Spain’s economy has recovered very well after the Euro crisis, which has led to an influx of foreign investments, especially in the tourism and trading industries. Ranked among the best European countries to invest in, Spain has attracted many foreign investors during the last few years.
There are over 10,000 foreign companies operating in Spain at the moment and the Government is encouraging foreign entrepreneurs to invest in this country by granting them different tax incentives. Considering the great number of foreign companies establishing subsidiaries and branch offices in Spain, it is essential to be updated on the company formation procedures and requirements for running correctly a Spanish business.
All Spanish companies are subject to the Commercial Law which also imposes accounting standards. Spanish companies must also submit annual balance sheets and other relevant accounting documents with the Trade Register. Our team of consultants in company formation in Spainwill guide you step by step through the company registration procedure and will also inform you about the accounting requirements.
Accounting services available in Spain
Our team of specialists in company registration in Spain offers a wide range of accounting services among which we mention the following: tax registration, VAT registration, payroll, audit services, the preparation of the annual financial statements and tax minimization solutions. Our specialists can also provide assistance on the tax compliance procedures available here.
The following video offers a short presentation on the accounting services available in Spain:
Our team of Spanish accountants will help your company grow, by providing personalized accounting services, which will be delivered in accordance with the provisions of the applicable rules of law. Investors can request information on the manner in which Spanish companies have to submit VAT returns with the local tax authorities.
We can also inform businessmen on the types of accounting documents that have to be prepared on a yearly basis. In case you need other types of services in this country, for example assistance for making a will in Spain, our lawyers can help you.
What are the basic accounting requirements in Spain?
Once the procedure of company formation in Spainwas completed and the legal entity is ready to start its business activities, the Commercial Code and the Companies Law stipulate that the company is also legally required to record all of its transactions in specific types of accounting documents.
The official accounting body in Spain is represented by the Instituto de Auditores-Censores Jurados de Cuentas de Espana, which is responsible with verifying the manner in which commercial entities in this country apply the accounting procedures available here. The accounting system in Spain was modified in 2005, when the country adopted the International Accounting Standards, which became applicable, starting with that year, to listed companies operating in this country.
The International Accounting Standards (IAS)were implemented in Spain for the purpose of getting in line with the European Union’s directive on how accounting procedures have to be completed at a EU level. The IAS are created and regulated by theInternational Standard Accounting Board.
Our team of consultants in company registration in Spain can advise on the main accounting procedures deriving for the IAS, depending on the type of company investors want to set up here. When opening a company in Spain, from an accounting view point, the legal entity is obliged to perform the following:
•obtain accounting books, prior to engaging in any commercial activities;
• the accounting books have to be brought at a local Mercantile Registry with the purpose of being stamped by the institution;
• the company should also have a personnel registration book, in which all the company’s employees are registered;
• the latter document provides a proof on the fact that the employees were registered with the local tax authorities.
These are the basic accounting documents that have to be obtained prior to engaging in commercial activities in Spain, but once the company starts its operations, additional accounting procedures have to be followed. For example, it is necessary to submit an annual self-assessment tax return, which has to be deposited in specific periods of time during the financial year.
As a commercial entity in Spain, it is also legally required to submit corporate tax returns, financial statements (which are comprised of several types of documents that have to be submitted based on the company’s legal entity and annual turnover) and inventories. These documents have to be submitted with the Mercantile Registry and our team of consultants in Spanish company formation can provide personalized advice on this matter.
Accounting in Spain is organized based on the calendar year, which is the same with the tax year as a general rule. This means that the accounting period must have 12 months and it generally is the same with the calendar year, but businesses also have the possibility of opting for a different scheme with regards to their tax base year.
What other types of accounting documents should a Spanish company have?
Besides the types of documents we have presented above, investors have to make sure that they have all the accounting forms that are requested under the applicable legislation. For this purpose, Spanish companies must have a daily book, which records the daily economic activity of a company (this document is provided in a standardized format).
Other relevant documents are the following: annual accounts, balance sheet, the profit and loss account and the quarterly balance. It is necessary to know that the company must present these documents in specific formats. More importantly, companies have to keep specific accounting documents for a period ranging from 4 to 6 six years.
The manner in which these documents have to be submitted with the local institutions varies based on the size of the company and its revenues. For this purpose, the procedures for accounting in Spain are simpler in the case of small and medium sized companies, as they can opt for summary annual accounts. This rule is applicable to micro-enterprises as well.
Depending on these coordinates – the revenues of the company and the number of employees, a company will be required to perform an audit, which must always be done by a team of specialists who have obtained a qualification in this profession. The exemption from audit applies if, for a period of two consecutive years, the company has had annual assets with a value of less than EUR 2.85 million and an annual turnover of less than EUR 5.7 million and if it employs less than 50 employees.
Other than this, all commercial companies must appoint an auditor, and this obligation is also applicable to all listed companies, insurance companies, credit institutions and others; our team of consultants in company formation in Spain can provide more details on other entities that need to audit their financial activity.
Submitting VAT returns in Spain
As we mentioned at the beginning of the article, one of the accounting requirements in Spain refers to submitting VAT returns. Companies are obliged to obtain a VAT number in certain conditions and when this happens, they must also prepare VAT returns, as per the local law. Our team of specialists in company formation in Spain can assist investors with advice on the accounting procedure available in this case; some of the important aspects are presented below:
• aSpanish company must submit quarterly VAT returns if its total sales in the previous financial year were of maximum EUR 6 million;
• it is compulsory to submit monthly VAT returns if the sales were above EUR 6 million;
• non-compliance can lead to fines imposed at rates ranging from 20% to 200%;
• non-compliance can also be imposed with interest fines applicable at the rate of 5%;
• interest fines can increase up to 20% when the VAT returns were delayed for a period of 1 year.
Customized bookkeeping services in Spain
Accounting and bookkeeping are vital components of the day-to-day management of aSpanish company, which is why you can request the services of our accountants when it comes to preparing monthly, quarterly and annual financial statements. They will also draft any other requested or necessary accounting documents so your company will always be up to date with all the reporting requirements as established by the legislation.
Another important role in the accounting department of a Spanish company is the human resources - HR and payroll. Many companies hire outsourcing companies to handle payroll and accounting reports from this department. Our agents in Spain can provide you with complete management accounting services related to payroll.
Spanish companies are also required to appoint independent auditors to have their financial records monitored and verified. OurSpanish agents will offer you tailored audit services based on the International Standards on Auditing and on the specific legal requirements for each type of company. For personalized services and prices, you can contact us.
Forensic accounting in Spain
Investors who want or need to perform in-depth financial auditing of their company’s documents may opt for forensic accounting, which is a procedure that combines the knowledge of several disciplines. Forensic accounting in Spain is performed by specialists who have extensive knowledge in the field of business, accounting and auditing.
Their mission is to combine the techniques used in these domains to provide reliable results which can also be used in the court, in the situation in which an investor is required to provide detailed information on the company’s financial statements. Our team of Spanish lawyers can offer assistance to the businessmen who need to start the forensic accounting procedure.
The responsibilities of a forensic accountant in Spain
Forensic accounting is a procedure which is correlated with legal actions regardingfraud or embezzlement, in litigation cases. Investors have to start the forensic accounting procedure when they are requested to provide further details on the company’s financial documents, which may hide various legal or financial issues.
A forensic accountant will be responsible to analyze the documents of a company, to provide a clear and understandable image on thefinancial situationand the way the financial aspects of the company were carried out by those in charge (if they have followed the applicable legislation); our team of Spanish attorneys can offer more details on this matter.
The accountant will have to perform the following actions: analyze the financial documents and gather information, create financial applications, useful during the auditing procedure and for the required presentations, establishing reports, which will be used in the court, assist in the court and testifying in the court on the results of the audit.
Forensic accounting services in Spain
Thefinancial specialistwill keep a close contact with the entrepreneurs’ lawyers, to whom he or she can offer detailed information on the financial aspects of the company. The forensic accounting procedure can start in the pre-trial stage, in which the accountant will offer an overall image of the current situation.
What is the legal framework on accounting in Spain?
In the case of those who want toopen a company in Spainas a publicly traded entity, it is necessary to know that, starting with 2005, such companies must prepare consolidated financial statements, as per the Regulation (EC) No 1606/2002. The accounting procedures applicable in Spain are also given by the Royal Decree 1159/2010 and the Royal Decree 1514/2007.
Another Decree, the Royal Decree 1515/2007, approved procedures for accounting in Spain under the Spanish GAAP for small and medium-sized companies and micro-companies. All these legal acts were later amended, to introduce new regulations with regards to audit procedures in Spain. This was done under the Royal Decree 602/2016, which implemented the EU Audit Directive 2013/34.
According to the law on accounting in Spain, the obligation to submit financial statements can be completed in the form of simplified financial statements or full annual reports. We have presented in this articles the types of entities that are allowed to file simplified forms.
Those who want to open a company in Spain have to be aware that, in the case in which they have to file the full annual report, such report will contain the following types of documents: general information on the company, the company’s investment report, the director’s report, the resolution of the shareholders meeting, the auditor’s report and the financial statements, which include documents such as the balance sheet, the profit and loss report or the cash flow statement.
Just like in other EU member states, the company’s financial statements can be made public by the Commercial Register, where such documents have to be filed. Although basic information is available for free, the full report can be obtained by those interested in the financial situation of a company in exchange for a fee. The documents can be obtained in an electronic format or in a paper format.
In the situation in which the company needs to be audited, the legislation on accounting in Spain stipulates that this activity has to be done only by persons who have obtained a license in this profession (it can be done by a natural person who acts as an auditor or by an auditing firm).
A statutory auditor needs to have at least 8 years of experience, out of which 4 are represented by the tertiary education and 1 year to theoretical instruction. After this, 3 years of practical training have to be completed. This minimum requirement is regulated by the Directive 2006/43/EC.
Please note that auditors who have gained their experience in the field in other EU countries (or member states of the European Economic Area) are entitled to perform this profession in Spain, only as long as they pass a test on the Spanish audit procedures. If the foreigner passes the required test, then he or she will be registered with the institution which regulates in the activity of Spanish auditors. For more information on audit and accounting in Spain, we invite you to contact our team of specialists in Spanish company formation.
Call us now at +34 915 36 78 06 or +34 938 074 056 to set up an appointment with Federico Richardson, one of our specialists in company formation in Madrid and Barcelona. Alternatively you can incorporate your company without traveling to Spain.
As a Lexidy Law Boutique SLP client, you will benefit from the joint expertize of local lawyers and international consultants. Together we will be able to offer you the specialized help you require for your business start-up in Spain.