Make informed decisions before expanding your business into the thriving Spanish economy. Discover Spanish companies’ essential legal and regulatory requirements and considerations like partners, capital, and liability towards third parties.
In recent years, Spain has emerged as a thriving international business and trade centre, drawing companies from all over Europe. As an entrepreneur or an expanding enterprise, venturing into Spain can hold significant potential. However, before taking the plunge, it is crucial to understand the intricate legal and regulatory requirements governing businesses in the country.
This article sheds light on the essential formalities necessary to establish and operate a business in Spain. It is important to note that these requirements can vary based on the chosen legal structure, considering the number of partners, capital investment, and liability towards third parties.
Comprehending and complying with these regulations is paramount to ensure a smooth and legally compliant operation within the Spanish business landscape.
Before we head to the company registration steps, we must know the common legal structures in Spain for better understanding. In Spain, there are several legal structures for companies, each with its characteristics and requirements. Here are the names of different legal structures for Spanish companies in English:
Starting a company in Spain is a relatively simple process, and many opt to begin by setting up a Limited Liability Company (L.L.C.) in the country. This approach is widely favored due to its ease and convenience.
To establish a limited company in Spain, follow these clear steps:
| Type of Company | Minimum Capital Requirement |
| Public Limited Company (S.A.) | €60,000 |
| Private Limited Company (S.L.) | €3,000 |
| Simplified Limited Company (S.L.S.) | €3,000 |
| General Partnership (Sociedad Colectiva) | None (Liability is unlimited and the joint between partners) |
| Limited Partnership (Sociedad Comanditaria) | None (Liability of limited partners is limited to their contribution) |
| Cooperative Corporation (Sociedad Cooperativa) | The amount specified in the bylaws, or €3,000 if not specified |
| Sole Proprietorship (Empresario Individual) | No specific minimum capital requirement, but the owner’s liability is unlimited. |
In Spain, companies are subject to specific shareholder requirements to promote transparency and effective corporate governance. A minimum of one shareholder is needed to form a company, and they can be of any nationality. Shareholders need to have their identities registered. Shareholders need to have their identities registered with the Commercial Registry. Additionally, companies must hold annual general meetings, where shareholders can participate and vote on important matters.
Shareholders also have the right to:
Spanish law enforces strict regulations on insider trading and fraudulent activities to ensure fairness and protect minority shareholders, fostering a conducive environment for investment.
In Spain, entities are overseen by a management body known as “órgano de administración.” The management body is always obligated to prioritize and protect the corporate interest, which represents the common interest of the shareholders.
This body can have four structures:
Directors can be either natural or legal persons in non-listed companies. However, since June 2021, only natural persons can be appointed or re-elected as directors in listed companies.
An exception applies to listed companies in Spain, which must have a board of directors with at least three members. Nonetheless, many Spanish-listed companies delegate the regular management to an executive committee or one or more managing directors. Such a delegation requires approval by two-thirds of the directors and must be registered with the Spanish Commercial Registry to be valid.
| Corporate Income Tax | 25% (Standard rate) |
| 15% (Applicable to newly created entities) | |
| 25% (For certain small businesses) | |
| Value Added Tax (V.A.T.) | 21% (Standard rate) |
| 10% (Reduced rate – applicable to some goods) | |
| 4% (Super reduced rate – applicable to basics) | |
| Social Security | Approximately 30% of the employee’s salary |
| plus additional employer contributions | |
| Local Taxes | Varies based on municipality and activities |
The tax rate applicable to companies subject to Corporate Income Tax (C.I.T.) in Spain varies depending on the entity type.
The standard rate is 25%. However, a newly incorporated entity conducting business and showing a positive tax base during its first two fiscal years qualifies for a reduced rate of 15. Cooperatives with a special tax regime are subject to a rate of 20%. In specific cases, different rates may apply: banks are taxed at 30%; non-profit entities at 10%; pension schemes at 0%; and collective investment institutions at 1%, among others.
The recently published draft General State Budget Law for the fiscal year 2023 proposes a decrease in the general C.I.T. rate from 25% to 23% for entities with a net turnover below E.U.R. 1 million in the previous fiscal year.
Value Added Tax (V.A.T.), known as “Impuesto Sobre el Valor Aadido” (I.V.A.) in Spanish, is a consumption tax applied to the sale of goods and services in Spain. The standard V.A.T. rate is 21%. However, specific goods and services, such as food and books, have reduced rates of 10% and 4% respectively.
Businesses registered for V.A.T. are required to charge V.A.T. on their sales and file regular V.A.T. returns. They can also reclaim V.A.T. paid on their purchases if used for business purposes.
In Spain, there are two types of V.A.T. registration:
Companies with a turnover exceeding €25,000 must register for V.A.T. and apply it to their sales, while smaller businesses can opt for voluntary registration. Even companies with lower annual revenues can opt for voluntary registration. Once registered, regular V.A.T. returns must be filed, and any owed V.A.T. must be paid to the Spanish Tax Agency.
For companies exporting goods or services to other E.U. countries, there is the option to use the V.A.T. Mini One Stop Shop (MOSS). This online portal allows businesses to report and pay the V.A.T. due in all E.U. countries with customers.
Filing tax returns is a crucial annual task. It is mandatory to submit Corporate Income Tax (C.I.T.) returns within 25 calendar days after, six months from the end of the tax year. For instance, if the tax year aligns with the calendar year, the return should be filed anytime between the 1st and 25th July of the following calendar year. Remember, this timely submission is a legal requirement that must be met.
The financial statements encompass various essential documents, such as:
Unlike unlisted companies, public companies cannot provide summarized versions of their financial statements; they must present full details. Moreover, public companies have additional reporting obligations. They must prepare and publicly share an annual corporate governance report, offering a detailed breakdown of the company’s governing system and practical operations. Additionally, there must be a yearly report on directors’ remuneration, which includes information about each director’s remuneration policy and individual compensations.
However, branches of foreign companies operating in Spain are exempt from filing their financial statements. Instead, they need to obtain a certificate from the Commercial Registry of their home country, confirming that the financial statements have been appropriately submitted.
Spanish companies must submit their financial statements to the Commercial Registry every year in Spain. The company’s directors have a three-month window after the financial year’s end to release the financial statements, management report, proposed earnings distribution, and, if applicable, consolidated financial statements and management report.
Legal entities must fulfill at least two of the following three criteria in two consecutive years to meet the audit requirements:
The appointment of an auditor takes place during the General Meeting or General Assembly before the end of the first financial year, requiring prepared accounts.
The company directors are responsible for presenting a comprehensive financial report, which should encompass the balance sheet, profit and loss account, cash flow, a statement of changes in equity, notes to the financial statements, and a management report. All financial reports must adhere to the accounting standards set in Spain.
The Spanish Employment Act sets rules and benefits for employees, which you should know when building a workforce:
To talk to our specialists, call us on:
+44 (0)208 421 7470 or simply fill in the form below and we’ll get back to you.
For help and advice on multiple company incorporations or one-off setups, please don’t hesitate to contact us or call us on +44 (0)208 421 7470
Contact usMake informed decisions before expanding your business into the thriving Spanish economy. Discover Spanish companies’ essential legal and regulatory requirements and considerations like partners,
Discover how to set up your dream company in Spain, the 15th largest economy globally and 4th in the Eurozone, boasting favourable market conditions
Table of Contents Spain is often considered as one of Europe’s most culturally rich and diverse countries. This reputation has made it one of
Table of Contents If you’ve ever visited Spain on your holidays, you might already know it is easy to get lost in the country’s
The Old Free School, George Street, Watford, Hertfordshire, WD18 0BX T: +44 (0) 20 8421 7470 Office Hours: 9:00 am-5:00 pm Open A European Company.com is a trading name of Universal Company Incorporations Ltd. Universal Company Incorporations Ltd is a company registered in England and Wales with company number 08455371
The information and any commentary on the law contained on this website is provided for information and guidance purposes only. Every reasonable effort is made to make the information and commentary accurate and up to date, but no responsibility for its accuracy and correctness, or for any consequences of relying upon it is assumed by Open A European Company, its directors , employees or associated websites.
The information and commentary on Open A European Company’s site does not, and is not intended to amount to legal advice to any third party on a specific case or matter. You are strongly recommended to obtain specific, direct legal advice from professional advisers whether these be your own advisers or those that appear on the OpenAeuropeancompany.com site. You should consider taking advice both in the country in which you are domiciled and in the country in which you are seeking to open a company. and not to rely on the information or comments on this site.
Copyright © 2009-2024 Open a European Company
Web design by Bridget Designs - Website Maintenance and SEO by LerriHost
To provide the best experiences, we use technologies like cookies to store and/or access device information. Consenting to these technologies will allow us to process data such as browsing behaviour or unique IDs on this site. Not consenting or withdrawing consent, may adversely affect certain features and functions.
Functional Functional Always activeThe technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
Preferences PreferencesThe technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
Statistics StatisticsThe technical storage or access that is used exclusively for statistical purposes. The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
Marketing MarketingThe technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.
Accept Deny View preferences Save preferences View preferences Manage consentHow we use your data
What we need
Universal Company Incorporations Ltd, herein known as UCI Ltd, will be what’s known as the ‘Controller’ of the personal data you provide to us.
UCI Ltd is a holding company which encompasses the following websites: Open A European Company.com, Start An American Company.com, Open A Dubai Company.com, Start an Australian Company.com, Open A German Company.com, Open An Italian Company.com and Readymade Companies Worldwide.com. By submitting your data, you agree that UCI Ltd can send you promotional materials on behalf of and relating to these subsidiaries.
We only collect basic personal data about you, which does not include any special types of information or location based information. This does however include your name, email, phone number etc.
Why we need it
We need to know your basic personal data in order to provide you with information on our services, offers and discounts, and news pertaining to those services.
We will not collect any personal data from you that we do not need in order to provide this service to you.
What we do with it
All the personal data we process is handled by our staff in the UK. However for the purposes of IT hosting and maintenance, this information is located on servers within the United States. This data is protected by the EU-US Privacy Shield, ensuring that your information is stored and treated with equivalent privacy and security laws.
This information is stored in a secure account on Mailchimp, an email marketing service. Mailchimp cannot use your data for their own marketing or promotional purposes, and no 3rd parties have access to your personal data unless the law allows them to do so.
As part of our integrated email marketing service, we also collect information on user interaction. This includes collecting data on actions such as opening the newsletter or clicking on links within the newsletter, which is then used to optimise future marketing materials.
We have a Data Protection regime in place to oversee the effective and secure processing of your personal data. More information on this framework can be found on our website.
How long we keep it for
Your data stored for marketing purposes will be kept with us until you notify us that you no longer wish to receive this information. You can do this by contacting us, or by clicking ‘unsubscribe’ at the bottom of our marketing emails.
More information on our retention schedule can be found in our longform privacy policy.
What are your rights?
If at any point you believe the information we process on you is incorrect, you can request to see this information, and even have it corrected or deleted.
If you wish to raise a complaint on how we have handled your personal data, you can contact our Data Protection Officer who will investigate the matter.
If you are not satisfied with our response, or believe we are processing your personal data not in accordance with the law, you can complain to the Information Commissioner’s Office (ICO).
Our Data Protection Officer is Heather Landau, and you can contact them here.
