Thinking about starting a Spanish company while living in Spain on the Digital Nomad Visa (DNV)? You're not alone—many digital nomads want to go beyond freelancing or remote work, and the appeal of running your own company in sunny Spain is strong. But the truth is, the process can be a lot more complicated than it first appears.
Let’s break it all down - step by step - so you can decide if setting up a Spanish company is right for you, and how to avoid the common pitfalls.
A Cautionary Tale: Misinformation and the DNV
We’ve seen quite a few clients arrive in Spain after being told - typically by well-meaning, but not always DNV-savvy tax advisors - that setting up a Spanish company is the magic ticket to paying less tax and benefiting from the Beckham Law. The process is often expensive and, unfortunately, ends in disappointment: once everything is set up, the digital nomad discovers their residency doesn’t permit them to be registered as a company director (autónomo societario). At MyTaxes, we’ve had to help dismantle more than a few of these costly, unnecessary company structures.
Is a Spanish Company Really Necessary?
Before getting bogged down in paperwork and costs, ask yourself: "Do I really need a Spanish company for what I want to do?"
The Autónomo Alternative
In most cases, registering as a self-employed individual (autónomo) is the simpler, more affordable route. As an autónomo, you can legally invoice clients both in Spain (up to 20% of your income if you are on the digital nomad residency) and abroad, avoid a mountain of bureaucracy, and keep accounting and admin straightforward. Many digital nomads find this setup covers all their business needs without the headache of running a company.
Using a Foreign Company
Here's another idea: keep your company based abroad. You get to live in Spain, enjoy the lifestyle, and work for your own foreign company. Just make sure you get good tax advice and play by the rules so the Spanish tax authorities don't come knocking. If you do that, it can actually be the simplest way to go.
When Does a Spanish Company Make Sense?
There are situations where forming a Spanish company is the right move. Consider it if your plans involve:
- Hiring employees in Spain: You’ll need a legal entity to properly handle payroll and contracts.
- Owning assets in Spain: Think office space, warehouses, or equipment.
- Running a local business: If you’re launching anything with a bricks-and-mortar presence or local service delivery.
But that's not the whole story. Here are some other important factors:
Mitigating Permanent Establishment Risk
Doing business "in Spain" with a foreign company can expose you to the risk of being classified as having a “permanent establishment”—which could mean surprise tax bills. Forming a Spanish company sets you up with clear tax residency and can help avoid nasty surprises from the tax office.
Tax Planning Differences
If you operate through a foreign company, you’ll often need to invoice out most profits to deflect the Spanish tax authorities' gaze. This can be messy and, sometimes, risky. With a Spanish company (and a robust structure with real employees or assets), this issue largely goes away.
Tax Optimisation: When Does it Pay Off?
Generally, opening a company in Spain starts to make sense if your income is above the €60,000-€80,000 range. At this level, you may take advantage of a slightly lower tax rate on dividends compared to Spain’s progressive personal income tax rates. This can mean real savings and a more efficient way to grow your business.
Timing Is Everything: Set Up Before You Arrive
If you’re set on starting a Spanish company, timing matters. Do it before you become a Spanish tax resident!
New Spanish companies benefit from a reduced 15% corporate tax rate for the first two years they're profitable. If you’ve already worked as an autónomo doing the same activity, you could lose out on this perk. Acting early means you can lock in those savings right from the start.
Does My Digital Nomad Visa Let Me Open a Company?
Here’s where things get tricky. Yes, your DNV lets you legally own a Spanish company. But you can’t simply start working for it like you might expect.
Key restrictions:
- No working as administrator: While there is no explicit prohibition in law, from our experience it appears that you cannot register as an autónomo societario (company director) under the DNV.
- Remote, non-Spanish activity only: Your activity must broadly match what you applied for through your residency, and remain remote. You’re not allowed to earn more than 20% of your income from sources inside Spain (and only if you are self-employed).
The result? Many digital nomads follow poor advice, pay hefty setup costs, and then find out they can’t actually work in their shiny new company structure. We urge you to consult advisors who understand the DNV rules before making any big moves!
Residency Pathways for Entrepreneurs (and the Beckham Law)
If your main goal is to work full-time for your Spanish company, you’ll need a different type of residency. Let’s walk through your options, including a closer look at the Beckham Law, which many are keen to tap into.
The Beckham Law: A Tax Regime for New Arrivals
If you become the administrator of a Spanish company, you may qualify for Spain's Special Expat Regime (commonly called the Beckham Law). Here are the essentials:
- Flat tax rate: You’ll pay a flat 24% tax on Spanish-sourced income for up to six years.
- Not just for innovators: Your company doesn’t have to be a high-tech or innovative startup.
- Key requirements: You can’t have been a Spanish tax resident for five years, and you must move to Spain specifically for your work role as administrator.
This regime, combined with the startup corporate tax rate, can mean real savings—but eligibility rules can be strict and are subject to change, so always seek up-to-date, tailored advice.
Other Residency Options
If you’re looking to move to Spain to run a company, the Digital Nomad Visa or Residency won’t work—but here are some other options:
- Highly Qualified Professional (HQP) Visa: If you have the relevant qualifications or experience, this lets you work as director or manager of your own company.
- Intra-Company Transfer (ICT) Visa: If your Spanish company is linked to a business abroad, this pathway covers senior transfers.
- Family Member of DNV Holder: If your spouse or partner has the DNV/Residency, you get broad work rights—including running your own business.
- Entrepreneur Visa: For new and innovative business ideas with high economic value.
The Golden Rule: Your Business Needs To Be Real
It’s simple but crucial: if you open a company in Spain, it must be a genuine business, with real activity, assets, or employees. Spanish authorities look closely at structures set up just to save on tax. If you try to run a “shell” company, you risk heavy fines and legal problems.
Key Takeaways
- Start with a clear goal: Does your project actually need a Spanish company?
- The DNV doesn't let you work freely for a Spanish company—double-check before making a move!
- The Beckham Law offers benefits, but only with the right setup.
Before you take any steps, seek advice from experts like ourselves who work with Digital Nomads and international entrepreneurs every day. It will save you time, money, and a lot of hassle!
If you have questions or want to discuss your individual scenario, MyTaxes is here to help guide you through the process with clarity and confidence. Book a consultation with us now.