Doing business in Spain offers opportunities — many opportunities. From fast‑growing sectors such as the knowledge economy, advanced industry, digital services, and fintech/sport‑tech initiatives, to the strong appeal of Spain’s lifestyle and business environment.
At the same time, doing business in Spain works differently than in many Northern European countries. Think of different regulations, administrative requirements, and a business culture that can sometimes be surprising.
Are you considering starting a company in Spain? Or do you already run a business abroad and wish to expand into the Spanish market?
At OTIS Legal Group, we have been advising companies, investors, and directors for over twenty years. In this comprehensive guide, we share our key insights, common pitfalls, and practical tips — helping you start your Spanish venture with clarity and confidence..
Why Spain is so attractive for businesses
Jaarlijks starten duizenden Europese ondernemers een bedrijf of tweede vestiging in Spanje. De redenen zijn duidelijk:
- A large domestic market with strong sectoral growth
- A strategic gateway to Latin America
- An attractive business climate for both entrepreneurs and corporations
However, behind these opportunities lies a system that operates differently from what many international business owners are used to. Procedures tend to be more bureaucratic, regulations vary by region and municipality, and administrative processes often take longer than expected. Proper preparation helps avoid delays and legal or financial risks.
Expanding into Spain with an existing business
If you already operate a company abroad and want to start business activities in Spain, several structures are available, including:
- Setting up a Spanish subsidiary
- Opening a branch office
- Working with a local partner
- Providing services cross-border
The most suitable structure depends on factors such as liability, taxation, regulatory requirements, and the nature of your activities.
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The Spanish Legal System: different from other European jurisdictions
Spain consists of 17 autonomous regions,each with its own regulatory powers. Unlike countries with a largely uniform national system, Spain operates with regional and municipal differences in areas such as:
- Licensing and permits
- Company law
- Tax regulations
- Labour law
Without local expertise, companies — and sometimes even directors — may unknowingly face risks, especially in real estate projects, HR matters, contracts, or permit applications.
OTIS Legal Group addresses this complexity through local lawyers, region‑specific expertise, and direct communication with Spanish authorities — ensuring full compliance at every stage.
Choosing the right legal structure
One of the first and most important decisions is selecting the appropriate Spanish business structure. The two most common options are:
- “Autónomo” (self-employed individual)
Comparable to a sole trader:
- Fast and straightforward setup
- Lower administrative burden
- But: full personal liability
Suitable for small‑scale activities or temporary projects.
- Sociedad Limitada (S.L.) – Spanish limited liability company
The most popular choice in Spain:
- Separate legal entity with limited liability
- Strong professional image for clients and partners
- Better protection and scalability
An S.L. must be incorporated before a Spanish notary and registered with the Commercial Register. OTIS provides full support — from incorporation and governance to legal and tax registration.
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Employment law and hiring staff in Spain
If you plan to hire employees in Spain, you will need to comply with Spanish employment law, which differs significantly from many other European systems.
Key areas include:
- Employment contracts
- Social security contributions
- Collective bargaining agreements (“convenios colectivos”)
- Dismissal procedures
- Holidays and public holidays
A sound employment structure helps prevent future disputes and unexpected costs.
Contracts and commercial agreements
Clear and well‑drafted contracts are essential when doing business in Spain, including:
- Cooperation agreements
- Distribution agreements
- Agency agreements
- General terms & conditions
- Shareholders´ agreements
Contracts are often governed by Spanish law and may operate differently from similar agreements in other jurisdictions.
Operate with certainty in Spain — read our whitepaper Spanish Contract Law.
Dismissal and termination of employment in Spain
How does dismissal work in Spain?
Spanish dismissal law is characterised by a relatively flexible system without prior approval from an authority or court. Employers can generally terminate employment directly, provided the dismissal is properly justified, communicated in writing, and complies with formal requirements.
Types of dismissal
In practice, Spanish law distinguishes mainly between:
Disciplinary dismissal (for employee misconduct)
Objective dismissal (e.g. economic, technical, or organisational reasons)
Review after termination
A key feature is that dismissals are usually reviewed after termination. Employees may challenge the dismissal, after which a court will assess whether it is: fair, unfair, null and void.
Unfair dismissal leads to higher severance compensation. In cases of null dismissal, reinstatement and payment of back wages are generally required.
Before going to court, parties must first attempt mandatory mediation (conciliación), often focusing on reaching agreement on severance pay.
Severance pay
Disciplinary dismissal: generally no severance
Objective dismissal: 20 days’ salary per year of service
Unfair dismissal: 33 days’ salary per year of service
Unfair dismissal: 33 days’ salary per year of service
More employee protection
Recent case law shows increased employee protection, including stricter procedural requirements for disciplinary dismissals — reinforcing the importance of careful handling.
Common pitfalls when doing business in Spain
Based on our legal practice, companies frequently encounter the following challenges:
Licensing and zoning
Permit requirements differ by region and municipality, potentially causing delays or fines if not properly arranged.
Tax surprises
Spain applies different tax rules for residents and non‑residents. Incorrect assumptions can result in unexpectedly high tax exposure.
Language and cultural differences
Business in Spain is often more personal and relationship‑driven.
Common differences include:
- Slower decision‑making processes
- Emphasis on personal contact
- Greater flexibility
- Less rigid formal structures
Understanding these aspects significantly improves business success.
Regional regulation
What is permitted in Andalusia may be entirely different in Catalonia — legally, fiscally, and administratively.
Administrative delay
Registrations, permits, and banking processes often take longer than anticipated.
OTIS mitigates these risks by mapping out all legal, tax, and administrative steps in advance.
What OTIS Legal Group offers businesses
OTIS Legal Group advises international companies on, among others:
- Incorporation of Spanish entities (S.L., branches, subsidiaries)
- Employment law and HR matters
- Legal support for real estate projects
- Contracts, negotiations, and general legal advice
- Tax advisory services
- Restructuring and growth
- Debt collection and dispute resolution
Our approach
- Personal guidance by English‑speaking experts
- Local lawyers with deep regional knowledge
- Transparant pricing, clear phasing and dedicated contracts
- Practical solutions without unnecessary legal jargon
Our strentgh
OTIS is part of a broader professional network (including Euro Economics and IFAR), enabling full legal, tax, financial, and operational support.
Starting a business in Spain?
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We take care of everything: NIE number, notary, incorporation, filings, and registrations.
Practical tips to get started
- Obtain your NIE number early — it is required for incorporation and notarised deeds
- Open a Spanish business bank account — this often takes longer than expected
- Verify permits before leasing or purchasing property
- Draft clear, tailored contracts — standard Spanish templates are often insufficient
- Plan for regional differences — one country, seventeen systems
- Invest in legal due diligence — especially for real estate, partnerships, or acquisitions
Conclusion: Succes starts with proper preparation
Spain offers enormous opportunities for businesses, but success starts with the right preparation. With OTIS Legal Group, you benefit from:
- Local legal expertise
- English speaking guidance
- Transparant costs
- Clarity, security and peace of mind
- A team that supports you from first steps through sustainable growth in Spain
Question about doing business in Spain?
Would you like to explore your plans or start immediately? Contact us without obligation for an initial consultation.