Spain

DOING BUSINESS IN SPAIN

A member of the European Union, Spain boasts a population of around 47 million meaning it has one of the lowest density population rates in the EU. However, since securing democracy in 1975 following the end of Francisco Franco’s dictatorship, which spanned over three decades, Spain has grown to become the Eurozone’s fourth-largest economy. Combined with the modernisation of business set-up processes, the reduction in the number of licensing requirements and most sectors being open to foreign investment, this makes doing business in Spain an encouraging concept – provided professionals do their research into Spanish business culture and accountancy and tax laws.

The World Bank may rank Spain as 30 out of 190 at the time of writing for ease of doing business but doing business in Spain is only simple and seamless if one understands the intricacies of Spain’s commercial customs. Do you know what type of company you are going to be dealing with in Spain? A smaller, often-family run PYMES or an (government controlled) INI (Instituto Nacional de Indistria), which foster more traditional characteristics or the MNC sector or the more modern native-Spanish sector? Which type of company you work with determines what will be expected of you.

Tensions exist between traditional Spanish work styles that echo the state-run businesses of the Franco era, which fell under the inefficient and over-bureaucratic INI, and the new indigenous Spanish organisations run by a younger generation of managers who were often partly educated outside of Spain. Despite these conflicts, it is still possible to highlight the similarities of what to expect when doing business in Spain, whether with an organisation that implements a more traditional approach or working with one of the “new breed” of managed Spanish businesses, which this website does. For example, being aware of the Spanish respect for hierarchies, which are underpinned by interdependent relationships as opposed to interdependent functions, is crucial.

Where business accountancy is concerned, the World Business Culture website can also provide a wealth of accurate information on the corporate and individual tax obligations (and exemptions) that new and foreign businesses will be subjected to in Spain. For instance, businesses are required by law to maintain a “Libro Diario” (Journal), “Libro de Inventario y Cuentas Anuales” (trial and balances book) and annual accounts, whilst the standard rate of Spanish Corporate Income Tax for Spanish resident companies is 25% and Value Added Tax (VAT) is chargeable at the standard rate of 21% on all sales of goods and services by businesses in Spain, acquisitions of goods in the EU, and imports.

The World Business Culture website is a reliable source of detailed information on Spanish business practices and commercial tax regulations for any professional looking to, not just do business in Spain, but to succeed in Spain.

OVERVIEW

Spain has had a rollercoaster ride over the past twenty years from an economic perspective. The country went through a classic boom and bust scenario. The Spanish population felt the highs and lows of a rapid growth in living standards only to be then battered by a massive downturn leading to wage stagnation and record levels of unemployment – especially amongst the younger generation.

Things seem to be picking up however and the hope is that Spain has weathered the economic storm and is poised for a period of solid, manageable GDP growth which can help to drive the country into a more prosperous and sustainable future. Some painful lessons have been learnt the hard way and future economic consolidation will be built on stronger foundations going forward.
If you are thinking of doing business in Spain, the economic signals are positive and now is probably a good time to approach the market. The country has a highly educated workforce and a strong middle-class consumer base. As a key member of the European Union, Spain has well established trading links throughout Europe. Add this to its position as ‘the gateway to South America’ and its geographic proximity to North Africa and Spain starts to look like a highly attractive market.

However, if you are thinking of doing business with Spain it is extremely important that you do some homework before diving into any initial relationship-building activities. What are the key motivators of potential partners or clients in Spain? How are decisions arrived at and what is the best approach in terms of communication? Studying Spanish business culture will help you make the right impressions from the outset.

This country profile provides an overview of some of the key aspects of Spanish business culture in a concise, easy to follow-format. The document includes information on:

  • Background to business
  • Business Structures
  • Management style
  • Meetings
  • Teamwork
  • Communication
  • Women in business
  • Entertaining
  • Top tips