Setting Up Your Business in Spain: GEOS Guide for Global Expansion

This article is apart of our weekly series associated with the The Global Subsidiary Index. The series is designed to help businesses identify the best countries for establishing a subsidiary based on key operational factors. GEOS provides a data-driven ranking of jurisdictions worldwide, assessing across 40+ criteria to bring you insights into global expansion opportunities.

Each country on the index is scored on an overall score out of 100, with each individual criterion out of 5 or 10. Higher scores indicate a more favorable environment for businesses. By leveraging these insights, companies can make informed decisions on where to establish a legal presence.

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Setting up business in Spain puts your company in a market that’s growing stronger every year. It now ranks #14 in the Global Startup Ecosystem Index 2025, moving up again this year. It also holds 7th place in Western Europe, with 39 cities earning a spot in the StartupBlink rankings. The energy around Spain’s startup scene keeps growing.

The broader economic picture helps too. The government deficit is expected to fall from 2.5% of GDP in 2025 to 2.1% by 2027, and the debt-to-GDP ratio is on track to drop below 100%. That trend gives global teams more stability when planning long-term investments.

This guide breaks down what it takes to expand into Spain, the real hurdles you should expect, and how GEOS supports every step of the setup process.

Why Should You Expand to Spain?

Spain gives companies a strong foothold in Europe while opening doors to Latin America and North Africa. It sits at the crossroads of major trade routes, offers a modern digital backbone, and maintains a stable business environment.

Companies with an existing company structure can consider options such as establishing a branch or subsidiary in Spain. Professional legal guidance is recommended to determine the best approach for expanding an existing company into the Spanish market.

The GEOS Global Subsidiary Index Score of 63.6 shows a market with real strengths but also some administrative hurdles that global teams should plan for. It’s a mix that rewards good preparation and gives well-structured companies a clear advantage.

A Gateway to Europe, Latin America, and North Africa

When you’re setting up business in Spain, you step into one of Western Europe’s more balanced economic environments. GDP per capita sits at USD 35,297, and GDP growth reached 3.2% in 2024, outpacing many European peers. 

It’s a diversified economy with strengths in manufacturing, tourism, logistics, and renewables. The country’s steady recovery has been built on consumption, job creation, and investment from EU-backed programs.

Spain’s political system is stable, even with regional dynamics that occasionally influence policymaking. The communications and financial systems are top-tier, both scored 5/5, giving investors reliable digital and banking infrastructure from day one.

What Makes Spain Attractive?

Spain’s market fundamentals give companies room to grow across several industries. The manufacturing sector continues to modernize through digitalization and Industry 4.0 adoption. The country also pushes hard on green energy and sustainability, making it a competitive base for future-focused industries.

Spain ranks 31st on the World Bank Ease of Doing Business list, ahead of France and Italy. Administrative tasks can feel heavy, and regional rules vary, but the regulatory environment is transparent and predictable.

Foreign investment in Spain has been strong. Over the past five years, inbound FDI averaged 2.3% of GDP, more than double the OECD average. U.S. companies remain major investors, especially across digital infrastructure and advanced tech.

Economic Momentum and Outlook

Spain has shown resilience despite global volatility. Growth slowed slightly in late 2023 but remained above the Eurozone average. Domestic consumption, job gains, and stable inflation support the current outlook. Economic forecasts remain positive:

• Inflation trending downward
• EU-backed investment programs driving capital formation
• Labor reforms reducing temporary contracts and encouraging more stable employment
  (Unemployment has dropped to 11.6%, a 15-year low.)

Spain still faces challenges: high public and private debt, persistent unemployment compared to EU peers, and productivity gaps in small and medium-sized enterprises. However, government reforms and EU funds are directly targeting these issues.

Digital Economy and Tech Landscape

The digital ecosystem is a major advantage for anyone setting up business in Spain. Spain has one of Europe’s strongest digital infrastructures:

• 95.2% fiber-to-the-premises coverage
• 92.3% 5G coverage
• Strategic location for international data cables

The government’s España Digital 2026 strategy fuels investment in AI, 5G, cybersecurity, and digital skills. Programs backed by NextGenerationEU funds have positioned the country as a regional leader in digital transformation. Key developments include:

• Creation of SETT, a $22bn public tech investment company
• Significant investment in quantum computing and semiconductors
• Ambitious AI initiatives, including a national LLM in Spain’s four official languages
• A new AI oversight body, AESIA, the first in the EU

Key Regulations You’ll Need to Navigate

When you’re setting up business in Spain, you’ll operate under the EU’s most advanced regulatory frameworks. Spain applies these rules strictly, and regulators play an active role in how they shape digital, financial, and data-heavy industries.

• Full GDPR compliance through the LOPDGDD
• Digital Services Act (DSA) and Digital Markets Act (DMA)
• Evolving policies for AI (EU AI Act)
• Firm cybersecurity requirements (NIS2, DORA, EU Cyber Resiliency Act)

Companies entering Spain often find compliance more demanding than in non-EU markets, especially around data protection, digital taxation, and cloud sovereignty rules. However, the environment is transparent, and regulators are predictable.

Market Challenges

Even with strong fundamentals, companies need to prepare for:

• Regional bureaucracy and slower administrative processes
• Talent shortages in advanced tech fields
• Limited green energy supply compared to demand
• Potential exposure to the Digital Services Tax (3% rate, currently paused)
• High labor costs in some regions
• Public procurement practices that can favor price over innovation

Why Spain Still Stands Out

Spain offers market size (USD 1.39 trillion GDP), strong infrastructure, a skilled workforce, and a strategic position that reaches Europe, LATAM, and North Africa. It’s one of Europe’s top digital performers, and EU-funded initiatives keep strengthening innovation and future-ready industries.

The country’s economic momentum since 2019 gives businesses a solid base. Policy direction focuses on productivity, skills, and modernization. Spain’s large consumer base, competitive costs relative to Western Europe, and investor-friendly climate make it a strong choice for companies expanding globally.

Tax & Regulatory Environment

The tax system is one of the first areas companies pay attention to when setting up business in Spain, because it shapes how your operations run day to day. Spain keeps a predictable structure, but it comes with detailed filings, regular deadlines, and close oversight from the Spanish Tax Agency (Agencia Tributaria).

Most formalities run through the local tax office. The tax authority oversees business registration, record-keeping, and compliance processes, and businesses must interact with the tax authority to obtain necessary permits and submit tax returns. That’s where you request the CIF, file Form 036, and complete the registrations you need to operate. During registration, companies must declare their business activity, and accurately describing the business activity is crucial for obtaining licenses, permits, and the correct tax treatment. Spain scores 6/10 on corporate tax, 6/10 on tax and accounting structure, and 3/5 on reporting complexity. It’s very much an EU-style framework: structured, documentation-heavy, and consistent.

Key rates look like this:

• 25% corporate tax for most companies and foreign permanent establishments
• 15% for startups and new entities during their first profitable years
• Reduced SME rates rolling out in 2025

Spain is also highly open to foreign ownership. It scores 8/10 for non-resident UBO acceptance, which simplifies cross-border structuring.

Regional incentives can shift the numbers further. The Canary Islands and Basque Country have some of the most attractive tax regimes in Spain. Since national and regional rules both apply, local guidance helps clarify the full tax outcome for your structure.

Corporate Tax Structure

Spain imposes a corporate income tax on resident companies, taxing their worldwide income. Non-resident companies with a permanent establishment pay NRIT at the same 25% rate. From 2025, companies can access phased-in reductions:

• Micro-enterprises: Lower brackets stepping down from 21% to 17% on income up to EUR 50,000.
• SMEs: Rates moving from 24% toward 21% over five years.

Startups keep the 15% reduced rate for up to four years if they meet Spain’s criteria for “emerging companies.” These criteria focus on age, innovation, workforce presence in Spain, and no dividend history.

Spain also applies a minimum effective tax rate of 15% for large companies and consolidated groups. The global minimum tax (OECD Pillar Two) adds domestic and top-up tax obligations for multinationals with consolidated revenue above EUR 750 million.

Reporting and Administration

When you’re setting up business in Spain, you’ll deal with a self-assessment system. Tax authorities review companies based on risk signals, past filings, and group structure. Businesses handle several recurring obligations:

• Quarterly CIT advance payments
• Annual CIT return
• Quarterly VAT
• Monthly or quarterly social security

Large companies follow stricter advance-payment rules. The statute of limitations is four years, though tax-loss checks can run ten years. Cash payments above EUR 1,000 are banned, with fines up to 25%.

Most companies must prepare annual stand-alone financial statements and, in some cases, consolidated accounts. These need shareholder approval and must be filed with the Mercantile Registry. Audits apply when thresholds in the Companies Act are met.

Listed companies face extra duties. They publish annual and half-year reports, issue a corporate-governance report, and disclose director pay. Major shareholders and directors also have reporting obligations.

Foreign investors must declare any investment or disinvestment within 30 days. The filing is electronic and used for statistics only.

Beneficial Ownership Transparency

Spain aligns with EU anti-money-laundering rules. All companies must declare their ultimate beneficial owners (UBOs) through a notarial deed. Details must also be provided with annual accounts.

• Spain keeps a non-public UBO database, managed by the General Council of Notaries.
• Obligated entities can access it, but the public cannot.
• A separate public UBO registry is planned but not yet available.

Spain allows full foreign ownership, and there are no local partner requirements.

Data Protection and Digital Regulation

Strong data rules come with the territory when you’re setting up business in Spain. Spain enforces GDPR through the LOPDGDD, its national data protection law. Enforcement is strict, and the AEPD is known for being one of Europe’s tougher regulators. Companies must meet:

• Full GDPR obligations
• Spain-specific rules on digital rights, minors, automated decisions, and employee data
• Broader EU frameworks like the Digital Services Act, Digital Markets Act, NIS2, DORA, and the Cyber Resilience Act

Spain also leads on AI regulation. Its agency, AESIA, is the first national AI supervisor in the EU.

Local Expert Insight

Spain’s tax system works nationally, but regional regimes can change the numbers quite a bit. The Canary Islands Special Zone offers deep reductions. The Basque Country and Navarra also run their own incentive programs.

Foreign companies can unlock real savings, but the landscape isn’t plug-and-play. You need local advisors who understand how national CIT, regional incentives, and EU compliance rules overlap.

Limited Liability Company Incorporation & Compliance Essentials

Setting up business in Spain takes coordination. Most incorporations run 1–2 months. You’ll secure the company’s tax ID (NIF), sign before a notary, and file the documents with the Commercial Registry. The registry usually needs about 30 business days to process the incorporation package.

The pace depends on how quickly your documents are ready. Each legal form has different rules for liability, taxation, and compliance. Picking the right structure matters because it shapes your obligations from day one.

Here’s how the registration process typically works:

• Reserve the company name. You’ll confirm availability and lock it in with the Mercantile Registry.
• Deposit the share capital. A Sociedad Limitada (SL) requires at least €3,000 as the minimum share capital. You deposit it into a Spanish bank account and get a bank certificate as proof of the capital deposit for the notary.
• Sign before the notary. The notarial deed formalizes the company’s formation.
• Register with the Mercantile Registry. This is when the company gains full legal personality.

Non-resident founders or directors must obtain a foreigner’s tax identification number (NIE) as part of the incorporation process.

Once registered, you’ll secure the tax identification numbers you need to operate:

• The corporate tax identification number (CIF)
• A tax ID code for filings
• The foreigner’s tax identification number (NIE) for non-resident founders or directors

The Sociedad Limitada remains the most common structure for foreign investors. It offers limited liability, simple administration, and a low capital requirement. As a limited company, this structure protects personal assets from business liabilities, unlike some other legal forms. Foreign companies can also enter Spain by setting up a subsidiary or registering a branch, depending on how much independence they want the local entity to have.

Another common legal structure is the sole trader, which is suitable for small entrepreneurs and freelancers. The sole trader structure is simple to set up, requires no initial investment, but means the owner has unlimited personal liability for business debts.

Director and Representation Requirements

Spain doesn’t require a local or national director, which keeps the structure flexible. The resident director score is 3/5, mainly because non-resident directors must appoint a local tax representative or obtain a Spanish NIF before anything can proceed. This step often sets the pace for onboarding. Once the NIF is in place, the rest of the setup flows more easily.

• No nationality restrictions
• Local tax representative required for non-residents

Paperwork and Documentation

Paperwork is a significant part of the process when you’re setting up a business in Spain. Incorporation is formal and document-heavy. Spain scores 2/5 for original paperwork because you’ll work with notarial deeds, apostilles, and sworn translations. 

These documents are standard under Spanish corporate law and help ensure the company is recognized without issues by the Commercial Registry. A registered office in Spain is also mandatory from day one.

Digital Processes and Online Systems

Spain’s government portals are improving, and the country scores 4/5 for digital sophistication. Many filings can be handled online, but not everything is fully automated. Some Commercial Registry steps remain partly manual, so expectations should balance digital convenience with occasional paperwork. The system works well enough, but it’s not entirely frictionless.

In-Person Steps

Certain tasks still require physical presence. The in-person requirement score is 2/5 because bank account setup usually needs an on-site visit, and some notaries still expect individuals to appear in person. Many allow power of attorney signings, but it’s not guaranteed across all regions.

• Opening a business account is a key in-person step required for company setup, as bank onboarding is often face-to-face
• Notary presence may be required, depending on the province

Local Expert Insight

Spanish notaries have broad discretion and can request additional certifications if anything looks incomplete. Pre-validating documents with a local contact can prevent long delays. 

A company only gains legal personality once it’s officially registered with the Commercial Registry of the province tied to its registered office, so getting the documentation right from the start matters.

Workforce & Employment Considerations

Hiring in Spain means working within a detailed labor system. Rules are clear, but they’re strict, so the employment law complexity score sits at 4/10. Employment obligations and costs can also vary depending on the legal structure of the business. Contracts, working hours, and termination procedures all follow national standards and often tie back to collective agreements.

Employee Protections and Courts

If you’re setting up business in Spain, it helps to know that the system leans strongly toward employees. Labor courts usually support workers, which gives the environment a 2/5 score for employer-friendliness.

Recent rulings raised the bar again. Employers must now let workers defend themselves before any disciplinary dismissal. That adds process and more paperwork, but it’s expected across most sectors.

Payroll Contributions and Costs

Employers are required to make significant social security contributions. These contributions total about 30% of gross salary, which explains the 3/5 payroll score. Employees contribute around 6.48%, but most of the cost sits with the employer.

• Contribution base runs from EUR 1,381.20 to EUR 4,909.50
• Extra percentages apply for occupational risks
• A new “solidarity contribution” now applies to high earners

Benefits and Pensions

Spain requires paid holidays, sick leave, and full social security coverage. The benefits score is 2/5 because most perks are statutory, not employer-driven. Pensions follow the state system, so the pension score also sits at 2/5. Private plans exist, but they’re not common.

Unions and Collective Agreements

Union membership is low, but influence is strong. Works councils give unions a real voice, especially in manufacturing and logistics, which keeps the union score at 2/5. Most sectors use collective bargaining agreements (convenios colectivos) that set pay scales, hours, overtime rules, and job categories.

• CBAs often override national law
• They define many day-to-day employment terms
• You must know which CBA applies before hiring

Working Conditions and Foreign Talent

Companies setting up business in Spain enter a system with clear rules. Spain follows a 40-hour workweek, enforced rest periods, and a national minimum wage. Leave is generous and includes vacation, parental leave, and sick leave.

EU/EFTA workers can move freely, while non-EU hires need a work permit and an NIE. Processing is structured, but timing depends on the role and the region.

Termination Rules

Terminations must follow strict grounds. Courts examine fairness and procedure closely. If something is missing, dismissals can be ruled unfair or void, leading to reinstatement or compensation. This structure reinforces the overall employee-friendly environment.

Local Expert Insight

Collective bargaining agreements shape almost everything. They decide wages, leave rules, and even how you manage dismissals. Knowing the right convenio from the start saves time and avoids disputes later.

Talent Availability & Salaries

Spain offers a strong talent pool across tech and business roles. Major cities keep drawing skilled workers, and the overall hiring environment is stable.

Tech, Business, and Finance Talent

Strong talent availability is a major advantage when setting up business in Spain. Developer talent scores 4/5. Madrid, Barcelona, and Valencia have active tech hubs and a steady supply of engineering talent. Junior and mid-level roles are easy to fill, and senior candidates are increasingly available.

Marketing, sales, and finance talent score 5/5. Spain has a deep multilingual base, and many professionals already work in international teams.

Recruiting Conditions

Hiring is efficient. Spain scores 8/10 for recruiting ease, helped by EU mobility and strong applicant volume. Most roles fill quickly in major cities. Specialized engineering roles may take longer, but the overall process is predictable.

Salaries and Benchmarking

Salaries stay competitive. Spain earns a 4/10 salary benchmarking score because compensation sits below Western European averages. This gives companies room to hire strong talent without stretching payroll.

• Tech salaries are rising but still manageable
• Business roles remain cost-effective

Language Considerations

English proficiency is improving, which gives Spain a 3/5 language score. Many professionals work comfortably in bilingual settings, especially in larger cities. Still, contracts and official HR documents must be in Spanish. Regional language laws can also apply, especially in Catalonia or the Basque Country.

Local Expert Insight

Bilingual hiring is straightforward in Madrid, Barcelona, and Valencia. Regional operations may need Catalan or Basque for certain documents or employee communications. Getting clarity early helps avoid delays.

Financial & Banking Considerations

Spain offers a predictable financial environment, which helps companies setting up business in Spain plan costs, with operating costs that land at a 6/10 average budget score. The country’s financial environment also supports efficient financial operations for businesses, making it easier to manage payments and currency in an international context. Opening a Spanish business bank account is essential for facilitating company operations and fulfilling legal obligations in Spain.

Business Bank Account and Account Opening

Opening a business bank account with a Spanish bank is necessary for company incorporation, managing finances, and enabling the business to pay taxes and pay income tax. Banking is modern but cautious.

Spain’s banks follow strict due diligence rules, especially when foreign shareholders or multi-layered structures are involved. Expect a 2–3 week timeline for account opening. A company director usually needs to appear in person. Some banks allow video verification, but it’s not guaranteed in every region.

KYC expectations are clear, which supports the 3/5 KYC requirements score. Banks verify identities, ownership structure, and the purpose of the account. They often request:

• Passports and tax IDs
• Proof of address
• Shareholder charts and UBO details
• Incorporation documents

Spain allows online verification in some cases, but financial institutions may still prefer in-person checks.

Expense Management and Documentation

Spain requires detailed documentation for tax deductions. That’s why the expense management score is 3/5.

Invoices must be in Spanish, and they need to include standard tax details such as NIF numbers, descriptions, and VAT breakdowns. Companies working with international vendors often need translated or dual-language invoices to keep everything compliant.

Operating Costs

Operating costs sit in the middle of the European range. The 6/10 budget score reflects manageable salaries, moderate real estate costs, and predictable banking fees.
For most companies, the financial environment supports steady budgeting rather than big surprises.

Local Expert Insight

Banks work efficiently, but stay cautious with foreign ownership structures. Pre-checking documents and knowing the KYC process saves time. In-person attendance by a company director speeds things up and avoids repeat appointments.

Immigration & Work Permits

Spain keeps its immigration system structured but fairly approachable. The immigration complexity score is 2/5, mostly because EU citizens can work freely while non-EU hires need sponsorship.

For foreign nationals starting a business in Spain, several visas are available. The main paths include the business visa, the entrepreneur visa, and the self-employed work visa. Each option targets a different type of activity.

A strong business idea and a comprehensive business plan or detailed business plan are essential for eligibility, as Spanish authorities require clear evidence of the business’s viability and growth potential.

The entrepreneur visa is particularly suitable for innovative or technology-based startups, while the self employed work visa is ideal for small business owners and self employed individuals in sectors like retail, hospitality, or professional services.

Even so, Spain is more open than many countries. The government is actively regularizing over a million undocumented migrants to counter demographic decline, which signals a broader pro-migration stance. The Spanish government may request evidence of job creation and investment as part of the business visa and work permit process, and is actively involved in administrative procedures for foreigners starting businesses in Spain.

Work Permits for Non-EU Talent

Non-EU hires need a residence and work permit, followed by a work visa. Employers start the process by securing work authorization through the Provincial Aliens Affairs Office. Spain checks the labor market first, unless the role appears on the Shortage Occupations List. If no qualified local candidate applies, the employer can still move forward.

Some roles skip the work-authorization step entirely. These include researchers, university professors, journalists, artists, and staff invited by public institutions.

Once the work permit is approved, applicants get their visa from a Spanish consulate and can enter the country legally.

Arrival and Compliance

Permits are valid for one year and can be renewed. Anyone staying over six months must get a TIE card. Employers also register workers with Social Security. If the application is denied, the decision can be appealed. After five years of legal residence, workers can apply for long-term status with unrestricted work rights.

Fast-Track Options

Spain offers quicker paths for certain profiles. The Golden Visa supports investors, and the Startup Law speeds up residence for tech founders and high-growth entrepreneurs. These routes move fast, but documentation needs to be precise.

Language and Documentation

Language plays a big role when you’re setting up business in Spain. Most filings must be in Spanish, and many supporting documents need apostilles or sworn translations. Even simple sponsorships take extra planning because every document has to meet local standards.

Local Expert Insight

Spain welcomes foreign talent, but accuracy matters. Golden Visa and Startup Law cases only move quickly when every document is clean, translated, and complete. Getting ahead of paperwork saves a lot of time.

Insurance and Risk Management

Insurance and risk management are critical components of building a resilient business in Spain. Whether you’re a foreign investor, entrepreneur, or small business owner, understanding the local insurance landscape and proactively managing risks will help safeguard your business assets and ensure long-term stability.

Spain’s business environment is well-regulated, and having the right insurance coverage is not just a legal requirement in many cases—it’s also a smart way to protect your company from unexpected setbacks.

Mandatory Business Insurance in Spain

When operating a business in Spain, certain types of business insurance are compulsory. If you employ staff, you must provide workers’ compensation insurance and enroll your employees in the Spanish social security system. This ensures that your team is protected in case of workplace accidents or illness, and that you remain compliant with Spanish labor laws.

If your business owns or leases commercial premises, property insurance may also be required by law or by your landlord. Additionally, public liability insurance is highly recommended—and often mandatory for specific business activities—to protect your business in Spain against claims for injury or damage caused to third parties.

This type of business insurance is especially important for customer-facing businesses, as it covers legal costs and compensation payments if a claim is made against your company.

Beyond these essentials, you may want to consider other forms of coverage, such as professional indemnity insurance or product liability insurance, depending on your business structure and sector.

Unique Spain Expansion Insights

Setting up business in Spain feels straightforward at first, but the details tell a different story. The country blends national rules with strong regional authority, a fast-moving tax environment, and a business culture that still depends on personal interaction.

Foreign businesses can expand into Spain by setting up a branch or subsidiary of their own company, allowing them to utilize their existing business operations while meeting local legal requirements.

You also operate in a system where notaries have real control over corporate actions. These factors shape how foreign companies function day to day.

Regional Nuances

Spain looks unified on paper, but autonomous communities follow their own administrative styles. Labor rules, tax expectations, and processing times can shift from Madrid to Catalonia to the Basque Country. Planning for those differences prevents delays later.

Digitalization of Tax

Spain’s Suministro Inmediato de Información (SII) system requires near real-time VAT reporting for certain companies. Invoices must be uploaded almost immediately, which demands tight bookkeeping and reliable internal controls.

Cultural Norms

Business still moves through relationships. Deals tend to progress after in-person meetings, follow-up conversations, and steady rapport. A purely digital negotiation cycle often falls flat here.

Public Notary Centrality

When setting up business in Spain, it’s important to note that notaries hold significant authority. They review incorporations, share transfers, amendments, and dissolutions. If paperwork isn’t perfect, they can pause the process without hesitation. Their scrutiny shapes your timeline more than in many other jurisdictions.

How GEOS Simplifies Your Expansion into Spain

GEOS handles the parts of Spain’s system that usually slow companies down. The team coordinates notary appointments, prepares the documents notaries commonly question, and manages every step of tax registration. 

Once the entity is active, GEOS oversees VAT filings, labor notifications, and recurring compliance so your local operations stay clean and predictable.

AI-Powered Global Expansion Support

Geovanna acts as your day-to-day guide to setting up business in Spain. She prepares filings, checks documents against local standards, organizes certifications and translations, and tracks every deadline. You get clear, immediate answers on compliance without chasing different agencies or waiting on slow email chains.

Is Spain the Right Fit for Your Business?

Spain holds a GEOS Global Subsidiary Index Score of 63.6, placing it in a strong position for EU expansion. Operating costs stay moderate, talent is deep, and infrastructure links you to European and international markets. 

The trade-off is slower administration and strict documentation standards. With the right support, or with GEOS handling the process, Spain becomes a stable and scalable base for long-term growth.

📩 Contact GEOS for a customized expansion strategy!

This article does not constitute legal advice.