If you want to open a company in Spain, the options are usually a branch or your subsidiary. The main differences are that a branch has no legal capacity of its own and is subject to the jurisdiction of the country in which the parent company has its registered office.
Nevertheless, it must be established by a notarial deed and entered in the commercial register. It must also have a permanent seat and a fiscal representative in Spain. In the case of an own company, the choice usually falls on a limited liability company, which is the most suitable legal form for a small or medium-sized company.
The share capital is at least EUR 3,000 and must be fully subscribed and paid in at the time of incorporation. Only one partner is required to set up the company.
Who can start a business in Spain?
There is freedom of establishment in the EU. This means that any legal or natural person from the EU can set up a business in Spain. However, there are several important characteristics to consider when setting up a company, such as the formation costs, various liability issues, tax regulations, or disclosure obligations.
The correct choice of form and structure can already influence the future success of the company during the formation phase. Therefore, every time a company is set up in Spain, the advantages and disadvantages of the legal form and its consequences for the shareholders and managing directors should be examined.
Not only liability issues but especially tax aspects, which may affect each shareholder, must always be considered individually. The formation of a Spanish company takes between 30 and 40 days until it is registered in the Commercial Register. However, the company can be active from the time the notarial deed of incorporation is drawn up and the tax number assigned.
It takes about three to five days to request a free company name and to prepare the notarization.
The legal forms of companies in Spain
In Spain, as in other EU countries, a general distinction is made between partnerships and corporations. The legal forms for companies presented in the following are the most typical in Spain and useful for many business models.
However, tax aspects are neglected in the following list and should be analyzed on a case-by-case basis before incorporation.
1. The Spanish S.L. “Sociedad de Responsabilidad Limitada”
The Spanish SL is a “limited liability company”. A company in which the share capital, which shall be divided into indivisible and cumulative shares, shall be made up of the contributions of all the shareholders, who shall not be personally liable for the company’s debts. The low founding capital of the Spanish S.L. is 3,000 EUR.
2. Sole trader, freelancer (Empresario Individual), slef-employed (autónomo)
Craftsmen, commercial agents, or freelancers such as doctors, lawyers, or architects choose this legal form. In this form of business, a single natural person is responsible for the entire economic activities of the company and is also liable for all his private assets.
There is no minimum capital requirement for self-employed (autónomo), but they should be personal residents of Spain. Self-employed is subject to social security contributions in Spain. As of 01.01.2018, there are new regulations for them in Spain regarding taxation and social contributions.
3. Partnership company “Sociedad Civil”
The “Sociedad Civil” must be founded by at least two partners, whereby each partner is fully liable for his assets. The liability is joint and several. No minimum capital is required for the foundation. However, all shareholders are subject to social insurance.
4. The Spanish public limited company, Sociedad Anonima, S.A.
The Spanish S.A. is a public limited company. It has a similar structure to the S.L. and can also be formed by one or more shareholders. For the formation of an S.A., at least 60,000 euros of founding capital are required, of which at least 25 percent must be paid in.
The formation of an S.A. is recommended, for example, if there are many shareholders in the company or if debt capital is to be collected. Spanish S.A. is also very well suited as a holding company, i.e. a company that is to hold various participations at home and abroad.
Every case is different! Due to the multitude of possibilities and the consideration of individual framework conditions, it is always advisable to seek legal and tax advice from experts when setting up a company.
GM Tax Consultancy not only offers its clients advice on the choice of the right corporate form and structure and the formation of the company but also professional support in all company-related and tax issues after the formation of the company. Contact our tax advisors in Barcelona for a entrepreneurs and startup consultancy.
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