Company Formation and Consulting Services in Spain

Spain offers several legal structures for establishing a business, each suited to different needs and scales: Sociedad Limitada (SL): The most common company type in Spain, ideal for small and medium-sized enterprises. The minimum share capital is €3,000, which must be fully paid up at incorporation. Shareholders' liability is limited to their capital contributions. Share transfers are restricted, with existing shareholders having pre-emptive rights. Sociedad Anónima (SA): Designed for larger companies and those planning to go public. The minimum share capital is €60,000, with at least 25% to be paid up at incorporation. Shares are freely transferable. A Board of Directors (Consejo de Administración) is required. Sociedad Limitada Nueva Empresa (SLNE): A simplified version of the SL with a faster incorporation process that can be completed within 48 hours. Limited to a maximum of 5 shareholders, with capital between €3,000 and €120,000. Specifically designed for small entrepreneurs. Autónomo (Self-Employed): The simplest structure for individuals operating independently. No separate legal entity is created, and the individual bears unlimited personal liability. Registration with Seguridad Social is mandatory, with a fixed monthly contribution. New autónomos benefit from a reduced flat rate (tarifa plana) during the first years. Sociedad Civil and Comunidad de Bienes: Partnership structures without separate legal personality. Partners bear unlimited liability. Their simple structure makes them suitable for small-scale projects.

Before incorporating a company in Spain, it is mandatory to obtain a Certificado Negativo de Denominación Social, which certifies that the proposed company name is unique. This certificate is issued by the Registro Mercantil Central (Central Commercial Registry). The application allows up to three alternative name proposals, and the registry checks whether these names conflict with existing registrations. The approved name is reserved for 6 months, with a possible 3-month extension. Key rules for name selection: • The company name must not be identical to or confusingly similar to an existing company • SL companies must include "Sociedad Limitada" or "S.L." and SA companies must include "Sociedad Anónima" or "S.A." • Names that are misleading or could be confused with public institutions are not accepted • Applications can be submitted online or by post

Incorporating an SL or SA in Spain requires the deed of incorporation (Escritura de Constitución) to be executed before a Spanish notary (Notario). This document contains the company's articles of association (Estatutos Sociales). The deed of incorporation must include: • Identity details and NIF/NIE numbers of all shareholders • The company's trade name and Certificado Negativo certificate • The company's business purpose (objeto social) • Capital structure and share distribution • Registered office address (domicilio social) • Management structure and appointment of directors • Bank certificate proving capital deposit After reviewing all documents, the notary authenticates the deed of incorporation. Notarial fees typically range from €300 to €1,200 depending on the company's capital and complexity. Following the signing, the Impuesto sobre Transmisiones Patrimoniales y Actos Jurídicos Documentados (ITP-AJD) tax applies, though company formations are currently exempt from this tax.

A tax identification number is mandatory for conducting business activities in Spain. Different numbers are required depending on the situation: NIF (Número de Identificación Fiscal): The mandatory tax identification number for all Spanish companies. A provisional NIF is issued by the Agencia Tributaria (Tax Agency) during incorporation and is converted to a definitive NIF after Registro Mercantil registration is completed. The NIF is used in all tax and commercial transactions. NIE (Número de Identidad de Extranjero): The mandatory identification number for all foreign nationals residing in or conducting economic activities in Spain. The NIE can be obtained from police stations (Comisaría de Policía) in Spain or from Spanish consulates abroad. Documents required for NIE application: • Valid passport and photocopy • Completed EX-15 application form • Document explaining the reason for needing an NIE (company formation, property purchase, etc.) • Application fee (approximately €12) Foreign companies opening a branch in Spain must also obtain a NIF. The process is relatively straightforward for EU citizens, while non-EU citizens may require additional documentation.

After the deed of incorporation is authenticated by the notary, the company must be registered with the relevant provincial Registro Mercantil (Commercial Registry). This registration is essential for the company to acquire legal personality. Documents required for registration: • Notarized deed of incorporation (Escritura de Constitución) • Certificado Negativo de Denominación Social • NIF application document • ITP-AJD tax declaration The registration process typically takes 15 business days. Upon completion, the company is published in the Boletín Oficial del Registro Mercantil (BORME). Registration fees vary based on the company's capital but generally range from €100 to €300. After Registro Mercantil registration, the company is required to file its annual accounts (cuentas anuales) with the registry each year. Changes in management, capital increases, and other significant decisions must also be reported to the registry.

Spain has a comprehensive, multi-layered tax system. The key taxes that companies need to be aware of are: Impuesto de Sociedades (Corporate Income Tax): The general rate is 25%. Newly incorporated companies benefit from a reduced rate of 15% for the first two profitable years. Small businesses (cifra de negocios < €1 million) also qualify for the 15% rate. IVA (Impuesto sobre el Valor Añadido - VAT): • Standard rate: 21% (most goods and services) • Reduced rate: 10% (food, transport, hospitality, residential property sales) • Super-reduced rate: 4% (basic foodstuffs, medicines, books, newspapers) IRPF (Impuesto sobre la Renta de las Personas Físicas): Personal income tax applicable to autónomos and employees. Progressive rates range from 19% to 47%. IAE (Impuesto sobre Actividades Económicas): Economic activity tax. Companies with annual turnover below €1 million are exempt. Spain has double taxation treaties with over 90 countries. Additionally, the Canary Islands benefit from the ZEC (Zona Especial Canaria) regime, offering corporate tax rates as low as 4%.

All businesses and individuals operating in Spain are required to register with and contribute to the Seguridad Social (Social Security) system. Employer Obligations: • Employer social security contributions: approximately 30% of gross salary • Employee contributions: approximately 6.35% of gross salary (withheld by the employer) • Registration with the Tesorería General de la Seguridad Social (TGSS) is mandatory • An alta (registration) notification must be filed for each employee Autónomo (Self-Employed) Obligations: • Registration with RETA (Régimen Especial de Trabajadores Autónomos) is mandatory • Since 2023, a real income-based contribution system applies • New autónomos benefit from the tarifa plana: a fixed €80 monthly contribution for the first 12 months • Monthly contributions range from €230 to €500 depending on income level The social security system covers healthcare, pensions, unemployment insurance, occupational accident and illness insurance, and maternity/paternity leave entitlements.

The Beckham Law (Ley Beckham, formally known as the Régimen Fiscal Especial para Trabajadores Desplazados) offers an exceptionally attractive tax regime for foreign professionals relocating to Spain. Named after footballer David Beckham, this law came into effect in 2005. Key Benefits: • A flat 24% tax rate on income earned in Spain (up to €600,000; amounts above taxed at 47%) • Application of a flat rate instead of the normal progressive IRPF scale • Foreign-sourced income is generally not taxed in Spain (with certain exceptions) • The regime applies for 6 years (year of relocation + 5 years) Eligibility Requirements: • Must not have been a Spanish tax resident in the previous 5 years (reduced from 10 years by the 2023 reform) • Must be employed under a Spanish employment contract or serve as a company director • Must not hold more than 25% of the company (if applying as a director) • Application must be filed within 6 months of relocating to Spain The 2023 reform extended eligibility to digital nomads (nómadas digitales) and start-up founders. Applications are submitted to the Agencia Tributaria using Form 149 (Modelo 149).

Spanish labor law is governed by the Estatuto de los Trabajadores (Workers' Statute) and provides strong protections for employees: Employment Contracts: Written contracts are mandatory. Both indefinite (indefinido) and fixed-term (temporal) contracts exist. The 2022 labor reform significantly restricted the use of fixed-term contracts. Working Hours: The maximum working week is 40 hours. Annual paid leave entitlement is a minimum of 30 calendar days. Overtime cannot exceed 80 hours per year. Minimum Wage (Salario Mínimo Interprofesional - SMI): Set at €1,134 per month based on 14 payments as of 2024. Spain traditionally pays 14 salaries per year (12 monthly + 2 extra payments). Dismissal: Types include fair dismissal (despido procedente), unfair dismissal (despido improcedente), and collective dismissal (despido colectivo - ERE). Compensation for unfair dismissal is 33 days' salary per year of service (maximum 24 months' salary). Convenios Colectivos (Collective Bargaining Agreements): Sector-level or company-level collective agreements can establish rights above the statutory minimum and are legally binding.

All companies in Spain are required to maintain their accounting records in accordance with the Plan General de Contabilidad (PGC - General Accounting Plan). The PGC is aligned with International Financial Reporting Standards (IFRS). Mandatory Books: • Libro Diario (Journal): Chronological record of all financial transactions • Libro de Inventarios y Cuentas Anuales (Inventory and Annual Accounts Book) • Libro de Actas (Minutes Book): Records of general meeting and board decisions Annual Accounts (Cuentas Anuales): • Balance de Situación (Balance Sheet) • Cuenta de Pérdidas y Ganancias (Income Statement) • Estado de Cambios en el Patrimonio Neto (Statement of Changes in Equity) • Estado de Flujos de Efectivo (Cash Flow Statement) - for large companies • Memoria (Notes to the Financial Statements) Annual accounts must be prepared within 3 months of the financial year-end, approved by the general meeting within 6 months, and filed with the Registro Mercantil within 1 month of approval. Failure to file on time may result in administrative fines ranging from €1,200 to €60,000. Small companies (PYMEs) may apply the simplified PGC. Companies exceeding certain size thresholds are subject to mandatory independent audit (auditoría).