Whether you have some experience in the e-commerce industry or are a newcomer who wants to set up a new dropshipping business in Spain, then this step-by-step guide is for you! In this article, we will guide you through the entire process to legally open an online store in Spain.
But, let’s clarify one thing. Before committing to entering the Spanish market as an online seller, it is important to get familiar with the national laws and regulations. You should also gather information about the country’s e-commerce market.
That’s why now we would like to present and discuss some of the most important facts about e-commerce in Spain. The following figures refer to the relevant data on the e-commerce trends in Spain. In addition to that, we will also go over important steps for starting your first dropshipping store.
Important Facts About E-Commerce in Spain
The Spanish e-commerce market has developed relatively slowly in comparison with the markets of the other European countries.
Nevertheless, Spain has recently become one of the top emerging e-commerce countries in Europe. To be more precise, revenue from e-commerce in the country amounted to US$19.2 billion in 2020. And it is projected to increase to US$29 billion by 2025.
Out of the total population of approximately 47 million inhabitants, about 63% made an online purchase in 2020. The number of online buyers in Spain is expected to grow to around 37 million people in 2025, which accounts for 79% of the total population in the country.
As more and more Spanish citizens are making online purchases, there is also a heavy preference for online payment methods in the country. An increasing number of people in Spain are getting comfortable with paying for goods online. When it comes to their payment preferences when buying online, PayPal was the most popular payment method in 2020, followed by credit and debit cards.
Moreover, there is also an interesting report from the Statista Digital Market Outlook on the consumer spending habits of Spaniards. Fashion is what these people spend most of their money on online. This is the largest segment of the e-commerce market. And this segment is expected to generate about US$7 billion of the total e-commerce revenue in 2021. As a result, it would be very profitable to start a clothing dropshipping business in Spain.
Now, we will discuss everything you need to know about forming a dropshipping business in Spain. Depending on the type of business you are looking to start, you may find the process somewhat bureaucratic and lengthy. But after all, you are finally going to be your own boss and work for yourself.
Who Can Open a Dropshipping Business in Spain?
The answer is simple: Everyone can open a business in Spain. However, you must have the right to live and work in the country to start your own online venture there.
Spanish citizens who want to start a business in the country must obtain a tax ID, which is known as the Numero de Identificacion Fiscal (NIF).
If you live in a country that’s a member state of the EU, you have the right to work in Spain. But you will still have to obtain your Número de identidad de extranjero (NIE). This is a tax identification number. It allows you to open a business bank account, register a business, register for taxes, and more. You can get this number in person when you visit Spain or apply for it at the Spanish embassy in your home country.
In case you live in a country that’s not a member state of the EU, you must have a valid visa and work permit. You can apply for this permit at your local Spanish embassy or consulate.
Now, let’s focus on the process of starting a business in the country.
How to Legally Start a Dropshipping Business in Spain
Decide on an appropriate legal structure and register your business
A legal structure refers to the way a business is organized, in regards to its legal status. In Spain, there are multiple legal structures for you to choose from. But to open an e-commerce business in this country, you may want to choose from the following ones, depending upon the nature of your business.
Sole Trader (Autónomo or Empresario Individual)
This business structure is simple and easy to set up. It has a non-legal personality. This means that only one person owns and operates the business and that there is no need to incorporate the business. You won’t need any minimum share capital to operate as a sole trader.
The main disadvantage of being a sole trader is that you will have unlimited liability for debts. As long as your business gets into debt, you will have to use your personal assets to pay that debt.
To become a sole trader in this country, you are obliged to register with the Spanish Tax Agency and choose between working as a freelance professional (Autónomo) or a sole trader (Empresario Individual). Also, you will have to get a Social Security Number. You can apply for this number online.
Partnership (Sociedad Civil)
Are you planning to enter into business with someone else? If so, you can start a partnership. In this legal structure, you and your partner will personally share responsibility for the business.
Like the previous legal structure, a partnership does not have a minimum investment requirement. It also does not offer limited liability, which means that you and your partner will be personally liable for the debts of your partnership.
While a partnership agreement is not treated as mandatory in Spain, experts recommend creating one and signing it in front of a public notary.
Limited Liability Company (Sociedad Limitada, i.e., SL)
In this country, there are a few types of limited companies, with the Sociedad Limitada (SL) being the most common.
On the one hand, to set up a limited liability company (SL) in Spain, you will have to go through a more complex registration process and invest at least €3,000. You can withdraw the money as soon as the company is created. But on the other hand, you will not be personally liable for the debts of your company.
To register your company, you first need to get a certificate of uniqueness to verify that the name you want to use for your company is unique. You can get this certificate and register your company name with the Central Mercantile Register.
Then, you need to open a business bank account and put at least €3,000 into that account. Once you have done that, go to a public notary and sign the public deed of incorporation. Ultimately, you must register with the Spanish Tax Agency and the social security authorities.
Before deciding on the right legal structure and registering your business with the local authorities, you’d be smart to get legal assistance from a legal expert.
Register for taxes
As mentioned above, to start an e-commerce business in Spain, you must register with the Spanish Tax Agency (Agencia Tributaria). How your online start-up is taxed in this country depends on the type of legal structure you have chosen for your business.
As a sole trader, you can register for taxes in two different ways, depending on whether you are a freelance professional (Autónomo) or a sole trader (Empresario Individual).
But since freelancers offer services instead of selling goods online, we will focus on the latter. As a sole trader (Empresario Individual), you must pay an income tax at a rate of 19% each quarter. Regarding partnerships, each partner is required to pay their own income tax.
But for a limited liability company in Spain, the process is totally different. After the completion of the incorporation process, you must obtain a Corporate Tax Identification Number (CIF).
To learn more about how to do that, visit this page. When running a company in Spain, you will have to pay a corporate tax at a general rate of 25%.
You may also need to register for a value-added tax (VAT) with the local tax authorities and obtain a VAT number. The Spanish VAT is applicable to products sold in Spain. For more information on this topic, go to the official website of the Spanish Tax Agency.
Open a business bank account
As you can see, companies during the process of registration will have to open a corporate bank account and deposit $3,000 in that account. But this does not mean that you do not need a business bank account to operate as a sole trader or a partnership.
Opening a bank account for your online start-up allows you to manage your business finances with ease. And it will not be a complex process, provided that you have all the relevant documents.
The most important thing here is to choose the right Spanish bank to open a business bank account with. There are two main types of banks in the country – state- and privately-owned banks.
The state-owned banks are more focused on personal savings and credit schemes, whereas the privately-owned ones are more international and offer various services in English. Also, you should know that many business owners in Spain opt for the latter.
If you are a foreigner, you may consider opening your new Spanish business bank account online. However, some Spanish banks require at least one in-person visit. So it is a good idea to visit their official websites and choose the bank that best suits your needs.
Understand and meet your legal obligations when selling online
As you are planning to conduct online business activities in Spain, like finding products for dropshipping and selling them through an e-commerce website, remember that your online business must be compliant with the current Spanish and EU legislation. You must meet your legal obligations when selling online in Spain to avoid fines and penalties as well as form a connection with your visitors and customers based on trust.
To make sure everything runs smoothly and ensure your target audience sees your online store as a trustworthy website, you must fully comply with the following laws and regulations: Law 34/2002 for Information and E-commerce Business Services (LSSICE) and Law 15/1999 for Data Protection (LOPD).
What’s more, as stated earlier, Spain is a member state of the EU. That’s why as a new online business owner in Spain, you need to comply with the E-Commerce Directive established by the European Union.
Your Successful Dropshipping Business In Spain
Despite the relatively slow e-commerce market growth in Spain, the country is currently one of the top emerging e-commerce countries in Europe. There is no doubt that this is true – the facts speak for themselves.
So follow these legal steps to start off on the right foot. Listening to expert advice on starting your first dropshipping store is always good for fast progress. Devote full attention to your new e-commerce business and try to present it in the best positive light. We hope for nothing but the growth of your new online venture! Good luck!