments, or to readmit the employee
under the conditions in place prior to dismissal.
If a permanent contract that is terminated due to objective causes is considered
to be an unfair dismissal, then severance pay will be equivalent to 33 days
salary per year of service, up to a maximum limit of 24 monthly payments. In
these cases, the process for terminating contracts is more efficient, given that
it is not necessary to request prior administrative authorisation for individual
dismissals. However, such permission it is still necessary for collective
dismissals.
A dismissal will be declared null and void if it is due to any of the
discriminatory causes prohibited by the Constitution or legislation, or if it
violates fundamental rights and collective rights of the employee. An annulled
dismissal will result in the immediate readmission of the employee, and payment
of any outstanding salary.
Employers can also dissolve a contract for objective reasons, such as economic,
technical, organizational or production motives. If these motives are
accredited, the severance paid to the employee should be equivalent to 20 days
salary per year worked, up to a maximum of one year’s pay. If a dismissal is
declared to be unfair or null and void, it will result in the same conditions as
those indicated for a disciplinary dismissal.
Type of contracts in Spain:
- Indefinite contract
- Training contracts
- Fixed-length contracts
- Part-time contracts
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Foreigners who wish to work in Spain, either for themselves or for others,
will have to obtain a work permit.
Citizens of European Union Member States and legal immigrants can accept offers
of employment and move freely for this purpose within Spain.
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Social security guarantees people, families and regularized immigrants
suitable protection with regard to eventualities and situations that, due to
sickness, accidents or unemployment, require medical attention or economic aid
to substitute the lack of income. Employees and employers are required to
contribute to Social Security funds.
The Social Security system covers the following aspects: medical attention and
medicines, benefits for temporary disability, risk during pregnancy, maternity,
provisions for permanent, partial, total or long-term disability, retirement,
death of a spouse, orphanage, provisions for unemployment, death and family
protection.
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How much does the
employee cost the company?
Is it more
convenient to operate through PE?.