What are the Types of Companies and Business Structures in Spain?
Establishing a subsidiary company in Spain offers numerous advantages, especially with the country’s competitive corporate tax rate. At 25%, Spain’s corporate tax rate matches the eurozone average and is notably lower than those in France, Germany, and Italy. Moreover, Spain provides various tax incentives and exemptions that can significantly lower the effective tax rate to approximately 20%. To set up a subsidiary company in Spain, foreign companies and individuals have several options, with the most common business structures choices being the Corporation (S.A.) and the Limited Liability Company (S.L.).
1. Corporation (S.A.) – Sociedad Anónima
Corporations, or Sociedad Anónima (S.A.), are frequently chosen for their trustworthiness with banks and business partners. To start a S.A. in Spain, you must have a minimum capital of €60,000. This capital might be provided either in cash or through assets such as real estate or other valuable items.
An S.A. offers flexibility in transferring shares, making it easier for shareholders to sell or transfer their stakes. This feature is particularly beneficial for larger companies or those planning to go public in the future, as it allows for easy entry and exit of investors.
2. Limited Liability Company (S.L.) – Sociedad de Responsabilidad Limitada
The Limited Liability Company, also known as Sociedad de Responsabilidad Limitada (S.L.), is a popular alternative for smaller companies or those wanting more ownership control.
To establish an S.L., you must complete a legal process that includes signing a notarial deed and preparing the company’s articles of incorporation. These documents must include key details such as:
- The identity of the founders
- The company name
- The company’s purpose
An S.L.’s share capital must be at least €3,000, fully paid up and divided into shares.
One of the main advantages of an S.L. is its flexibility. The minimum capital requirement is lower than for an S.A., making it easier and less expensive to set up. In addition, the structure of the company can be changed without needing to adjust the articles of incorporation, giving owners more control and adaptability.
How is a Company Incorporated and How Long Does the Process Take?
Setting up a subsidiary company in Spain can be a complex process, given the country’s detailed legal and regulatory requirements.
The following key steps may help you understand the process better. Each step is necessary to ensure compliance with Spanish laws and smooth operation of your new business entity.
1 – Reserve the company name: The first step to set up a subsidiary company in Spain is to secure a unique company name at the Central Commercial Registry (Registro Mercantil). Our team handles the application for you, submitting up to 3 alternative names to maximize approval chances. The reserved name is valid for 6 months, with 3-month window for deed execution. ALTIOS also manages the renewal of the name reservation if it expires, ensuring no delays in your formation process.
2 – Gather all necessary documentation:
- Company registration of the parent company: this document must be apostilled by the Court of Appeal
- Holding Company Registration (if applicable): similarly, this document must be apostilled
- Statutes of the Parent Company: the founding document or statutes outlining the parent company’s operational structure
- Certified Identity Document of the Administrator: a certified copy of the identity document for the subsidiary’s designated administrator
- NIE of the Administrator: the Spanish Foreigner Identification Number (NIE) for the administrator of the subsidiary
3 – Open a corporate bank account: open a bank account in the name of the new company for capital contributions. We assist in this process and make sure that the required capital payments are deposited and certified by the bank to meet all legal prerequisites.
4 – Translate documents into Spanish: all necessary company registration documents must be translated into Spanish by a certified translator to comply with Spanish legal requirements.
5 – Obtain Tax Identification Numbers (NIF): visit the Hacienda (Spanish tax authority) to obtain the Tax Identification Numbers for both the parent company and, if applicable, the holding company.
6 – Draft the Articles of Association: Prepare the articles of association for the subsidiary in Spanish. This document has to define the company’s structure, its purpose, and operational rules, in line with Spanish regulations.
7 – Notarization: Take all the compiled documents, including the bank’s capital payment certificate and the Spanish articles of association, to a Spanish notary.
8 – Commercial Registry Assessment and Registration
9 – Apply for a Digital Certificate: Essential for managing most administrative and regulatory tasks electronically, facilitating smoother operations and compliance.
10 – Apply for an Intra-Community VAT Number
11 – Register for Social Security
