Tax Compliance Spain

These are the Legal and Tax obligations for a company or a self employed in Spain

Registration in the taxpayers census and obtaining tax ID (NIF)

Registration in the census of taxpayers is one of the most important of the legal obligations in Spain. It is a formal obligation for companies and freelancers. It is used by the tax authorities to have a census of all entrepreneurs, professionals and obliged to withhold and also to track tax obligation compliance.

Obtaining the NIF (tax identification number) it is required by law. The NIF is used to identify companies and self employed in matters of taxation. In the case of self employed the NIF is the same as in the DNI (National identity document) or NIE (Foreigner identification number) in case of foreign self employed.

In the case intra Community transactions are carried out, the tax office will assign a NIF for EU VAT purposes which will be the NIF with the prefix ES.

Registration of activities (Forms 036 or 037)

By filing these forms the entrepreneur informs the tax office of the type of activity that is going to be carried out and what tax filing obligations the entrepreneur or professional will file.

The activity registration is prior and essential to carry out other procedures such as registering the company in the Social Security or self employed registration.

Electronic notifications

The electronic notifications system is used to receive correspondence electronically from the Spanish official bodies. With this system the entrepreneur will receive and download the correspondence from the Tax Office, Social Security, etc directly in the computer using a system in which the delivery date is accredited.

A couple of years ago came into force the law by which the relationship of entrepreneurs and professionals with the administration is regulated. Individuals have the right to communicate with the government electronically and may opt in voluntarily.

In contrast, businesses and regulated professionals have the obligation to relate with the administration electronically.

Annual report of operations with third parties (form 347)

The annual report of operations with third parties is a mandatory declaration to be submitted by entrepreneurs and professionals. This declaration communicates the Tax Office the amount of transactions with other companies and professionals over EUR 3000. Ultimately, the aim is to communicate what we have invoiced to our customers and invoices received from our suppliers. The Tax office the cross-matches data between companies to check compliance with tax obligations.

Tax forms (303, 130, 111, 115, 347, 349, 390, 190, ......)

Surely, tax filing is a formal obligation we know. Depending on our activity we will be required to submit one or another tax. In general, everyone has the obligation to submit VAT returns (quarterly form 303  and annual summary 390). In addition, self employed must file form 130 in most cases which is a withholding Income Tax declaration . Other common forms are 111 and 190 for income tax withholdings, the rent withholding tax (form 115) and form 349 in the case intra community operations.


Other obligations

If case of hiring employees, company registration in Social Security

Company registration in the Social Security is an administrative procedure in which the company communicates to the General Treasury of the Social Security (TGSS) the starting of activities as entrepreneur and requests the registration in the corresponding Social Security scheme.

Registration, which is indispensable and prior to hiring workers in the company, is valid throughout Spain and the lifetime of the company. This registration identifies the company so it can hire employees.

With this registration, the Social Security assigns a registration number called contribution account code (CCC) that is unique to the company. The Social Security will record the registration and CCC in its entrepreneurs registry.

Self employed registration

Self employed registration is mandatory as soon as the activity starts. For companies it is mandatory in certain cases, to register the director in the self employed scheme. 

Financial statements and corporate books for limited companies

All limited companies are obliged to keep record of accounting records. From the output of this accounting we will obtain the mandatory accounting books which are the Inventory book and and annual accounts and the accounting statements book.

It is also required to have a Minutes Book and a shareholders record book.

These books must be electronically legalized at the commercial registry for which the company must have a electronic certificate.

Data protection Act (LOPD)

The LOPD is mandatory for all companies that collect and store data from individuals.

Purpose of the Act: This Act aims to guarantee and protect, with regard to processing of personal data, public freedoms and fundamental rights of individuals, and especially their honor and personal and family privacy.

In practice this encompasses all companies, although in theory it could be the case of a company without employees which deals only with other businesses and has no data from individuals. For example a self employed without employees and whose clients are other companies.

Occupational risk prevention act.

The occupational risk prevention law is only applicable in case of having employees. Under this law the employer who has employees in charge is obliged to plan and carry out the necessary actions to avoid accidents in the company. The company must draft a prevention plan regarding occupational hazards. Normally this plan is entrusted to a specialized external company that studies and evaluates occupational risks and proposes corrective measures.

Business opening license

This is a mandatory procedure which must be requested at the Town Hall. The entrepreneur must proof that the activity to be performed on the premises, either an office or industrial premises meets the conditions for which it is going to be used.