Business investment for non-profit residence permit
Non-profit residence (also called non lucrative residence), as the name implies, means that you cannot engage in any profit-making activity in Spain. It is not possible to work or to start your own business. However, the law does allow you to invest in a business. Although you cannot work or run a business, you can hold shares in a company.
For example, I can start a joint venture with someone else and I will only contribute the money. Since the non-profit residence permit does not allow to work, I cannot hold any position in the company. However, I can exercise my rights as a shareholder and enjoy dividends.
Related article: Guide to shareholder dividend income tax
On the contrary, if you want to be the director of the company or hold any other position, you need a work permit or self-employed permit depending on whether you control the company and shareholding percentage.
Diffents ways for business investment
In general, there are three options:
- Establishing a new company in Spain. It can be a sole proprietorship or a partnership with another person. Since a non-profit resident cannot act as a director (unless you change your residence permit type), another person should be appointed. This person may or may not be a shareholder.
2. Purchase of shares from another person. If the company is already established or already in operation, the non-profit residence can also invest by purchasing shares.
If you are investing in an unlisted company, you will need to coordinate with the seller of the shares and the company.
Related article: Sale of shares of a Spanish SL company
3. Increase of share capital in existing companies. Some companies need to expand their capital to grow, so people can also invest by taking shares. The company increases its registered capital by means of a share increase and the investor injects capital in exchange for shares in the company.
In addition, it should be noted that the income from the investment is subject to personal income tax in Spain according to the law.
