Before starting the process of registering a company in Spain, it is important to understand the different legal structures available and choose the most appropriate one for your needs.
This comprehensive guide prepared by QualityConta provides detailed information on the steps involved in registering a company in Spain, the types of company structures available and key considerations for foreign investors.
Understanding the main business forms in Spain
When registering a company in Spain, it is important to select the right type of company structure.
The most common forms include Limited Liability Companies, Partnerships, Limited Partnerships and Sole Proprietorship. Each structure has its own advantages, legal implications and requirements.
Limited Liability Companies
Sociedades de Responsabilidad Limitada (SRL), known as Sociedad de Responsabilidad Limitada (SL) in Spain, is the most popular business form for small and medium-sized companies.
This structure limits the liability of shareholders to the amount they have invested in the company, protecting personal assets from business debts.
An SRL requires a minimum share capital of €1 in symbolic form and no maximum limit. The company name must be unique and include “S.L.” at the end.
Public Limited Companies
The Sociedad Anónima (S.A.) is more suitable for larger, established companies. A minimum share capital of € 60.000 is required, which is higher than in the case of a limited company.
This type of company also has additional requirements, such as the need to have a board of directors and to issue shares.
Partnerships
A partnership involves two or more persons who share the profits, losses, and management responsibilities of the business.
Partners in a Limited Partnership have unlimited liability, which means that their personal assets can be used to cover the debts of the business.
This type of structure is ideal for businesses where trust and mutual cooperation are key.
Limited Partnerships
Limited Partnerships (Sociedad Comanditaria Simple) combine elements of partnerships and LLCs.
They have two types of partners:
- General partners: Manage the business and have unlimited liability.
- Limited partners: They contribute capital and have limited liability up to the amount of their investment.
This structure is beneficial for investors who wish to participate in the business without being involved in the day-to-day management.
Individual Entrepreneurs
An autonomous or self-employed person is the simplest form of business in Spain, suitable for people who wish to operate on their own.
The sole proprietor has full control over the business, but also assumes unlimited liability for all debts and obligations.
This structure is easy to set up and manage, with fewer administrative requirements compared to other business forms.
Advantages and costs associated with each option
Once you have decided which type of business structure is most appropriate for your business, it is important to consider the advantages and costs associated with each option.
Limited Liability Company (LLC)
Limited Liability Companies (LLCs) are a popular choice for small and medium-sized businesses due to their flexible structure and the protection they offer shareholders.
Advantages
- Limited Liability: Shareholders are only liable up to the amount of their investment, which protects their personal assets.
- Ease of management: The LLC is relatively easy to manage and has fewer formal requirements compared to other more complex structures.
- Flexibility in management: Allows greater flexibility in the management and internal organisation of the company.
Costs
- Minimum share capital: Requires a symbolic minimum share capital of €1 (“formerly” €3,000).
- Incorporation costs: These include notary fees, registration in the Commercial Register and other legal costs, which may vary.
- Administrative costs: These include accounting and auditing, depending on the size and activity of the company.
Public Limited Company (PLC)
Corporations (SA) are more suitable for large companies seeking a structure with greater credibility and the possibility of issuing shares.
Advantages
- Limited Liability: Like the LLC, the shareholders have limited liability.
- Share issuance: Allows the issuance of shares, which facilitates the raising of capital.
- Credibility: Greater credibility with investors and financial institutions due to its requirements and structure.
Costs
- Minimum share capital: Requires a minimum share capital of €60,000.
- Incorporation costs: Higher than those of an LLC, including notary fees, registration in the Commercial Register and other legal costs.
- Administrative and management costs: These include accounting, regular audits, and the need for a board of directors.
General Partnership
A Limited Partnership is a simple structure where two or more persons share the profits, losses, and management responsibilities of the business.
Advantages
- Simplicity: Simple structure with fewer formal requirements.
- Collaboration: Suitable for businesses where trust and mutual cooperation are key.
Costs
- Incorporation costs: These include registration in the Commercial Register and other legal costs.
- Unlimited liability: Partners have unlimited liability, which implies a high personal risk, as their personal assets can be used to cover the debts of the business.
Limited partnership
Limited partnerships combine elements of general partnerships and limited liability companies, allowing for both general partners and limited partners.
Advantages
- Differentiation of roles: It allows having partners who manage the business (general partners) and partners who only contribute capital (limited partners) with limited liability.
- Flexibility: Benefits of a partnership with limited liability protection for some partners.
Costs
- Incorporation costs: These include registration in the Commercial Register and other legal costs.
- Mixed liability: Unlimited liability for general partners and limited liability for limited partners.
Individual Entrepreneurs (Self-employed)
Self-employment is the simplest and most suitable for individuals who wish to operate on their own, taking full responsibility for the business.
Advantages
- Easy establishment: Fewer administrative requirements, making it easier to set up and manage.
- Full control: The entrepreneur has full control over the business.
Costs
- Incorporation costs: Minimal, with only the need to register with Social Security and other basic formalities.
- Unlimited liability: The entrepreneur assumes all liability, including the debts and obligations of the business, putting his personal assets at risk.
Comparative table of the advantages and disadvantages of each venture
| Type of company | Description | Minimum Share Capital | Responsibility | Advantages | Disadvantages |
| Limited Liability Companies (LLC) | Popular form for SMEs. | €1 | Limited to investment. | Protects personal assets, easy to manage for SMEs. | Requires share capital, single name with “S.L.” at the end. |
| Public Limited Companies (SA) | Suitable for large companies. | €60000 | Limited to investment. | Increased credibility, issuance of shares. | Requires board of directors, higher share capital. |
| Partnerships | Two or more persons share profits, losses and management. | It does not require | Unlimited. | Simple shared management structure. | High personal risk, personal assets at risk. |
| Limited Partnerships | It combines elements of partnerships and LLCs. | It does not require | Unlimited for general partners, limited for limited partners. | Role differentiation, protection for limited partners. | Management complexity, unlimited liability for general partners. |
| Sole proprietors (Self-employed) | Simpler form, suitable for solo operation. | It does not require | Unlimited. | Easy to set up and manage, less administrative requirements. | High personal risk, unlimited liability. |
Considerations for Foreign Investments in Spain
Spain is an attractive destination for foreign investors due to its stable economy, skilled workforce and strategic access to the European market.
In addition to offering a business-friendly environment, Spain has a well-developed infrastructure and a solid legal system that protects investors’ rights.
However, there are specific considerations and requirements for foreign investments that need to be addressed to ensure a successful entry into the Spanish market.
Documentation required for foreign investments
Foreign investors must provide several documents to establish a company in Spain. These include:
- Valid passport or national identity card: These documents are necessary to identify the foreign investor and must be current and valid.
- Foreigner Identification Number (NIE): This is a unique number that is assigned to all foreigners in Spain for any legal and financial transactions. The NIE can be obtained at a police station in Spain or at the Spanish consulate in the country of origin.
- Proof of address in Spain: This can be a rental contract, a utility bill or any other document confirming the investor’s residence in Spain.
- Bank certificate showing the deposit of the initial capital (if applicable): This certificate is necessary to demonstrate that the minimum share capital required for the company has been deposited in a Spanish bank account.
- Articles of association and company bylaws: These documents define the structure, objectives and operating rules of the company. They must be drafted in accordance with Spanish law and submitted to a notary for verification.
- Tax Identification Number (NIF) for the company: The NIF is necessary for all fiscal and commercial activities of the company. It can be obtained through the Spanish Tax Agency.
Regulatory compliance
In addition to documentation, foreign investors must ensure that they comply with various Spanish and EU regulations regarding foreign investment and anti-money laundering laws. These include:
- Anti-money laundering compliance: Spain has strict regulations to prevent money laundering and terrorist financing. Investors must ensure that all funds used in the investment are of legitimate origin and comply with international regulations.
- European Union Regulations: As a member of the European Union, Spain is subject to EU regulations and directives. Investors should familiarize themselves with these regulations, especially those relating to trade, competition and consumer rights.
- Registration of foreign investments: In some cases, foreign investments must be registered with the Spanish authorities. This registration allows the government to monitor foreign investments and ensure compliance with national and EU laws.
- Consultation with the local administration: Depending on the type of business and its location, it may be necessary to obtain specific permits and licenses from the local administration. This may include building permits, health and safety permits, and other industry-specific requirements.
Incentives and benefits for foreign investors
Spain offers several incentives and benefits to attract foreign investment. Some of these include:
- Subsidies and financial aid: The Spanish government and the European Union offer a variety of subsidies and financial aid to encourage investment in specific sectors such as technology, renewable energy and advanced manufacturing.
- Special economic zones: In certain areas of the country, there are special economic zones that offer tax incentives and customs benefits to attract foreign investment.
- Double taxation agreements: Spain has double taxation agreements with many countries to avoid investors paying tax on the same income in both countries. This makes investment in Spain more attractive from a tax perspective.
- Infrastructure and logistics: Spain has an advanced transport infrastructure, including ports, airports, and an extensive road and rail network, which facilitates access to European and global markets.
- Skilled workforce: Spain has a highly skilled and competitive workforce, with a high level of education and technical skills. In addition, the cost of labor is relatively low compared to other European countries.
Additional steps for Foreign Investors
To ensure a successful investment, foreign investors should consider the following additional steps:
- Legal and tax advice: Hiring comprehensive business advisors or better advice on setting up foreign companies can help navigate the complexities of the Spanish legal and tax system, ensuring compliance and optimizing tax advantages.
- Market research: Conducting thorough market research can provide a clear understanding of the local business environment, competition, and market opportunities.
- Networking: Establishing a network of local contacts, including business partners, suppliers and customers, can facilitate integration and success in the Spanish market.
- Cultural adaptation: Understanding and adapting to Spanish business culture is crucial. Spain values personal relationships and trust in business, so establishing a local presence and building strong relationships can be very beneficial.
Consulting the Commercial Register and the Register of General Terms and Conditions of Business
Before registering a company, it is essential to consult the Commercial Register and the Register of General Terms and Conditions.
The Companies Register provides information on existing companies, ensuring that the name chosen for the company is unique and not already in use.
The Register of General Terms and Conditions helps to understand the standard terms and conditions that apply to commercial contracts in Spain.
Steps and requirements for company registration
Registering a company in Spain involves several steps and fulfilling various legal requirements. Here is a detailed overview of the process:
- Choose a company name: Make sure the name is unique and not already registered.
- Drafting the articles of association: Defines the structure, purpose and operating procedures of the company.
- Obtaining a NIE: Foreign investors must obtain a NIE, which is essential for all legal and financial transactions in Spain.
- Open a bank account: Deposit the required initial capital and obtain a bank certificate.
- Notarize the Articles of Association: Sign the Articles of Association before a Spanish notary.
- Register with the Commercial Registry: Submit the articles of association, notarized and other required documents to the Commercial Registry.
- Obtain a NIF: Apply for a NIF for the company at the Tax Agency.
- Register with the Social Security: Register the company and its employees with the Spanish social security system.
- Obtain the necessary permits and licenses: Depending on the business activity, obtain the relevant licenses and permits.
Obtaining necessary Visas, Licenses, and Permits
Foreign entrepreneurs may need to obtain specific visas, such as a business visa or an entrepreneur visa, to legally operate a business in Spain.
In addition, certain commercial activities require specific licenses and permits from local authorities.
It is important to research and secure all necessary documentation to avoid legal problems. Specialized advice on setting up a foreign company can be of great help.
Tax and social security obligations
Understanding tax and social security obligations is crucial for financial planning and compliance for your business in Spain. Here is an overview of the key obligations:
- Corporate Tax: Companies in Spain are subject to corporate tax, which currently has a standard rate of 25%.
- Value Added Tax (VAT): Businesses must register for VAT and comply with VAT reporting and payment requirements. The standard VAT rate is 21%, with reduced rates for certain goods and services.
- Social Security Contributions: Employers must register with the Spanish social security system and make regular contributions for their employees. This includes contributions for pensions, health care and other social benefits.
- Annual Financial Reports: Companies are required to keep accurate financial records and file annual financial statements with the Commercial Registry. This includes balance sheets, income statements and other relevant financial reports.
Secure the company registration process in Spain with an experienced adviser
To ensure a smooth and secure registration process, the services of an experienced consultancy should ideally be enlisted.
At QualityConta, our foreign company formation and English language advice and management services are designed to help foreign investors establish themselves in the Spanish market in an efficient and compliant manner.
Setting up foreign companies
Our team of experts in setting up foreign companies will help you:
- Selecting the right business structure: We will evaluate your needs and objectives to recommend the best business structure, whether it is a Limited Liability Company (SL), a Public Limited Company (SA) or any other legal form.
- Preparing and reviewing the necessary documentation: We take care of drafting and reviewing the articles of association, company by-laws and other documents required for registration.
- Obtaining the Foreigner Identification Number (NIE): We assist in obtaining the NIE, which is necessary for all legal and financial transactions in Spain.
- Opening a bank account: We facilitate the process of opening a bank account in Spain and obtaining the bank certificate showing the deposit of the initial capital.
- Registration with the notary and the Commercial Register: We coordinate the signing of the articles of association before a notary and the registration of the company in the Commercial Register.
Advice and management
Our English language advice and management service offers you:
- Legal and tax consultancy: We provide legal and tax advice to ensure compliance with all Spanish and European laws, optimising the tax advantages available to your company.
- Permit and licence management: We assist in obtaining all necessary permits and licences to operate your business, ensuring that all local and sectoral requirements are met.
- Recruitment and human resources assistance: We assist in recruitment and human resources management, including social security registration and compliance with labour regulations.
- Accounting and financial management: We provide accounting and financial management services to keep your finances in order and meet annual reporting obligations.
- Ongoing support: We offer ongoing support to resolve any doubts or problems that may arise during the operation of your company, ensuring that it is always in compliance with current regulations.
Conclusion
Choosing these services will allow you to focus on growing your business while we take care of the legal and administrative aspects.
Trust QualityConta, we have the experience to help you navigate the process of registering and operating your business in Spain with confidence and security.
Frequently asked questions about company registration in Spain
Does setting up a company in Spain take a long time?
No, setting up a company in Spain does not take long. The process is usually completed within a few weeks, as long as you have all the required documentation and follow the administrative steps correctly.
Is it preferable to have a consultancy to open a business in Spain as a foreigner?
Yes, it is preferable to have a consultancy to open a business in Spain as a foreigner. A consultancy provides expert guidance on local regulations, administrative procedures and tax optimization, facilitating the process and ensuring legal compliance.
Is a Spanish limited company suitable?
Yes, a Spanish limited company (SL) is often desirable because of the limited liability of the partners, protecting their personal assets against the debts of the company, and its flexibility in terms of business structure and management.
