Where Should You Start A Business: France vs Spain

If you have ever considered starting a business in Europe, France and Spain are both highly appealing options. Both have incredibly robust economies and access to the rest of Europe.

France thrives on innovation and is leading the charge in the tech sector, especially sports tech. On the other hand, Spain’s tourism industry is going strong, and the country was recently ranked as one of the top European destinations for digital nomads to work and live in.

These two neighbouring countries offer exciting opportunities in their own right, but they also have their own differences. Before you choose one to start a business in, consider their taxation laws, costs of living and visa requirements.

How Startup-Friendly Are Spain And France?

Spain has taken major strides to be more accommodating to startups, especially in Barcelona and Madrid. To support this, the government introduced the Startup Act where early-stage entrepreneurs can access funding resources and mentorship. To date, the country has around 11,000 active startups.

France has often been regarded as one of the most startup-friendly countries in Europe, even producing 21 unicorns that are valued at $1 billion. The government launched its La French Tech initiative to support startups through investments and tax incentives, and cities like Paris, Marseille and Lyon attract entrepreneurs from all over.

Which Industry Opportunities Exist In Spain And France?

Spain: Tourism and hospitality continue to rank as some of the most successful industries especially in the coastal areas and in Madrid or Barcelona. Fintech and AI-driven startups have also begun to emerge, creating ample opportunities in the tech space. Spain is also a major producer of olive oil, wine and fresh produce which can be exported. This makes starting a business in agriculture or food exports a viable option.

France: Home to designer brands like Chanel and Louis Vuitton, there is certainly a market for luxury products and fashion. Similarly to Spain, the tech space is a strong contender with startups in AI and green tech. Internationally-recognised brands like Renault and Airbus have a presence there, so automotive and aerospace are also sectors to consider.

What Are The Tax Regulations In Each Country?

Spain: The corporate tax rate is 25% although this is reduced to 15% for startups during their first two years of business. For personal income tax, this can range from anywhere between 19% to 47%. Value Added Tax (VAT) is currently set at 21% and is a standard rate.

France: Similarly, the corporate tax rate is 25% and also decreased to 15% for small businesses who earn less than €42,500 per year. The personal income tax is lower than Spain’s, ranging from 11% to 45%. The VAT’s standard rate is 20%.

Overall, France offers more tax relief for smaller businesses and while their VAT rates are similar, Spain’s is slightly higher. Spain also has more startup-specific tax incentives than France.

The Cost Of Living Expenses In Spain And France

Spain: Cities like Madrid and Barcelona typically have lower rental and property prices compared to a city like Paris in France. Labour is also cheaper, which can make it easier to hire employees. If you choose to have an office space further out of the main areas, you’ll find that rentals and utilities are even more affordable.

France: The country has much higher salaries and living expenses although co-working spaces could be a cost-effective option to save on office spaces.

When it comes to affordability, Spain does emerge as the more practical option.

Visa And Residency Requirements For Entrepreneurs

Spain: Startup founders are able to apply for an Entrepreneur Visa, which requires a business plan to show innovation and how the business intends to create jobs. You can also opt for the Self-Employed Work Visa, but you will need to provide proof of financial stability and professional experience. There is also a Golden Visa but to qualify for this, you need to invest €500,000 in real estate.

France: For entrepreneurs, investors or employees who are in the tech sector, the French Tech Visa would be an ideal option. The Auto-Entrepreneur Visa is suited to freelancers whereas highly-skilled professionals can apply for the Talent Passport Visa.

When it comes to visa options, France does have more of a variety especially for tech-related professionals. Spain’s visa process can also be slightly slower.

What To Consider Before Starting A Business In Either Country?

Every country will have its own unique challenges, and Spain and France are no different. These are a few things to keep in mind before starting a business in either of them.

Spain: The process of registering your business can take some time, and your employer contributions for employees can be more than 10% higher than France’s. In terms of funding opportunities, there are also less options to choose from whereas France can offer more.

France: The country hiring regulations can be quite complex to navigate which makes it challenging to hire or dismiss employees. The overall cost of living and salaries are also much higher than Spain’s.

How To Set Up A Business In Spain Or France

Spain: Firstly, you will need to decide on a business structure with the most common two being a sole trader or limited liability company. You can then check with the Mercantile Registry if your desired business name is available and then register it. After this, you can apply for a NIE (Foreigner Identification Number) and open a business bank account. You will need to draft Articles of Association and register with a valid Notary as well as register for tax.

France: Likewise, you can choose your structure with a simplified joint-stock company or auto-entrepreneur (freelancer) being the common options. The next step is to register your business name with the INPI , file Articles of Association and register with the Trade and Companies Register. Then, you may open a business bank account and register for any applicable taxes.