Living in Spain and Starting a Business as an Expatriate
“Spain to Accept Rescue From Europe for Its Ailing Banks,” "Declining confidence and tightening credit conditions caused by the country's sovereign-debt crisis," "52.1% youth unemployment," are among recent headlines from major global media outlets relating to Spain, along with similar stories regarding all of the so-called "PIIGS" countries (Portugal, Italy, Ireland, Greece, and Spain).
Apart from the fact that Spain recently won Europe’s Soccer Cup, the Mediterranean country has been making primarily negative headlines for quite some time. Given its bleak economic situation, Spain might be one of the last countries to which you might contemplate a move.
However, the possibility to buy up significant amounts of cheap real estate is not the only economic opportunity that Spain offers right now. Madrid, for example, continues to maintain a per capita GDP higher than that of Germany, a fact that Esperanza Aguirre, the President of the Autonomous Region of Madrid, emphasized at a recent press conference. If you are able to find a target niche that is still unexplored, now is a unique time to place your product and/or services at the forefront.
The key is to adapt your entrepreneurial pursuits to the economic situation at hand; don’t create a product that is overpriced, and don’t expect to make a peak in sales this year. Planning longer-term (as far as that is possible given the constant flux of laws in Spain) and becoming familiar with the needs of your target audience, in turn, can bring rewards. Of course, there are all the other reasons that still prevail in favor of Spain — the pleasant climate, long hours of sunshine, diverse landscapes, unparalleled nightlife, delicious food, and generally friendly people. Read on to find out how other expats have thrived thanks to the development of their own businesses.
Spain as a Business Hub
“I purposely chose to move to Madrid because it is the center of Spain and where I saw a lot of opportunities for entrepreneurship,” says American expat Lauren Aloise. It is now her third year in the Spanish capital, where she founded Madrid Food Tour, a business that offers small, customized food tours that offer to take you off the beaten path and into the heart of Spanish cuisine. “My husband and I had previously lived in Seville and Cadiz, both places we really love but, unfortunately, do not offer the same level of career opportunities,” she adds.
But the fact that large cities such as Madrid and Barcelona serve as business centers does not mean that they are the only places you can start a business. American expat Jerry Hoffman, a professional actor/singer since the age of seventeen, abandoned his acting career in Los Angeles to found Shakespeare Mallorca, a company of international theater artists that will presents the works of William Shakespeare (in English) and the classical Spanish playwrights (in Spain). According to Hoffman, Mallorca has a “clearly needy English-speaking market.” The multicultural and multilingual resident and tourist populations of Mallorca, in addition to the beauty of the island and his love of Shakespeare, made him found Shakespeare Mallorca. His first shows premiered in 2012 in the Palma Auditorium.
Food and theater are not the only fields being ventured into by expats. From renewable energy to the latest communication businesses, expats have their say in just about every business endeavor in Spain.
At first sight, all this may sound too good to be true. But founding your own business — and keeping it running — is a lot of work. “My first issue, and the one many Americans have, was becoming a legal resident with the option of working in Spain,” says Aloise. “I wish I could say I had an easy solution for this challenge, but I was granted residency because of my marriage to my husband, a Spanish citizen.”
Check out the justlanded.com section on Spain for more information on getting a NIE (Número de Identificación de Extranjeros; in English, the identification number for foreigners) or a Tarjeta de Residencia (literally meaning “residency card”). The official site of the Ministerio de Hacienda y Administraciones Públicas provides further information, although only in Spanish. It may take a while to decipher the details — for example, if you want to work for yourself, you will have to select cuenta propia (as opposed to cuenta ajena, which means working for someone else).
You can also consult with English-speaker lawyers, such as those at Strong Abogados. Pedro Da Cruz of Strong Abogados, for example, explains some of the nitty gritty details: “As an American expat, you will be required to obtain a NIE before starting business in Spain. This is a requirement for all Non-Spanish citizens. The particular challenge exists when the company intends to start trading. At this point the company must either appoint or have someone acting as director who has a work permit in Spain. This can prove to be a particular challenge for US citizens if they do not hold a work permit.”
“After the 7-month process of getting my residency, setting up the business seemed easy!” affirms Aloise. If you’re wondering how best to get started, Spain Expat provides a useful step-by-step guide, including the following stages which are described in their article:
- Choose a name for your business (and register it).
- Choose a legal business structure.
- Create a business plan.
- Find financing.
- Find a location.
- Secure licenses and permits.
Aloise, for example, currently runs Madrid Food Tour as an autónoma (a registered self-employed person). “I receive a discount on the monthly social security payments because I am under 30 years old,” she says. “In the future I could consider setting up the business as a sociedad limitada (limited liability company), but at the moment there is no overwhelming benefit in going that route.”
Aloise and Hoffman both advise that any expat looking to start a business in Spain should consult with an attorney, an accountant, and a notary public. ““[Starting a not-for-profit foundation like Shakespeare Mallorca] has been especially tricky in light of the current economic ‘crisis’, and recent change in the Spanish government (less than six months old),” says Hoffman. “The law seems to change daily, and there is no handbook for newcomers to the system.” But if you ask for help, you can find solutions, as Aloise did: “The tax laws were another really confusing area for me, but luckily I have been able to seek advice from accountants in both Spain and the U.S.,” she notes.
Expat Nellie Huang took things a little further. As the co-founder and Editor-in-Chief of WildJunket, a travel blog and digital magazine, she has her home base in Granada, Spain. However, she set up the WildJunket business in Singapore. “It’s much easier in terms of paperwork and cost,” she explains. “It was a straightforward process: we applied for our business license online, paid for the application, and within a week, it was approved.” In fact, she isn’t the only one who doesn’t want to deal with the Spanish bureaucracy; “I know another expat in Spain,” Huang says, “but she too got fed up setting up her business here, so she got her license in the UK instead.”
Another option is to open up a Spanish branch of a company that already exists in the United States. Urban Green Energy (UGE), for example, is changing the face of distributed renewable energy generation by putting users in control of their energy with versatile wind turbines and hybrid solar solutions. As an American company, UGE embarked on a joint venture with a local team in Spain to help grow the business. “Perhaps this is the best way to start, and maybe down the line as the business succeeds, expats can be relocated to continue to grow the business,” Ann Amarga, Associate Manager, UGE Marketing, recommends.
Success Will Be Rewarded
All in all, don’t let the bureaucracy deter you. Expat Pierre-Alban Waters founded Moving2Madrid, a company that provides all-inclusive personal relocation services for people who want to move to Madrid. “I wanted to create something myself, to have full ownership, to challenge the status quo,” he says. He began seeing all the challenges he had experienced when moving to Madrid as potential business opportunities. “Realtors have low quality ethical standards, relocation companies have no transparent and fair pricing focusing on corporate and executive accounts,” he observes. “Why can't everybody have an all included relocation package serviced by trustworthy expert expats with lots of free tips so everyone can take their decision and see if they want to use the services?” That’s when Moving2Madrid was born.
American expat Gwendolyn Alston, who has been living in Madrid since 1988, also wanted to have more control over how she spent her time. “I had been working in the book industry for 15 years, with long hours away from home and two small children,” she says. “I wanted to spend more flexible time with my daughters as they were growing up, and also wanted the challenge of working for myself. I had ideas that I wanted to put into action and see what I could make of them for myself and for my family.” That’s when she started Moca Media, a company that offers outreach and marketing services for independent filmmakers. Alston also recommends that you “work with a lawyer or a 'Gestoría' to do your legal papers and tax payments.”
In fact, Spanish lawyers, notaries and accountants are not the only people who can be called upon for help. Networking with other expats and entrepreneurs (expats or not) can be very beneficial as well. Eager to help other prospective business founders, Waters himself created Guiripreneur, the #1 group for international entrepreneurs in Madrid (now under the umbrella of the Meetup network of websites). In fact, Aloise is one of the members who benefitted: “I was able to connect to other expat entrepreneurs here in Madrid through a group called Guiripreneurs and also through Madrid Emprende and various Facebook groups,” she says. “Virtually, I am always looking for opportunities to exchange advice with other expats in Spain, and am often in contact with Spanish businesses and Spain bloggers too. Lastly, make sure to find out about any support for entrepreneurs in your community. Madrid offers young entrepreneurs various opportunities, such as free office space, half price social security payments, and discounted financial and legal advice,” Aloise adds.
Based upon his own mistakes, Waters ultimately recommends that future entrepreneurs “listen to your instinct — if you don't like something in your business, change it. Your main asset is your passion.”
For More Information
Internations.org is an international online community for people who live and work abroad. It includes city and country guides, including information about setting up a business in Spain.
Spainexpat.com includes information on starting a business in Spain.
Doingbusiness.org offers the official guidelines for starting a business in Spain, provided by the International Finance Corporation (IFC) and the World Bank.