Starting a renovation company in Spain as a foreigner: residence permit, REA, insurance and VAT

A foreigner can open a renovation company in Spain on the same terms as a Spaniard: autónomo or SL, an external health and safety service, insurance and REA registration before the first subcontract. Non-EU citizens also need a self-employment residence permit. Our three-worker model needs about €70,000 and pays back in just over two years.

Below: which residence permit lets you run a renovation business yourself, when buying an existing firm beats starting your own, autónomo versus SL, the registers, permits and insurance you need before the first job, who applies for building permission, how the 10% VAT rate on home renovation works and what a crew costs under the construction collective agreement (convenio). At the end there is a payback model with assumptions you can replace with your own.

Which residence permit lets you run a renovation company

Anyone, including someone living abroad, can buy a company or register an SL (the Spanish limited company). But to work in Spain yourself — pricing jobs, running sites, hiring people — a non-EU citizen needs a work authorisation. EU, EEA and Swiss citizens simply register as EU residents and need no permit.

• Self-employment (cuenta propia) is the main route. The first authorisation is issued for one year, for one autonomous region and one sector of activity (art. 83 RD 1155/2024). You must meet the requirements Spanish law imposes on nationals for that activity, prove qualifications or experience where the activity calls for them, and show that the planned investment is sufficient (art. 84). Renovation is a standard activity for this permit: a business plan with a crew, a van and clients is easy to follow. How the permit works is covered in “Cuenta propia in Spain”.
• Modification from inside Spain. If you already live here on another permit, you can switch to self-employment without leaving; after a year of residence the authorisation is granted for four years. The application goes to the provincial immigration office (Oficina de Extranjería) through the Mercurio platform — details in “Modifying a Spanish residence permit to self-employment”.
• The startup visa does not fit: refurbishing flats is not an innovative project. It is assessed by the UGE under Law 14/2013, and innovation is the core requirement there.
• A residence permit without the right to work lets you live here but not run the company. Change the basis first — see “Non-lucrative residence permit”.
• Student stay for higher education allows work, including self-employment, of up to 30 hours a week alongside studies (art. 57 RD 1155/2024) — enough for odd jobs as a tradesman, not for a company with a crew. More in “Student visa for Spain”.

Employing yourself in your own SL is not a separate route: whoever controls the company — holding half the capital, or a third, or a quarter together with management duties — and works in it counts as self-employed for social security (art. 305.2.b LGSS).

The path to the first job

Registering the company is a small part of the preparation. Most of the time goes into health and safety, the register and insurance.

Buy an existing firm or start your own

A renovation company rests on people: an owner who prices the jobs, a crew and a reputation with clients. It has few premises or equipment, so its price depends on whether the people stay after the deal. Two listings show the range. In the Gijón business transfer programme (FADE, 2025), a firm doing partitions, floors and office fit-outs since 2006 is for sale: turnover €179,152 in 2024, all technical work done by one person, price €35,000. On Bizalia (October 2026), a building refurbishment and maintenance company in Barcelona with €5–10 million turnover asks €2.5–5 million and offers either the SL shares or a transfer of the whole business (traspaso). These are asking prices, not completed deals.

If you are looking at a purchase in the €150,000–600,000 range, you are paying for client contracts and for people. So the deal is structured so that the seller stays for a transition period and part of the price depends on revenue after the handover. What to check before signing:

• What you are buying. SL shares bring all the company’s debts and history with them, including liability for completed jobs. When you buy a business as a going concern, the seller’s tax debts from the activity pass to the buyer unless a tax office certificate is obtained before the deal: it is issued within three months, and liability is limited to what it states (arts. 42.1.c and 175.2 LGT). For social security benefits arising before the transfer, the buyer is jointly liable (art. 168.2 LGSS). The difference between the two routes is explained in “How to buy an existing business in Spain”.
• People. Employees transfer to the new owner with all their rights and seniority (art. 44 Estatuto de los Trabajadores). Check that everyone has health and safety training and how many contracts are permanent: the law requires at least 30% (see the crew section below).
• REA. Is the entry valid and when is renewal due: renewal is filed in the last six months of the term, otherwise the entry is cancelled (art. 6 RD 1109/2007).
• Completed jobs. A list of works for the last ten years, complaints and lawsuits. For works that required a design project, the builder is liable to the owner for up to ten years (see the insurance section below).
• Figures. Revenue according to VAT and corporate tax returns, the share of the three largest clients, signed forward contracts, the warehouse and its lease term.

If what you need is the right to work rather than a flow of orders, starting your own company is cheaper.

Autónomo or SL

A tradesman working alone or with one helper usually starts as an autónomo (self-employed sole trader): registration takes days and the bookkeeping is simpler. The steps are in “How to register as autónomo in Spain”, and contributions based on actual income in “Autónomo taxes and contributions”. Construction and renovation work is not on the 2026 list of flat-rate modules (Orden HAC/1425/2025), so tax is calculated on actual profit.

In renovation the autónomo has a weak spot: he is liable for business debts with all his assets. The emprendedor de responsabilidad limitada status shields only a home worth up to €300,000 from enforcement (art. 8 Law 14/2013). For someone relocating with capital, a seaside flat and an investment portfolio, that is not much. An SL separates site risk from personal money: capital from €1 (art. 4 of the Companies Act), corporate tax in 2026 for turnover up to €1 million of 19% on the first €50,000 and 21% above, and for a new company 15% in the first profitable year and the next one (art. 29 and transitional provision 44 of the Corporate Tax Act).

An owner who works in his own SL and controls it pays contributions as an autónomo societario. Whether the director’s post itself is paid is decided by the articles of association: by default it is unpaid (art. 217 of the Companies Act). How money goes into and out of the company is covered in “How to put money into your own SL” and “Dividends from your own company after relocating”, reporting in “SL reporting in Spain”. If the shares will be held through a holding company, decide that before you move — see “Holding company in Spain”. Business registration, tax and social security enrolment are usually handled together with a gestor, the local administrative adviser who then files the returns.

REA register, health and safety and training

Subcontracting in construction is governed by a separate law, Law 32/2006. It covers renovation too: its list of works includes refurbishment, repair, maintenance, painting and installation of building services (art. 2).

• Who needs REA. A company hired as a contractor or subcontractor on a site must enter the Registro de Empresas Acreditadas before it takes part in the subcontracting chain (art. 3 RD 1109/2007). If you work only for private owners and hire no one for the site, the subcontracting law does not apply to you. Hire an autónomo electrician or take work from a main contractor, and it does. In practice renovation companies register straight away: registration is free, and main contractors will not work with you without the number.
• How to register. The application goes to the labour authority of the region where the company has its registered office; the entry is valid across Spain for three years (art. 6 Law 32/2006, art. 6 RD 1109/2007). In it, the legal representative declares that the company has its own organisation, people and equipment, trained staff and health and safety arrangements (art. 4.1–4.3 Law 32/2006).
• Why the main contractor will ask for the number. If he hires a subcontractor without an entry, he becomes jointly liable with it for debts to workers and social security (art. 7.2 Law 32/2006).

The owner of a renovation company cannot handle health and safety personally: that is allowed only for firms of up to ten people without hazardous work, and construction work with a risk of falling from height is on the hazardous list (art. 11 and annex I, h RD 39/1997). So you sign a contract with an external prevention service (servicio de prevención ajeno). Every worker on site takes an 8-hour first-cycle course and a 20-hour course for their trade; the company’s manager takes a 10-hour course for directors. Training is evidenced by the Tarjeta Profesional de la Construcción (TPC), issued by the Fundación Laboral de la Construcción (arts. 142 and 154 and annex XII VII Convenio General del Sector de la Construcción).

For each job the contractor prepares a safety plan and, before work starts, notifies the labour authority of the site opening, attaching the plan. If more than one company or autónomo works on the site, the owner appoints a safety coordinator (arts. 3.2, 7 and 19 RD 1627/1997).

Electrical, gas, asbestos: separate authorisations

A full renovation almost always includes work that needs its own registration — held either by your company or by a subcontractor.

• Electrical installation. The installer company files a declaración responsable (a formal self-declaration) with the regional industry department and holds professional liability insurance of at least €600,000 per claim, or €900,000 in the specialist category (ITC-BT-03, para. 5.8.c, RD 842/2002).
• Gas, heating, air conditioning. These works have their own regulations with the same logic — registration of the installer company with the region and a qualified worker on staff (RD 919/2006 for gas, RITE — RD 1027/2007 for thermal installations).
• Asbestos. Older buildings often have roofs, tanks and pipes made of asbestos cement (uralita). Only a company entered in the Registro de Empresas con Riesgo por Amianto may remove them (art. 17 RD 396/2006). This part is usually given to a specialist firm.

Insurance and liability for the work

There is no general obligation for a renovation company to insure its civil liability — except for electrical installation. But three things everyone insures:

• Payouts to workers under the collective agreement. For death, total permanent disability for any work or severe disability caused by a workplace accident or occupational disease, the company pays €47,000; for total permanent disability for the worker’s own trade, €28,000 (art. 69 VII Convenio General). Without a policy, the company pays these amounts itself.
• Liability to the client and neighbours. A leak into the flat below or a damaged shared pipe is an ordinary renovation incident. Main contractors, building managers and any private client with a large budget will ask for the policy.
• Guarantee on works with a design project. If the work falls under the Building Act (requiring a project under art. 2.2 LOE), the builder is liable to the owner for defects in finishes for one year, for defects that make the home unfit for use for three years and for the load-bearing structure for ten years from handover (art. 17.1 LOE). Renovation without a project follows the general rules of the Civil Code on works contracts.

Ten-year building insurance (seguro decenal) is not the contractor’s obligation. It is taken out by the developer of a new residential building; someone building a single house for their own use does not need it unless they sell the house within ten years (art. 19.1.c and additional provision 2 LOE). The law assigns the one-year finishes guarantee to the builder (art. 19.2.a), but only the ten-year cover is mandatory.

Building permission: who applies

The licencia de obra (building licence) or declaración responsable is filed by the owner of the flat or building — the person paying for the work. The owner also pays the municipal construction tax ICIO, whose rate is set by the town hall but cannot exceed 4% of the cost of the works. If the owner has filed nothing, the tax can be collected from the contractor as a substitute taxpayer, who then recovers it from the owner; the tax arises when work starts, even without a permit (arts. 101–102 TRLRHL). So before the first day on site the company asks the client for the reference of the filed declaration or licence.

What exactly is filed is decided by the town hall. The familiar labels “obra menor” and “obra mayor” (minor and major works) explain little nowadays: the dividing line is whether a project is needed. Work that alters the load-bearing structure, facade, volume or use of a building requires an architect’s project (art. 2.2 LOE) and usually a licence. Interior renovation without such changes goes through a declaration. In Madrid, since 2022 the declaration has been the default regime, with a licence kept for works listed in annex I of the OLDRUAM ordinance — for example, those affecting protected building elements.

VAT on renovation: 10%, 21% or none

Renovation is charged at 10% VAT (IVA) instead of 21% when all four conditions are met (art. 91.Uno.2.10º Law 37/1992):

• the client is a private individual for their own home, a homeowners’ association, or the owner of a home let as a primary residence;
• payment is by card, bank transfer, named cheque or into the company’s account — not in cash;
• the building was built or refurbished at least two years earlier;
• materials supplied by the company cost no more than 40% of the price before VAT.

An example. A flat renovation in Madrid for €60,000 before VAT. If the company buys the tiles, bathroom fittings and kitchen for €27,000 itself, materials make up 45%, the rate is 21% and VAT is €12,600. If the client buys some of the fittings directly and the company’s materials come to €24,000, that is exactly 40%, the rate is 10% and VAT is €6,000. The difference for the client is €6,600, which is your strongest argument in price negotiations. The 10% rate applies to the execution of works (ejecución de obra); appliances that the company simply sells and installs separately from a renovation are charged at the standard rate.

Subcontracting follows a different rule. If you work for a main contractor under a developer’s contract to build or refurbish a building, you do not charge VAT on your invoice — the recipient of the work accounts for it (inversión del sujeto pasivo, reverse charge, art. 84.Uno.2º.f). You still recover VAT on your own purchases, but later, so this has to be built into your working capital. Rates and returns are covered in “VAT (IVA) in Spain”.

The crew: collective agreement, contributions and 30% permanent staff

Construction wages are set by provincial collective agreements based on the national VII Convenio General. Under the Madrid construction agreement for 2026, a first-grade tradesman (oficial 1ª de oficio, level VIII) earns €25,103.23 a year all-in, a specialised labourer (level XI) €23,079.10, and a foreman (encargado, level VI) €26,164.38.

On top of that the company pays social security contributions: 23.60% common contingencies, 5.50% unemployment on a permanent contract, 0.20% to the wage guarantee fund, 0.60% for vocational training, 0.75% intergenerational equity mechanism (Orden PJC/297/2026) and 6.70% occupational accident rate for construction (additional provision 61 LGSS). In total 37.35%. A first-grade tradesman costs the company about €34,479 a year, a labourer €31,699. Average wages are covered in “Average salary in Spain”.

A company that regularly works on construction sites must keep at least 30% of its staff on permanent contracts; a new company from the seventh month of activity (art. 4.4 Law 32/2006, art. 11 RD 1109/2007). A crew entirely on temporary contracts does not comply with the law, and a temporary contract also costs more in unemployment contributions: 6.70% instead of 5.50%.

Investment and payback: the numbers

A hypothetical SL in Madrid, without buying a business: the owner prices the jobs and runs the sites, the payroll has two first-grade tradesmen and a labourer under the Madrid agreement, and electrical and plumbing work goes to subcontractors. Prices for vans, tools and other costs are our assumptions: replace them with your own.

The €70,776 investment pays back in about 2.2 years. Two caveats. First, the crew is an almost fixed cost. With revenue 10% lower, profit before tax falls from €37,342 to €16,342, and break-even is at revenue of about €28,776 a month. Second, the main risk in renovation is not a loss but a cash-flow gap. You pay for materials and wages straight away, while the client pays an advance and then in stages; one delay on a large job stalls the others. The advance, the payment schedule and a retention until handover go into the contract before work starts.

If you want to check, with your own figures, whether the self-employment permit suits you and which legal form to choose, get in touch — we will look at your case in a consultation.

Frequently asked questions

What VAT rate applies to a flat renovation in Spain?

10% if the client is a private individual for their own home, a homeowners’ association or the owner of a home let as a primary residence, the building is at least two years old, payment is not in cash and the company’s materials cost no more than 40% of the price before VAT. If any condition is not met, the rate is 21%.

Can an air conditioner or boiler be installed at the 10% rate?

Yes, if the installation is part of a home renovation and the company’s materials, including the unit itself, stay within 40% of the price before VAT. If the company simply sells and installs the appliance separately from a renovation, it is a supply of goods with installation and the rate is 21%. The invoice shows labour and materials separately.

Does a flat renovation business qualify for the startup visa?

No. The startup visa is granted to an innovative project with a favourable ENISA report, and a renovation crew is an ordinary business. The right permit for it is self-employment: a business plan, investment and renovation experience, with a first authorisation for one year.

Can I switch to cuenta propia and work in renovation?

Yes, renovation is a standard activity for the self-employment permit. If you already live in Spain, you switch by modification without leaving the country: after a year of residence the authorisation is granted for four years. You apply to the immigration office of the province where you live, and the business plan describes the work where you will carry it out.

Do I need REA if I only work for private clients?

Formally no, as long as you hire no one for the site and do not work for another contractor yourself: REA is mandatory for taking part in a subcontracting chain. As soon as you hire an autónomo electrician or take work from a main contractor, you need the entry before work starts. It is free and valid for three years.

Do I need to have a builder’s diploma recognised to run a renovation company?

No. Construction trades are not regulated professions in Spain, and no diploma is needed for renovation work. The company needs separate authorisations for electrical, gas and asbestos work, and the project for works affecting the structure or facade is signed by an architect or engineer qualified to practise in Spain.

Who obtains the renovation permit — the owner or the company?

The owner of the property files the declaration or licence and pays the ICIO tax of up to 4% of the cost of the works. If work starts without the paperwork, the tax can be collected from the contractor, so the company checks the permit before starting.

Key points about running a renovation company in Spain

• A non-EU citizen needs a self-employment residence permit; the startup visa and permits without the right to work do not fit a renovation business.
• An existing firm is bought for its people and clients; without a transition period with the seller the purchase is risky, and SL shares bring the company’s debts and guarantees with them.
• In renovation an SL is usually safer than autónomo status: site liability is separated from personal assets.
• Before the first job — a prevention service, worker training, insurance and REA registration as soon as there is subcontracting.
• The 10% VAT rate on home renovation hinges on the materials condition: no more than 40% of the price before VAT.
• In our model, a firm with a three-person crew needs about €70,776 and pays back in 2.2 years, but a 10% drop in revenue cuts profit by more than half.

Sources

• Law 32/2006 on subcontracting in construction — BOE; RD 1109/2007 — BOE; RD 1627/1997 — BOE; RD 39/1997 — BOE.
• Law 38/1999 (LOE, Building Act) — BOE; RD 842/2002 (ITC-BT-03) — BOE; RD 396/2006 — BOE; TRLRHL — BOE.
• Law 37/1992 (VAT) — BOE; Law 27/2014 (Corporate Tax Act) — BOE; Orden HAC/1425/2025 — BOE; LGT (General Tax Act) — BOE.
• RD 1155/2024 (Immigration Regulation) — BOE; LGSS (General Social Security Act) — BOE; Orden PJC/297/2026 — BOE; Law 14/2013 — BOE; Companies Act — BOE.
• VII Convenio General del Sector de la Construcción — BOE No. 228 of 23.09.2023; Madrid construction collective agreement for 2025–2026 — BOCM No. 311 of 31.12.2025; OLDRUAM ordinance — Madrid City Council.
• Sale listings: FADE, Relevo Empresarial de Gijón 2025; Bizalia, October 2026.