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Types of Companies and Business Structures in Spain: Registration Steps & Benefits

In this article, we will examine the types of companies and business structures in Spain. We'll also go over their benefits and how they can be registered.

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    Types of Companies and Business Structures in Spain

    Are you intending to begin your business in Spain?

    Whether you’re a local entrepreneur or a foreign investor, choosing the right type of business structure can be a critical factor in your success.

    Forming a corporation in Spain can be compelling and rewarding, but it’s crucial to understand the

    types of companies and business structures in spain

    different types of companies and business structures available before making any decisions. Each business structure that an investor can employ to setup a firm in Spain has its advantages and challenges, so it’s crucial to do your research and choose the one that best fits your goals and circumstances. From sole proprietorships to PLCs, each entity structure has its own distinctive characteristics and legal requirements.

    In this article, we will examine the types of companies and business structures in Spain. So, let’s dive into it.

    Creation of Table for Various Types of Corporations in Spain

    Down below we’ve listed various types of corporations in Spain with their eligibility, minimum investment, and taxes.

    Type of Business Structure

    Eligibility

    Minimum Investment

    Taxes

    Sole proprietorship (Autónomo)

    Any individual 

    None

    Income tax  (IRPF) and VAT (IVA)

    Partnership (Sociedad Civil)

    Two or more individuals

    None

    Income tax  (IRPF) and VAT (IVA)

    Limited Liability Company

    One or more individuals  

    €3,000

    Corporate tax(IS), VAT (IVA), and annual accounts

    Public Limited Company

    One or more individuals  

    €60,000

    Corporate tax (IS), VAT (IVA), and annual accounts

    Cooperative

    Two or more individuals          

    None

    Income tax (IRPF), VAT (IVA), and annual accounts

    Limited Partnership

    Two or more individuals

    None

    Income tax (IRPF) and VAT (IVA)

    Limited Partnership with Shares                    

    Two or more individuals

    €60,000

    Corporate tax (IS), VAT (IVA), and annual accounts

    Economic Interest Grouping

    Two or more individuals or entities

    None

    Income tax (IRPF) and VAT (IVA)

    European Company (Sociedad Europea or SE)                 

    Any individual or entity operating in two or more EU countries

    €120,000 or equivalent in local currency

    Corporate tax (IS), VAT (IVA), and annual accounts

     

    Branch office (Sucursal)   

    Any foreign company

    None

    Corporate tax (IS), VAT (IVA), and annual accounts

    Different Types of Companies and Business Structures in Spain

    Here is the list of the distinct types of companies and business structures in Spain, including:

    1. Sole Proprietorship

    A sole proprietorship, known as “autónomo” in Spain, is the simplest business structure that allows individuals to conduct business on their own. It is suitable for those who want to work alone and be responsible for their own business.

    It is also the most popular and common form of business structure in Spain, with approximately 3 million sole proprietorships operating in the country. As a sole proprietor, the owner is responsible for all aspects of the business, including finances, operations, marketing, and sales.

    However, sole proprietors have complete control over their business, but they are also responsible for managing all aspects of it. One of the advantages of a sole proprietorship is that it has low start-up costs and minimal legal formalities. It is also easy to dissolve the business when the owner decides to retire or move on to other ventures.

    Sole proprietorships are common for small and micro-businesses such as freelance workers, self-employed professionals, and tradespeople. They are also suitable for those who want to test their business idea or work as a part-time entrepreneur.

    Steps for starting a Sole Proprietorship

    To register as an Autónomo in Spain, you need to obtain a Número de Identificación de Extranjero (NIE) if you’re a foreigner and then register for social security with the Spanish Tax Agency.

    • It is necessary to enlist your company with the local tax office (Agencia Tributaria).
    • Obtain a licence if your business requires it.
    • CIRCE offers an online registration platform where you can fill out the enrolment form.
    • Required licenses and permits.

    2. Partnership

    Partnerships in Spain are a type of firm entity that merge more than 2 members and jointly share the ownership and management of a company. Partnerships are a popular choice for businesses that require more resources or expertise than a sole proprietorship can offer but don’t want to form a company with a more formal structure.

    To set up a partnership in Spain, partners must first register with the Spanish tax authorities and obtain a business licence, if required. They must also draft a partnership agreement that outlines the terms of the partnership, including how earnings and failures will be distributed, how conclusions will be made, and how partners can enter or leave the partnership.

    Partnerships offer several benefits, including shared responsibility and shared resources. Partners can bring their expertise and experience to the business, which can help it grow and succeed. They also offer flexibility in terms of management and decision-making, as partners can work together to make decisions.

    Step to register for Partnership (Sociedad Civil):

    To register a Sociedad Civil in Spain, you need to draw up a partnership agreement that signifies the contribution of each partner, revenue disbursement, and management structure.

    • The agreement must be notarized and filed with the Mercantile Registry.
    • Additional required documents such as identification documents, and tax certificates.
    • Proof of payment of registration fees.

    3. Limited Liability Company

    Limited liability companies (LLCs) are a popular business structure in Spain, combining the flexibility and simplicity of a partnership with the limited liability protection of a corporation. In an LLC, the owners are referred to as “partners” and their detriment is restricted to the share of funds they have put into the business.

    To set up an LLC in Spain, the partners must draft and sign articles of association and should be enlisted with the Commercial Registry. The partners should get a tax identification number and register with the Spanish tax authorities. They must also deposit the initial capital into a bank account and obtain a certificate of deposit.

    One of the main benefits of an LLC is the limited liability protection it offers to its partners. This signifies that the individual acquisitions of the partners are not at stake in case of any monetary liabilities of the company.

    Additionally, LLCs are a popular choice for small and medium-sized businesses in Spain, as they offer the protection of a corporation without the complex formalities associated with larger corporations.

    Steps to register a Limited Liability Company (Sociedad de Responsabilidad Limitada or S.L.):

    To register an S.L. in Spain, you need to obtain an NIE if you’re a foreigner, reserve the company name, and draw up the company’s bylaws, which should specify the company’s capital, shareholders, management structure, and other relevant information.

    • You’ll then need to deposit the minimum share capital (currently 3,000 euros)
    • Open a bank account.
    • Obtain a certificate of deposit.
    • Finally, you’ll need to notarize the bylaws and file them with the Mercantile Registry, along with other required documents.

    4. Public Limited Company

    Public limited companies (PLCs) in Spain are companies whose shares are publicly traded on the stock market. This type of business structure is often used by larger businesses that require significant amounts of capital and want to raise funds through the issuance of shares.

    To set up a PLC in Spain, the founders must draft and sign the company’s articles of association, which should be enlisted with the Commercial Registry. The firm should even contain a tax identification number and register with the Spanish tax authorities.

    PLCs are governed by a board of directors, who is hired by the stakeholders. The board of directors is accountable for taking strategic judgments for the company and overseeing the day-to-day operations. The shareholders, who own a portion of the company through their shares, have the power to elect and remove members of the board.

    One of the main advantages of a PLC is that it can raise significant amounts of capital by issuing shares to the public. This makes it a popular choice for larger businesses that require a significant amount of funding for growth or expansion.

    Steps to register a Public Limited Company:

    To register an S.A. in Spain, you need to follow similar steps to registering an S.L., but with higher minimum share capital (60,000 euros) and additional requirements, such as appointing an auditor.

    • Draft and sign articles of association
    • Deposit share capital in a bank account
    • Register with the Commercial Registry
    • Obtain a tax identification number (NIF)
    • Obtain any necessary licenses or permits

    5. Cooperative

    A cooperative business structure is a type of firm held and governed by the people who utilise its assistance or work for the company. The main objective of a cooperative is to promote the economic and social well-being of its members through the provision of goods and services.

    To set up a cooperative in Spain, a minimum of three people is required to draft and sign the company’s articles of association. The articles should be enlisted with the Commercial Registry. The cooperative must also obtain a tax identification number and register with the Spanish tax authorities.

    One of the main benefits of a cooperative is that it allows members to pool their resources and expertise to achieve common goals. Members are also able to benefit from shared resources and economies of scale, which can result in lower costs and higher-quality products or services.

    Additionally, cooperatives promote a sense of community and solidarity among members, as they share a common interest in the success of the company. Cooperatives are a popular choice for groups of individuals in Spain who want to come together to achieve a common goal or provide a specific service.

    Steps to register a Sociedad Cooperative

    To register a sociedad cooperative in Spain, you need to draw up the cooperative’s bylaws, which should signify the cooperative’s investment, partners, management structure, and other distinct data.

    • Draft and sign cooperative bylaws
    • Deposit the minimum share capital or contribution fund
    • Obtain a tax identification number (NIF)
    • Obtain approval from the regional government

    6. Limited Partnership

    A limited partnership (Sociedad Comanditaria) is a type of business structure in Spain where the company is composed of two types of partners: general partners and limited partners.

    The general partner is responsible for managing the company and is personally liable for the company’s debts and obligations, while the limited partner contributes capital to the company but has limited liability for the company’s debts and obligations.

    To set up a limited partnership in Spain, a minimum of two partners are required: one general partner and the other a limited partner. The company must have a name that includes the term “Sociedad Comanditaria” or its abbreviation “S.C.”.

    One of the major benefits of a limited partnership is the restricted liability security applied to the limited partners. This makes it an attractive option for investors who want to contribute capital to a company but do not want to be involved in its day-to-day management. The general partner also benefits from the additional capital contributed by the limited partner, which can be used to grow the company.

    Steps to register a Limited Partnership

    To register a Sociedad Comanditaria Simple in Spain, you need to draw up a partnership agreement that specifies the terms and conditions of the partnership, including the contributions of each partner, the distribution of profits and losses, and the management structure.

    • The agreement must be notarized and filed with the Mercantile Registry.
    • Additional required documents such as identification documents, and tax certificates.
    • Proof of payment of registration fees.

    7. Limited Partnership with Shares

    A limited partnership with shares (Sociedad Comanditaria por Acciones) is a type of business structure in Spain that combines the characteristics of a limited partnership and a public limited company.

    To set up a limited partnership with shares in Spain, the company must have a name that includes the term “Sociedad Comanditaria por Acciones” or its abbreviation “S.C.A.”. The company’s articles of association must be drafted and signed by all partners and later enlisted with the Commercial Registry.

    The firm should get a tax identification number and register with the Spanish tax authorities. The general partners are responsible for managing the company, while the limited partners hold shares in the company but do not have a say in the company’s management.

    Overall, a limited partnership with shares can be a useful option for those looking to start a business in Spain, especially when there is a need for additional capital and flexibility in profit and loss sharing.

    Step to register a Limited Partnership with Shares

    • To register a Sociedad Comanditaria por Acciones in Spain, you need to follow similar steps to registering an S.A., but with additional provisions for the limited partners.
    • The registration process is completed by notarizing the bylaws. 
    • Filing them with the Mercantile Registry.

    8. Economic Interest Grouping

    Economic interest grouping (Agrupación de Interés Económico or AIE) is a type of business structure in Spain that allows two or more companies to collaborate on a common project or business activity.

    The primary purpose of an AIE is to facilitate the pooling of resources, knowledge, and expertise between companies to achieve common goals. To establish an AIE in Spain, two or more companies must sign a contract that outlines the goals and objectives of the grouping, as well as the resources and responsibilities of each member company.

    The contract must be registered with the Spanish Commercial Registry, and the AIE must obtain a tax identification number and register with the Spanish tax authorities. Additionally, an AIE allows member companies to benefit from each other’s expertise and knowledge, improving the overall quality of the project or business activity.

    One of the main benefits of an AIE is that it allows member companies to share risks and costs associated with a project or business activity while maintaining their own legal and fiscal identity. This allows the member companies to take on larger projects and achieve economies of scale that are impossible individually.

    Steps to register an Economic Interest Grouping

    • Draft the Articles of Association (Estatutos) which should include information about the company’s name, purpose, and other relevant details.
    • Enlist with the AIE with the Central Mercantile Register.
    • Obtain a tax identification number (NIF) for the AIE.

    9. European Company

    The European Company, also known as Societas Europaea (SE), is a type of business structure available in Spain and other European Union member states. It is designed for companies operating in multiple countries within the EU, providing them with a common legal framework that facilitates cross-border operations.

    To establish an SE in Spain, a corporation must first establish a holding firm in the form of a PLC (SA) or a private limited company (SL). The holding firm must then draft the SE’s articles of association, which need to be authorized by the company’s stakeholders and enlisted with the Spanish Commercial Registry.

    One of the primary benefits of an SE is that it allows companies to operate across multiple countries within the EU while maintaining a unified legal framework. This can be particularly beneficial for companies that operate in multiple EU countries and want to streamline their legal and administrative processes.

    Steps to register European Company

    • Register the SE with the corresponding authorities in the country of origin.
    • Notify the Spanish Commercial Register (Registro Mercantil) of the intention to establish an SE in Spain and provide the necessary documentation.
    • Register the SE with the Spanish Commercial Register.
    • Obtain a tax identification number (NIF) for the SE.

    10. Branch Office

    A branch office is a type of business structure that allows a foreign company to establish a presence in Spain without having to incorporate a new legal entity. Instead, the branch office is considered an extension of the parent company, which means that the parent company remains liable for the branch’s activities.

    To establish a branch office in Spain, the foreign company must first register with the Spanish Commercial Registry and obtain a tax identification number (NIF). The company must also appoint a legal representative in Spain who will be responsible for managing the branch’s affairs.

    One of the primary benefits of a branch office is that it allows foreign companies to establish a presence in Spain without having to go through the process of incorporating a new legal entity. This can be particularly useful for companies that only plan to operate in Spain for a short period or want to test the market before establishing a more permanent presence.

    Another benefit of a branch office is that it allows the parent company to maintain greater control over the branch’s operations since the branch is considered an extension of the parent company rather than a separate legal entity.

    Step to register a Branch Office

    • Choose a unique name for the branch office.
    • Obtain a certificate of registration for the parent company.
    • Execute the articles of association in the vigilance of a public notary.
    • Enlist the branch office with the Central Mercantile Register.
    • Apply for a tax identification number (NIF) for the branch office.

    Conclusion

    Setting up a company in Spain can be a great investment opportunity, as it provides access to a large and diverse market, a skilled workforce, and favourable tax policies. Foreigners can also own and operate a company in Spain, but they must comply with the country’s legal and regulatory requirements.

    In choosing types of companies and business structures in Spain, it is essential to consider the legal, financial, and operational implications. Therefore, seek professional advice and guidance from Odint Consultancy to help you choose the types of corporations in Spain. Contact us today.

    FAQ’s

    The most common business type in Spain is the limited liability company (SL or SRL), which offers a good balance between ease of formation and legal protection for business owners.

    Yes, foreigners can own and operate any type of Spanish company. However, they may need to comply with certain legal and regulatory requirements.

    Some of the main benefits of setting up a company in Spain include access to a large and diverse market, a well-educated workforce, favourable tax policies, and a streamlined business registration process.

    The minimum investment required to start a company in Spain varies depending on the business structure, but it can range from €3,000 for a sole proprietorship to €60,000 for a public limited company.

    Yes, it is possible to establish a firm in Spain remotely. However, you will need to appoint a representative in Spain to handle certain legal and administrative tasks.

    The best business types in Spain for a small business depend on a variety of factors, including the number of owners, the level of liability protection needed, and the amount of capital available. A sole proprietorship or an LLC may be a good option for small businesses.