Good to know
Good to Know
- Spain does not require a local partner, local director, or local shareholder for foreign-owned companies — you can own and run an S.L. 100% yourself.
- Start the NIE application as early as possible: it's consistently the slowest step, especially if applying through a consulate abroad rather than in Spain.
- If you're setting up a bar, club, or restaurant in Magaluf itself, budget separate time and paperwork for a municipal opening/activity licence from the Ajuntament de Calvià — this is on top of, not instead of, the national company-formation process.
- A generic Power of Attorney will be rejected by Spanish notaries — it must specifically list each incorporation act (signing the deed, registry filing, tax registration, etc.) if you're not travelling to Spain yourself.
- Cost and timeline estimates online vary quite a bit depending on whether the source is a marketing page for a law firm's expedited service or a more general guide — treat any single-source '7–10 day' claim with some skepticism and budget for the higher end.
- There is no Magaluf- or Mallorca-specific corporate tax rate — the same national Spanish rules apply here as anywhere else in the country.
- If you're a solo remote worker or freelancer with modest income, most sources suggest starting as an autónomo rather than forming an SL — you can convert to an SL later as your business grows, but you generally can't go the other direction easily.
- Minimum share capital for an SL is legally just €1 now, but in practice most gestores (accountants) and banks still expect closer to €3,000 for credibility and to avoid triggering special legal-reserve requirements.
- Both structures require a Spanish NIE (foreigner tax ID number) before you can register — get this sorted early since it can be a bottleneck.
- Budget for an accountant/gestor either way — Spanish tax filing (quarterly VAT, quarterly income/corporate tax prepayments, annual returns) is genuinely bureaucratic and most foreign owners don't file it themselves.
Corporate Tax
- VAT Rate Percent
- 21
- Standard Rate Note
- The general Impuesto sobre Sociedades (corporate income tax) rate applies uniformly across Spain, including Mallorca/Balearic Islands.
- Standard Rate Percent
- 25
- Administering Body
- Agencia Tributaria (Spain's national tax agency)
- VAT Note
- Standard VAT (IVA) rate on most goods/services is 21%, filed quarterly regardless of company size.
Reduced Rates
Newly created companies, first two profitable fiscal years
- Rate Percent
- 15
- Rate Percent Detail
- 19% on first €50,000 tranche / 21% on the rest (2026 figures under Ley 7/2024 phase-in)
- Description
- Micro-enterprises (turnover under €1M) — 2026 phased rates on first €50,000 of taxable base vs. remainder
Reduced-dimension SMEs (turnover €1M–€10M)
- Rate Percent
- 23
Filing Obligations
- Modelo 200 — annual corporate tax return, filed within 25 days of the 6th month after fiscal year-end (typically July for calendar-year companies)
- Modelo 202 — quarterly advance corporate tax payments
- Modelo 303 — quarterly VAT (IVA) return
- Modelo 111 — quarterly withholding tax return for staff salaries/professional fees
- Modelo 347 — annual declaration of transactions over €3,005.06 with a single client/supplier
- Mandatory annual accounts deposit at the Registro Mercantil (Commercial Registry)
Structure Options For Foreigners
Autónomo (self-employed/sole proprietor)
- Taxation
- Progressive personal income tax (IRPF), roughly 19%–47% depending on income bracket, plus mandatory monthly RETA social security contributions.
- Liability
- Unlimited personal liability — personal assets are not separated from business debts.
- Setup Speed
- Fast — administrative registration with Agencia Tributaria (Modelo 036/037) and Social Security (RETA); some report same-day setup with a digital certificate.
- Who Its For
- Solo freelancers, consultants, remote workers with one or few clients, those testing the market before committing to a company.
- Minimum Capital
- None
- Requirements For Foreigners
- Requires an NIE (foreigner ID number); non-EU nationals generally need a self-employment residence/work authorization before starting activity.
Sociedad Limitada (SL) — limited company
- Taxation
- Corporate tax (Impuesto sobre Sociedades) at the tiered rates above (15% new-company rate, then 19-25% depending on size), rather than personal progressive IRPF rates.
- Liability
- Limited to the amount invested in the company; shareholders' personal assets are generally protected.
- Setup Speed
- Typically 2–6 weeks: NIE for shareholders/directors, company name reservation at Registro Mercantil Central, notarized incorporation deed, bank account and capital deposit, tax and Social Security registration.
- Who Its For
- Growing businesses, those with employees or multiple partners, higher-liability activities, or anyone wanting a more 'corporate' image with clients/banks.
- Minimum Capital
- Legally €1 minimum since the 2022 Crea y Crece law reform, though €3,000 remains the commonly cited/traditional figure and is still advisable in practice for banking and credibility reasons; below €3,000, special legal-reserve rules apply.
- Requirements For Foreigners
- Non-residents can be sole shareholders and directors of an SL. Every foreign shareholder/director needs a Spanish NIE; a non-resident director without EU residency may separately need a work permit depending on their role.
- Director Social Security Note
- A director who actively works in the company typically registers as an 'autónomo societario,' which carries a higher minimum monthly social security contribution than a standard autónomo.
Jurisdiction Note
Magaluf is a resort town within the municipality of Calvià, Mallorca, in Spain's Balearic Islands. Corporate taxation is set at the Spanish national level (Agencia Tributaria) — there is no separate Magaluf or Calvià municipal business income tax. Businesses here also pay standard municipal fees (e.g. IAE local business tax registration, IBI property tax if owning premises) common to any Spanish municipality.
Rule Of Thumb Break Even
Multiple professional sources cite roughly €40,000–€60,000 in annual net profit as the point where an SL's flat corporate tax rate starts to beat the progressive personal IRPF rate an autónomo pays; below that, the fixed running costs of an SL (accounting, registry fees) tend to outweigh the tax saving.
Invoicing Compliance Note
Spain is rolling out mandatory certified e-invoicing (Veri*factu / Crea y Crece B2B e-invoicing) for companies, with the Verifactu requirement for all SLs now scheduled from 1 January 2027 — relevant for any foreign-owned company setting up invoicing systems now.
Incorporation Process And Requirements
- Remote Incorporation
- Most formations can be completed without the founder ever travelling to Spain, using a notarised Power of Attorney authorising a representative to obtain the NIE, sign the deed, and complete registry/tax filings. The power of attorney must specifically authorise each incorporation act; a generic PoA can be rejected by the notary.
- Most Common Structure
- Sociedad Limitada (S.L.) — Spain's standard private limited company, roughly equivalent to a US LLC or UK Ltd. A single-shareholder version is called an S.L.U. (Sociedad Limitada Unipersonal).
- Jurisdiction Context
- Magaluf is a resort area within the municipality of Calvià, Mallorca (Balearic Islands), Spain. There is no separate Balearic or Calvià company-registration regime — incorporation follows the same national Spanish procedure used anywhere in the country. The only local-level layer is a municipal 'licencia de apertura/actividad' (opening/activity licence) from the Ajuntament de Calvià, which is commonly required for physical hospitality premises (bars, clubs, restaurants) given Magaluf's tourism-driven economy, in addition to the national company-formation steps below.
Typical Cost
- Share Capital
- €3,000
Stays in the company as working capital; legal minimum is €1.
Notary Fees
- Amount USD Low
- 171
- Currency Local
- EUR
- Amount USD High
- 684
- Amount Local Low
- 150
- Amount Local High
- 600
Mercantile Registry Filing
- Amount USD Low
- 114
- Currency Local
- EUR
- Amount USD High
- 456
- Amount Local Low
- 100
- Amount Local High
- 400
Name Reservation Certificate
- Amount USD Low
- 15
- Currency Local
- EUR
- Amount USD High
- 25
- Amount Local Low
- 13
- Amount Local High
- 22
NIE Processing Fee Per Person
- Amount USD Low
- 11
- Currency Local
- EUR
- Amount USD High
- 14
- Amount Local Low
- 10
- Amount Local High
- 12
Gestor Or Lawyer Full Service Fee
- Amount USD Low
- 912
- Currency Local
- EUR
- Amount USD High
- 4560
- Amount Local Low
- 800
- Amount Local High
- 4000
Typical All In Budget Excluding Capital
- Amount USD Low
- 1140
- Currency Local
- EUR
- Amount USD High
- 4560
- Amount Local Low
- 1000
- Amount Local High
- 4000
Realistic Timeline
- NIE Processing
- 1–3 weeks in Spain via a local representative; 2–6 weeks (sometimes longer) when applying through a Spanish consulate abroad — often the single biggest bottleneck for foreign founders.
- Notary Signing
- Same day once documents and NIE are ready.
- Name Reservation
- 1–3 business days online.
- Overall Estimate
- For a straightforward S.L. with documents prepared in advance, most professional sources converge on roughly 2–6 weeks from NIE application to a fully registered, invoicing-capable company; remote/non-resident cases with slower consular NIE appointments or complex shareholder structures can realistically run 2–4 months.
- Provisional Tax ID NIF
- Often same day / within 24 hours.
- Commercial Registry Filing
- Roughly 5–15 working days for a clean filing, though it can extend to 2–3 weeks in some provinces.
- Bank Account And Capital Deposit
- Days to several weeks; foreign-owned entities can face extra AML/KYC screening.
Minimum Share Capital
- Legal Minimum
- €1.00
- Practical Recommended Amount
- €3,000
- Note
- Since the 2022 'Crea y Crece' reform the legal minimum capital for an S.L. is €1, but most founders still contribute the historical €3,000 because it removes certain mandatory-reserve restrictions and reassures banks, landlords, and counterparties.
Core Incorporation Steps
- Obtain a NIE (Número de Identificación de Extranjero) for every individual foreign shareholder and director — mandatory before a notary can sign the incorporation deed; a foreign corporate shareholder instead needs a Spanish NIF.
- Reserve the company name (Certificación Negativa de Denominación Social) with the Registro Mercantil Central in Madrid; valid for 6 months, with exclusive rights during the first 3 months.
- Open a Spanish bank account 'in formation' in the company's name and deposit the share capital (or declare the contribution directly in the deed, depending on current bank/notary practice).
- Draft the company bylaws/articles of association (estatutos).
- Sign the notarial deed of incorporation (Escritura de Constitución) before a Spanish notary — in person or via a notarised Power of Attorney if the founder cannot travel.
- Obtain a provisional NIF from the Agencia Tributaria (often issued within 24 hours, letting the company start invoicing immediately).
- File the signed deed with the provincial Registro Mercantil (Commercial Registry) for the province of the registered office to obtain full legal personality.
- Register for tax (Modelo 036) to activate the definitive NIF and VAT (IVA), and register the company/directors with Social Security if hiring staff or as a controlling director (RETA).
- If operating a physical hospitality venue in Magaluf/Calvià, separately apply to the Ajuntament de Calvià for the relevant municipal opening/activity licence.
Local Partner Or Sponsor Requirement
- Details
- Spain imposes no local-partner, local-shareholder, or local-director mandate on foreigners. Both EU and non-EU nationals can own 100% of a Spanish company and act as sole director.
- Required
- No
Official Registry And Government Links
- Central Mercantile Registry
- https://www.rmc.es
- Agencia Tributaria Tax Registration
- https://www.agenciatributaria.gob.es
- Circe One Stop Shop For Sl Formation
- https://www.circe.es
AI-generated estimateData refreshed July 2026
Sources cited for this category
These are the sources cited in this business permits & incorporation for foreigners research for this city. Individual figures may not each trace to one of them.
More About Magaluf
Data last updated July 2026 · Verify anything important.