When starting a business in Spain, specific procedures have to be followed during the process of Spanish company formation. In the case of foreign businessmen, especially if they are not familiarized with the local legislation, it is highly advisable to receive legal assistance and legal representation on such procedures.
The company formation services provided by Lexidy Law Boutique SPL, the company representing CompanyFormationSpain.com, can be of help. Amongst the services investors can obtain, we mention the following: company formation, investment related services, professional advice related to the Spanish real estate market and tax advice. In case you need consultancy in various taxation matters in another country, for example in Switzerland, we recommend an experienced tax advisor in Zürich.
Types of companies
- limited liability company,
- public company,
- branch office
- liaison office
- civil companies
Minimum share capital
for LTD Company
Minimum number of
shareholders for a limited company
Time frame for the incorporation
- Newco Shareholder Individual - 3-4 weeks
- Subsidiary - 3-5 weeks
- Branch - 3-6 weeks
Corporate tax rate
CIT rate = 25%. Other tax rates may apply, depending on the type of company that is taxed and its type of business.
Dividend tax rate
- 19% tax rate up to the first EUR 6,000 of income,
- 21% tax rate for the following EUR 6,000 to EUR 50,000 of income,
- 23% tax rate for the following EUR 50,000 to EUR 200,000,
- 26% tax rate on any remaining income.
- 21% Normal Rate
- 10% Reduced Rate
- 4% Super Reduced Rate
Are Shelf Companies Available?
Do you supply a Registered Address/Virtual Office?
Local Director Required
No, Directors must not be resident.
Annual Meeting Required
Yes, it can be held online.
Is Accounting/Annual Return Required?
Investors can rely on professional assistance for immigration matters (visas for foreign investors, for example). Lexidy was founded by Federico Richardson Alborna, an English-speaking lawyer in Spain registered with the Bar Association - number 40.082.
Lexidy Law Boutique SPLis proud to mention that is part of several international organizations. Being a part of such structures helped us in increasing the quality of our services, and we are currently connected with other Spanish entities and foreign ones as well. Our company is part of the International Bar Association, the German-Spanish Association of Lawyers, the Sweden - Spain Chamber of Commerce in Barcelona, the Barcelona Bar Association.
Which are the main business forms available for registration in Spain?
Opening a company in Spain is a process that consists in drafting the articles of association of the Spanish company, together with providing other necessary documents such as:
- the passport copies of the shareholders,
- their specimen signatures,
- the special forms provided by the Trade Register.
Some public notary procedures are required for company formation in Spain and a registered office is also mandatory for companies set up here. In order toregister a company in Spain, it is also important to open a bank account and hire a local accountant.
We invite you to watch a short video about opening a company in Spain:
The Spanish legislation provides severaltypes of legal entities that can be set up by both local and foreign investors. The most common way to start a business in Spain is by setting up a limited liability company. The investors who want to start a small business on their own may register a sole trader, which benefits from a simple registration procedure. Besides these, investors interested in company formation in Spain may also set up the following types :
•joint ventures – this business form is chosen in order to accomplish a specific business goal;
•branch office – this is a suitable way for a foreign company to expand on the local market. It is considered a dependent structure to its parent company;
•subsidiary – it also represents an option for foreign companies, as well as local companies wishing to expand in Spain. In this case, the subsidiary will act as an independent structure from the parent company.
Steps for company formation in Spain
The steps for company formation in Spain for a foreign citizen are presented below, but foreigners can obtain in-depth information concerning these aspects from our team of consultants:
obtain an identification number for non-Spanish citizens (NIE), a step which will allow the investors to perform the incorporation procedures;
select one of the legal entities available under the Spanish commercial legislation;
prepare the documents for obtaining a certification (investors can provide three different possible company names);
open a corporate bank account at a local bank in Spain, which will be used for depositing the company’s minimum share capital;
draft the statutory documents of the future company and sign them in front of a public notary;
sign the public deed of incorporation; this document has to be signed by all the persons who have the quality of shareholders in the company;
apply for a tax identification number with the Spanish Tax Agency.
How can a businessman set up a limited liability company in Spain?
The most popular legal entity for those interested in company formation in Spain is the private limited liability company(sociedad limitada laboral). The capital of the Spanish SL is divided into nontransferable shares and the liability of each member is limited by his/her contribution to the capital. A minimum share capital of around EUR 3,000 must be deposited when opening a company in Spain.
All the decisions of the Spanish SL are taken by the general meeting of the shareholders which will appoint a director.
What are the main advantages of setting up a limited liability company in Spain?
The limited liability company in Spain is the most popular business form that is registered on the local market due to the fact that it offers a set of advantages to the company’s investors. The main advantages of a Spanish limited liability company are presented by our company formation agents in Spain:
•the company may be set up in Spain with 100% foreign capital;
•the liability of its shareholdersis limited to their contribution to the company’s capital;
•although numerous investors can associate in a limited liability company, the business form can also be registered by a single shareholder;
•the company can benefit from a fast registration procedure completed on the online websites of the official institutions.
What are the requirements for starting a public limited liability company (sociedad anonima)?
This type of company is a form of business which requires high amounts of capital and it is also known as the joint stock company. For opening this type of company in Spain, the investor needs to have at least around 60,100 EUR as share capital. At least one quarter of this sum must be paid up before starting the company registration in Spain.
The liability of the members incorporating a Spanish SA is limited by their contribution to the capital. The major decisions are taken, like in the case of the private limited companies, by the general meeting of the shareholders. The daily decisions are taken by a board of managers supervised by a supervisory board (only if desired).
Registering a general partnership in Spain
This type of company is formed by at least two members with equal responsibilities and rights, since they are all considered general partners. The liabilities of the members are extended on their personal assets and, in case of company’s dissolution, those can be used to cover the outstanding claims; our team of Spanish company incorporation consultants can offer more details.
Setting up a limited partnership in Spain
Another form of Spanish partnership is the limited one, which is formed by at least one member who is a general partner and at least another who is a limited partner, with limited liability to the extent of his/her own contribution to the capital. Only the general partner can take the major decisions and, in case the person is excluded, the partnership ceases to exist.
Who can set up a sole trader in Spain?
If a natural person decides toopen a company in Spainon his/her own, an option would be the sole trader, which is the simplest form of company formation in Spain. The business represents the same entity as its owner (because there is no legal distinction between the entrepreneur and the company). In case of company’s dissolution, the claims can be covered with the investor’s assets.
No minimum share capital is required for this type of entity and all the profits can be used freely by the company’s representative. This type of business form can only be set up by a single investor who starts a business in his/ her own name.
Costs for company formation in Spain
The process of company incorporation in Spain means several costs for investors. Some of the general costs for opening a company in Spain are the following:
registration fee: the registration with the Registro Mercantil Central (Mercantile Register) requires the payment of a fee of approximately EUR 100;
virtual office cost: approximately EUR 80/month; the virtual office represents the most cost convenient way of obtaining a business address in Spain, necessary for conducting a business activity;
minimum share capital: the costs vary depending on the legal entity selected for the incorporation; in the case of a limited liability company, the minimum share capital is of EUR 3,000;
company formation fee: our team of consultants in Spain can offer a competitive price for this service, at approximately EUR 1,500;
accounting costs: approximately EUR 100/month and for this service investors can receive assistance on matters referring to bookkeeping and corporate taxation.
How can a foreign investor register a Spanish branch office?
A foreign company can expand on the local market by registering a branch office, which is a type of permanent establishment that is legally dependent to its parent company abroad. A Spanish branch office has to be registered with the local authorities and one of the main requirements is to have the same trading name as the one of the parent company. Amongst the main incorporation requirements for company formation in Spain, we mention the following:
•obtain a notarized power of attorney and a Spanish tax identification number;
•obtain a Digital Certificate, which allows a simple communication with the local authorities through theonline environment;
•appoint a representative of the Spanish branch office, who has to be a resident in Spain.
Are there any other options for investing in Spain?
Besides the above mentioned options for starting a business in Spain, foreign investors can also enter the local market by purchasing a ready-made business. This type of company is also referred to as a shelf company and it designates a type of business that has already been incorporated and it is available for sale.
One of the main advantages of the Spanish shelf company is that it benefits from a fast registration procedure. That does not take into consideration the standard incorporation, due to the fact that the legal entity has already been registered with the local institutions.
However, certain procedures do need to be completed, such as transferring the ownership rights to the new investors. Others, such as opening a bank account, obtaining a corporate tax number or an official business address, are not necessary.
Another way to enter the Spanish market is byopening a liaison office (or a representative office), which is not set up for commercial activities. As a general rule, its responsibilities are limited to representing a foreign company on the local market by performing certain activities. For example, these can be operations designed at increasing the visibility of the foreign company in Spain.
This type of office does not need to be registered following the standard incorporation procedure, since it will not develop commercial activities. The liaison office will be set up by signing a public deed and it will also need to be registered for social security purposes, as it will have at least one representative acting as an employee in Spain.
Which are the main documents regarding foreign investments in Spain?
Some of the main legal documents regarding the investments activities carried out in Spain are represented by thedouble taxation agreements. Spain is a contracting state in more than 90 agreements for the avoidance of double taxation. Foreign investments are also protected under the European Union’s legislation, which was also adopted by Spain.
For more details related to the registration procedure of a company in Spain, you may contact our Spanish company formation specialists, who can offer tailored assistance for the registration of a legal entity in one of the Spanish cities.
Call us now at +34 938 07 40 56 to set up an appointment with Federico Richardson, one of our specialists in company formation in Madrid and Barcelona. Alternatively you can incorporate your company without traveling to Spain.
As a Lexidy Law Boutique SLP client, you will benefit from the joint expertize of local lawyers and international consultants. Together we will be able to offer you the specialized help you require for your business start-up in Spain.