Corporate Forms in Spain
6 Abril, 2023
The Spanish territory is the ideal setting for all those foreigners who want to start their own business. Ideal infrastructures, talent and an entrepreneurial ecosystem make cities like Barcelona, ​​Madrid or Alicante the best option when deciding where to start. However, the doubt resides in what type of company may be the most appropriate, have more tax benefits, or adjust to my needs.
Before starting the process of incorporating a company, we must decide what the type of it will be. But we are not talking about the business model or the specific project. We are talking about its legal structure.
In Spain there are different business structures from the legal point of view, all of them defined by the Commercial Code. Each of them has its own characteristics, and understanding their different purposes is crucial. Next, we will briefly talk about the main ones and those that may interest you the most.
1. LIMITED LIABILITY COMPANY (SL)
This is, without a doubt, the most popular business structure in the Spanish territory. Why? Due to its flexibility and ease in the incorporation process, requiring only € 3,000 as a minimum capital investment.
Advantages: liability is limited, so that in the event of possible losses the partners should not respond with their assets. Your liability will be limited to the capital investment made. Therefore, if you have invested the € 3,000 of initial capital, that is the maximum amount that can be asked of you on a personal level as a founder in case of indebtedness.
The procedures for the constitution and operation are simpler than those of a public limited company; To establish it, an affordable capital is required and it can be a sole proprietorship; From a certain level of benefits, taxes are lower than those of a self-employed worker and with a partnership the self-employed worker can deduct his salary as an expense. In this case, you will not pay income tax, but corporation tax. This is equivalent to 25% of the company's profits. It is also necessary to present the VAT return. However, there are several exemptions that you can benefit from and that can considerably reduce the tax base; so you will save money.
Disadvantages: the shares are not easily transferable, the partners have priority (which can be understood as an advantage if what you want is to restrict the access of third parties to the business activity), so it is not a convenient type of commercial company if you intend attract a large number of investors.
2. ANONYMOUS SOCIETY
A corporation is the legal structure reserved for large companies that trade stocks. They are characterized by a much more rigid structure and € 60,000 is needed for their constitution.
Advantages: the company is divided into shares that are freely transferred, the liability of the partners is limited to the capital contributed, it can be sole proprietorship and it can be listed on the stock market. In addition, certain activities such as banking and pharmaceutical companies, insurance companies, pension fund managers, etc., require this type of commercial company.
Disadvantages: the minimum capital required is high, the presence of people outside the company cannot be controlled and the procedures for setting up and operating are more complex than those of, for example, a limited company.
3. SELF-EMPLOYED PROFESSIONALS
We cannot forget the most basic form, the freelancers. Here are included the liberal professions included in the IAE basically divided into two groups: professional collegiate (doctors, engineers, psychologists or architects) or non-collegiate (programmers, designers or makeup artists). Most of these professionals do not have an establishment or premises, receiving the name of "freelance".
This professional retains the personal income tax on his invoice, the tax rate being lower than the rest (7% for new self-employed and 15% general).
However, unlike society, if you take this form, your liability will not be limited. Everything will happen for you, even those debts that you may incur.
4. OTHER COMPANY FORMS
There are many more corporate forms in Spain, among which some stand out, such as those that we will present. However, when it comes to setting up a new one in Spain being non-EU, the most recommended par excellence is the Limited Company, as we have seen. We also have:
Collective society: it is a type of commercial company of a personal nature, in which the partners play a very important role, since they not only invest capital, but also contribute their work and manage the company directly.
Limited partnership (or limited partnership): it is similar to the partnership, although it has the difference that in this type it is possible that a certain type of partner does not have to be directly in charge of managing it.
It should be noted that Spanish law allows both national and foreign companies to be incorporated in Spain, however, the foreign partner is required to be in possession of a Tax Identification Number (NIE) to carry out all the procedures of the constitution, such as, for example, the signing of the articles of incorporation before a Notary Public etc. In the case of legal persons, their articles of incorporation must be translated and, where appropriate, certification of registration in the commercial register and justify the representation of the person acting on their behalf, usually the administrator.
This has been a brief guide for all those foreigners who intend to start their company in the Spanish territory. Creating a company in Spain is an opportunity that has been on the rise in recent years. Our country is the perfect enclave for export, service, tourism and communications companies, among many others. In fact, Spanish exports of goods to third parties were around 300,000 million euros in the last year. In addition, of this amount, about 43% was generated by foreign companies established in Spain.
On the other hand, the communications and infrastructure network in Spain is one of the best and most complete in the world. It is the country with the most kilometers of motorways and motorways in the European Union, also having the most extensive high-speed train network in Europe and third worldwide. In its competitiveness report, the World Economic Forum (WEF) ranked Spain 12th in quality worldwide in terms of infrastructure and logistics. A fundamental piece of information without a doubt for any foreign entrepreneur who is looking for the ideal place to start a business project.
For all these reasons, we recommend that you contact us so that we can help you throughout the process. Our lawyers specialized in commercial and immigration law will solve all your doubts and will accompany you throughout the incorporation process. In addition, our accountants will take care of your taxes, accounting and other procedures so that you only enjoy the benefits generated.
