Registration of a company in Spain

Spain is one of the attractive European jurisdictions that can provide various opportunities for doing business, depending on the activities you carry out. The country has conducted a number of reforms to ensure the beneficial environment for doing business and the higher number of opportunities.

Major Forms of Entities

If you are thinking about opening a company in Spain, you may consider these legal forms:

• Limited Liability Company – a vehicle where the shareholders are liable to the value of invested funds only. The minimal threshold for the share capital of this entity is EUR 3000. It has to be paid in full at the moment of establishing. The entity should follow comparatively simple reporting requirements. This vehicle is one of the most widespread and effective from the time-cost perspective for small and medium businesses.
• Joint Stock Company – the vehicle that is more suitable for a large business. The entity should have at least EUR 60,000 of the share capital, and it is required to deposit at least 25% of that sum at the moment of registration. The vehicle can have common and preferred stocks. Still, the issuance and allocation of shares are permitted only after the entire payment of the entity’s share capital. This entity is more preferable for conducting certain types of professional activities and entering stock markets.
• Branch – if you want to test the advantages of this jurisdiction at the moment only, this can be a suitable option.
• General Partnership – a separate formation established by two or more business partners who bear unlimited liability over the entity's debts and obligations. Any personal assets of partners can be claimed during the possible winding-up procedure.
• Limited Partnership – this formation can be created by (i) one or more general business partners who assume risks related to doing business in full, and (ii) one or more limited business partners whose liability is restricted to the value of their made contributions only.

Incorporation Requirements and Steps

For instance, if you consider setting up a limited liability company in Spain, it is necessary to pass these preliminary stages and prepare respective documents:

1. Defining commercial priorities that align with the existing business structure (if any).
2. Obtaining NIE-number (Foreigner's Identification Number) is a compulsory precondition for establishing a company by a foreign investor.
3. Choosing the name for the future entity and getting the certificate of availability for the suggested name. Obtaining this certificate is required for saving time and preventing the risk of name denial due to the existence of the company with the same name.
4. Choosing the registered address for the future company.
5. Opening a corporate bank account for depositing funds for the share capital repayment. Subsequently, the certificate on depositing the value of the share capital is obtained from a bank for further lodgement to the Registrar.
6. Preparation and notarization of documents required to establish an entity: its Deed of Incorporation, the Articles of Association.
7. Submitting the set of all documents required for the registration, including registration forms, to the Commercial Register of Spain.
8. Registration for tax and social security purposes.

Legal and Regulatory Framework

The legal framework of the jurisdiction is comparatively favourable, in line with major European standards. Spain ensures greater flexibility of its legislation to make the procedure of business formation faster and simper for businessmen, especially for foreign investors. The major legal acts you can deal with during the business formation in Spain are the Commercial Code, the Companies Act, Commercial Register regulations, etc. The Commercial Register of Spain, the Bank of Spain and the National Securities Market Commission are major state bodies you may face with during starting and operating a business in Spain.

Advantages of the Jurisdiction

If you consider exactly Spain for the company incorporation, you may potentially enjoy these benefits:

• Competitive and highly-developed markets
• The country is open to foreign direct investments
• Flexible and skilled workforce
• Infrastructure close to excellent
• Plenty of incentives for doing business considering the exact sphere of your business interest
• Comparatively fast and simple company formation procedure.

Tax System

Here are the main highlights of local taxation:

• Corporate income tax – 25 %
• Value-added tax – 21 %
• Withholding tax (for non-residents) – (i) 19 % for dividends, (ii) 19 % for interests, and (iii) 19 or 24 % for royalties.
• Capital gains taxes – (i) corporate – 25 % (ii) individual (for non-residents) – 19 %.

How Prifinance Specialists May Help You

If you are interested in the registration of a company in Spain or elsewhere, our specialists can consult you more precisely about any options you consider. We will explore for you certain advantages that Spain and any other jurisdiction may have for your business, how to form a legal entity in a manner effective from the time-cost perspective. Choosing the most favourable tax regimes and calculating preliminary the amount of taxes due are also included in our service package. Opening a bank account is another compulsory option we will be glad to offer you. Reach us shortly for more precise discussions on the matters.