Company Registration in Spain
The environment for starting a business in Spain has become increasingly streamlined recently, thanks to legislative reforms introduced in 2022. Whether you’re considering forming an LLC, corporation, or partnership, the entire process has been greatly simplified. Before opening a business in Spain, you need to understand the different types of companies you can create and what aspects to consider when making your choice. Understanding the types of companies that can be created in Spain is crucial to successfully starting the registration process. Here are some common types of legal entities:
- Limited Liability Company (SL): is the most well-known corporate structure in Spain, often used for large companies that share ownership and associated business risks.
- Public Stock Company: is the most well-known corporate structure in Spain, usually used in large companies, where the liability of the shareholders is limited to their investment in the company.
- Cooperate.
- Sole Proprietorship: One person bears the financial risk of the business.
Benefits of company formation in Spain
Spain is quite an attractive destination for business investment, the country has its strategic advantages, favourable tax policy for new incorporations and a pretty supportive legal framework. Let’s see the key supremacies of incorporation in Spain:
- New legal entities can benefit from tax breaks during the initial years: A reduced tax rate of 15% on the first 300,000 EUR instead of the general 25% at the beginning.
- Spanish geographic location provides access to European and global markets.
- Spanish is a growing and dynamic market. 2017 saw Spain grow by 3.1%, Portugal by 2.7%, and Italy by 1.5%.
- Lack of mandatory rules such as having a Spanish partner.
- Requiring low capital to register a company in Spain.
- Free trade and customs laws in the Schengen area.
Requirements for company registration in Spain
No matter if you are a foreigner or a local citizen of Spain, everybody is allowed to incorporate a company in Spain. The first necessary requirement is that you are a legal resident. Nevertheless, according to your country of origin, the process can get more complicated. Starting a business in Spain involves a couple of mandatory steps to ensure the compliance with legal and regulatory requirements:
- Obtaining a Tax Identification Number (NIE): This number is essential for the foreigners that consider incorporation in Spain. It allows financial transactions to be performed within the country.
- Registering Company Name with the Registro Mercantil Central (RMC): This step allows you to understand whether your company’s name is already in use or not. If it’s not used by any other legal entity then you are required to register it.
- Obtaining Tax Identification Number: This number serves as an entity’s official identification for tax purposes.
- Opening a Business Bank Account. This account allows you to deposit the required sum of money for a certain legal form that was chosen.
- Signing the Deed of Incorporation: Officially establish your enterprise as a legal entity.
- Registration with the Mercantile Registry.
- Registration with the Social Security System.
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Documents required to set up a company in Spain
Starting up a business in Spain means that general procedures must be submitted and that specific papers are required to be prepared to serve as documentation to present to the competent authorities. Here is a list of documents that are usually needed in a request of this nature:
- Articles of Association. This document prescribes the internal regulations and governance structure of the company, including all possible details concerning name, purpose, share capital and management structure.
- Dead of Incorporation. It is a notarized document which formalizes the incorporation.
- Tax Identification Number. This number is used for tax purposes and usually required for opening bank account and performing various business activities.
- Proof of Registered Office.
- Bank Certificate of Deposit. It is a proof of deposit of the initial share capital into a Spanish bank account.
- Declaration of Compliance. The document which ensures that the directors confirm compliance with legal requirements concerning the incorporation.
- Registration with the Mercantile Registry. Filing the relevant documents for official registration.
Cost of setting up a company in Spain
The costs associated with setting up a legal entity in Spain can vary depending on several factors, including legal fees, notary fees, registration fees, and capital requirements. Legal fees typically account for a significant portion of the expenses, as you may need assistance from a lawyer or legal advisor to navigate the intricacies of Spanish corporate law and ensure compliance with regulations. Notary fees are also essential, as certain documents, such as the deed of incorporation, must be notarized before they can be submitted for registration. Additionally, there are ongoing costs associated with maintaining a company in Spain, such as annual accounting and tax compliance requirements, administrative expenses, and any applicable licensing or permit fees.
FAQ
How long does it take to set up a limited company in Spain?
You can have your business up and running in Spain in seven to eight weeks. The actual period for establishing a legal entity in Spain varies with many factors, among them how complex your business organization is and how efficient the registration process is. Normally, it takes from one week to four weeks to complete the registration process and obtain all necessary official approvals.
Is there a minimum capital requirement for company registration in Spain?
The minimum capital requirement plays a significant role in the whole process of starting a business in Spain. The amount varies based on the type of company that is planned to be registered. The two most common types of companies in Spain are Limited Liability Company (SL) and Public Limited Company (SA).
- For LLC the minimum capital requirement is €3,000. This means that when incorporating an LLC in Spain, the founders must contribute at least €3,000 to the company’s capital.
- For PLC the minimum capital requirement is significantly higher and is set at €60,000.
Do I need a foreign representative to register a company in Spain?
The decision whether to involve a foreign representative in your incorporation process depends on individual circumstances, preferences, and the level of assistance which might be required. Due to Spanish law, if you are a foreign investor you will need to appoint a representative resident in Spain. It is mandatory to appoint a local tax representative with the Tax Authorities. This choice of involving foreign representative in the incorporation process stems from individual case as well as preferences of business people.
