Doing Business in Spain

Country profile

Spain is a parliamentary monarchy, divided into towns, provinces and autonomous communities. There are 17 autonomous communities. The Kingdom of Spain has a surface of 505,990 kilometers square. The Balearic Islands in the Mediterranean, the Canary Islands in the Atlantic and the North African cities of Ceuta and Melilla are also included in Spanish territory. According to the National Institute of Statistics, Spain has a population of 47,150,819, out of which most of them speak Spanish, 17% speak Catalan and very few speak the Galician and Basque dialects. Spain is bordered by Andorra, France, Gibraltar, Portugal and Morocco. The capital city is Madrid. Spain’s currency is euro, as a consequence of being a member of the European Union. It is also part of North Atlantic Treaty Organisation (NATO), United Nations (UN), Organisation for Security and Co-operation in Europe (OSCE), Council of Europe (CoE).

Statistics

Approximately 12% of the Spanish population are foreign nationals. The largest foreign community is Romanian (14.1%), followed by the Moroccan (12.7%), Ecuadorian (7.5%), English (6.7%), Colombian (5.3%), Bolivian (4.1%) and German (3.4%). As far as the population is regarded, Madrid has 3.3 million. Other important cities and their population are Barcelona (1.6 million), Valencia (809,267), Seville (704,198), Malaga (568,507), Zaragoza 675,121), Bilbao (353,187). At the beginning of 2011, the Spanish work force included 18.2 million people, but the unemployment rate was extremely high, situated at 21.29%. 

Main industries

Spanish economy is based in 11.5% on industry, the rest of the budget being formed of services, trades and other sources. The main activity focuses on processing foods, textiles, footwear, petrochemicals, steel, automobiles, consumer goods, electronics.

Spain’s most important industrial city is not its capital, although Madrid has a well-developed industry of textiles, food, metal working, banking, education and tourism. Barcelona is however the center of the industrial Spanish power, with chemicals, pharmaceuticals, automobiles, electronics and appliance manufacturing among the most productive areas. Besides, Barcelona attracts one-fourth of the Spain’s foreign investment. In Valencia, the main industrial sectors are chemical, textile, ceramic and paper, while Seville focuses on manufacturing tobacco, armaments, porcelain and perfume.

Salaries

The average salary in Spain is 1,800 EUR, considered to be 35% lower than the rest of the EU countries. However, all employees earn a minimum salary of 641 EUR, according to the Spanish law.

Main corporate taxes

The standard Spanish corporate tax levied on companies activating on the country's territory is 35%. However companies with yearly sales of less than 8 million EUR benefit from certain deductions and 10% tax credit can be obtained for investments and expenses in internet, communications and information technology.

The VAT rate in Spain is 18% since 2010. A reduced 8% VAT rate applies to some basic food and services, while a super reduced 4% VAT rate relates to essential food, newspapers, books. Some services in Spain are VAT exempt, such as insurance and financial services, medical services or education. 

Dividend tax, or withholding tax imposed by the Spanish Tax Law has a standard rate of 15%.