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Types of Companies in Spain

Types of Companies in Spain

The legal structures which are available for foreign investors who want to open a company in Spain are similar to the ones set up throughout the European Union (EU). Spanish authorities provide legal options for those who want to start a small business, as well as for investors who are interested in registering a larger company. The registration process is similar for most of the companies, but in the case of a sole trader for example, the procedure differs, as it is much simpler to register this business formOur team of lawyers in Spain can provide legal assistance for the registration of a company and can help businessmen in choosing a legal entity that will best represent their business objectives. 

Legal entities in Spain 

When choosing a legal entity in Spain, it is important to take into consideration the rights and obligations given to the investors under that respective structure, the share capital that must be deposited during the incorporation procedure, but also the number of shareholders or partners necessary to run the respective company. In this case, it is recommended to request the assistance of an attorney in Spain

In Spain, investors can choose from the following legal structures

  • sole trader;
  • partnership;
  • limited liability company;
  • public limited company;
  • corporation;
  • co-partnership;
  • cooperative;
  • new enterprise limited company;
  • limited partnership

Out of all the legal entities mentioned above, most of the investors prefer to register a limited liability company, as it represents an autonomous structure and its investors can’t be held responsible for the company’s debts. Our team of attorneys in Spain can offer legal assistance for the drafting of the company’s statutory documents

Limited liability company in Spain

A limited liability company, known as Sociedad Limitada (SL), is a type of company in Spain that offers flexibility and asset protection. Operating as an SL provides administrative simplicity, which can be advantageous for foreign entrepreneurs. It’s suitable for small and medium-sized enterprises.

Setting up an SL requires a minimum share capital of 3,000 euros. Shareholders can be individuals or legal entities, foreigners or residents. Shareholders’ liability is limited to their capital contributions, separating personal and corporate liabilities. Our lawyers in Barcelona can help you if you want to open an SL in Catalonia.

An SL requires a registered office that serves as the legal address of the company and is essential for official communications.

In order to open this type of company in Spain, you will need to follow these steps:

  • Obtain a certificate of company’s name from the Central Commercial Register;
  • Ensure that shareholders and directors have a tax identification code in Spain for legal compliance;
  • Draft the Articles of Association;
  • Sign the deed of incorporation before a notary;
  • Obtain a provisional tax identification number (NIF) for tax compliance purposes;
  • Register the company with the Commercial Register to apply for a permanent NIF from the Spanish Tax Agency;
  • Open a corporate bank account to manage the company’s finances.

Our lawyers in Spain can assist in the entire process of opening an SL and help you with the documentation.

Public limited company in Spain

A public limited company is known in Spain as Sociedad Anónima (SA). Our Spanish lawyers will explain the key characteristics of this type of structure.

The SA is commonly used for larger business ventures and various purposes, like holding companies or stock corporations. It can be formed by single individuals or multiple shareholders. SA allows for publicly traded shares, offering great flexibility in ownership.

For the share capital, this type of company in Spain requires a minimum of 60,000 euros for incorporation. At least 25% of the total share capital must be paid by the shareholders at the time of registration of the company. The liability of shareholders is limited to the amount they have invested in the company through the purchase of shares.

In terms of accounting, an SA is required to prepare annual financial statements and undergo external audits.

If you need to open a company in the capital of Spain, our lawyers in Madrid can help you.

New enterprise limited company in Spain  

The new enterprise limited company in Spain refers to a simplified form of the limited liability company, which has special requirements. For example, the incorporation of this type of structure requires a number of shareholders between one and five. However, the company has the possibility of receiving new shareholders, who must be natural persons. 

Taxation of Spanish companies

In Spain, companies are subject to a corporate income tax (CIT) rate of 25% on their worldwide income. Additionally, there are special tax rates for some types of companies in Spain.

Newly created companies are taxed at a reduced rate of 15% for their first two tax periods, under certain conditions. Start-up companies may also pay 15% tax rate for their first tax period and the following three tax periods if they maintain the conditions for being classified as start-ups. However, some special requirements might apply in this case as well. Our attorneys in Spain will provide more details if you are interested.

The ordinary VAT rate in Spain stands at 21% and the reduced rates are 10% and 4%. Different VAT rates might apply in the Canary Islands and other Spanish regions.

Statistics about Spanish companies

If you wish to learn more about the company types in Spain and their distribution in the country, here are some interesting statistics:

  • 2,926,717 companies were active in the country in 2021, according to The National Statistics Institute;
  • 55,269 companies were part of a larger business group;
  • 2,871,448 companies were operating independently, without being part of a larger business group.

In addition to company formation, if you are interested in buying a property, our real estate lawyers in Spain can help you.

Businessmen are invited to contact our law firm in Spain for more details related to the types of companies that are available in this country.