Preheat the oven to 350 F (175 C).
In a small saucepan, combine the granulated sugar and water. Heat over medium heat, swirling the pan occasionally, until the sugar dissolves and turns golden brown. Be careful not to burn the caramel. Immediately pour the caramel into a 9-inch round baking dish, tilting the dish to evenly coat the bottom. Set aside to cool and harden.
In a mixing bowl, whisk the eggs until well beaten. Add the milk, vanilla extract, and a pinch of salt. Whisk until all the ingredients are well combined.
Pour the egg and milk mixture over the hardened caramel in the baking dish.
Place the baking dish in a larger baking pan or roasting pan. Create a water bath by pouring hot water into the larger pan until it reaches about halfway up the sides of the flan dish.
Carefully transfer the pans to the preheated oven and bake for approximately 1 hour, or until the custard is set. The center should still have a slight jiggle.
Remove the flan from the water bath and let it cool to room temperature. Then, refrigerate for at least 4 hours or preferably overnight to allow the flavors to meld and the custard to fully set.
To serve, run a knife along the edges of the flan to loosen it. Place a serving platter on top of the baking dish and quickly invert the flan onto the platter, allowing the caramel to drizzle over the custard.
Slice and serve the Spanish Flan chilled, garnished with additional caramel sauce or fresh fruit if desired.
