Are you an entrepreneur looking to expand your business into the Spanish market? Starting an LLC in Spain can be a strategic move to tap into a new customer base and grow your international presence. In this comprehensive guide, you’ll discover the step-by-step process to start your LLC in Spain, from choosing the right business structure to navigating the legal and tax requirements. By the end of this post, you’ll have the knowledge and confidence to successfully launch your LLC in Spain and take your business to new heights.
What is an LLC in Spain?
In Spain, a Limited Liability Company (LLC), known as a “Sociedad de Responsabilidad Limitada” (SRL or SL), is a popular business structure designed to protect its owners’ personal assets from business liabilities. It is particularly favored by small and medium-sized enterprises (SMEs) due to its flexibility, limited liability protection, and relatively straightforward formation process.
How to Start an LLC in Spain?
The following steps to start an LLC in Spain are:
1. Choose a Company Name
- Conduct a Name Search: Check the availability of your desired company name with the Central Commercial Registry (Registro Mercantil Central, RMC).
- Reserve the Name: Once approved, reserve the name to ensure it is protected during the registration process. This reservation is valid for six months.
2. Prepare the Articles of Association
- Drafting the Document: Create the Articles of Association (Estatutos Sociales), outlining the company’s structure, purpose, and operating rules.
- Legalization: The Articles must be notarized by a Spanish notary.
3. Obtain a Tax Identification Number (NIF)
- For Shareholders: Obtain a Foreigner’s Identification Number (NIE) for all foreign shareholders, which is required for tax purposes.
- For the Company: Apply for a provisional tax identification number (NIF) from the Tax Agency (Agencia Tributaria).
4. Open a Bank Account and Deposit Capital
- Capital Requirement: Deposit the minimum share capital (€3,000) in a Spanish bank account.
- Bank Certificate: Obtain a certificate from the bank confirming the deposit.
5. Notarize the Deed of Incorporation
- Execution: Sign the Deed of Incorporation (Escritura de Constitución) before a notary. This document includes the Articles of Association, details of the shareholders, and proof of capital deposit.
- Registration Fee: Pay the notary fees, which vary depending on the notary and the complexity of the documentation.
6. Register with the Commercial Registry
- Submit Documentation: File the notarized Deed of Incorporation with the Provincial Commercial Registry (Registro Mercantil Provincial).
- Official Registration: Once approved, the company is officially registered, and the company’s details are published in the Official Gazette (Boletín Oficial del Registro Mercantil, BORME).
7. Obtain the Final Tax Identification Number (NIF)
- Confirmation: After registration, apply for the definitive NIF from the Tax Agency, converting the provisional NIF into a permanent one.
8. Register for Social Security
- Employer Registration: Register the company with the Spanish Social Security system (Tesorería General de la Seguridad Social, TGSS) as an employer.
- Employee Registration: Enroll any employees with the Social Security system and ensure compliance with labor laws.
Benefits for Starting a Limited Liability Company in Spain
Some of the benefits for starting a limited liability company in Spain includes:
1. Limited Liability Protection
- Personal Asset Protection: Shareholders’ liability is limited to their capital contributions, safeguarding personal assets from business debts and liabilities.
2. Flexibility in Management
- Management Structure: SLs offer flexibility in management structures, allowing for either a single director or a board of directors.
- Operational Control: Shareholders can retain significant control over business operations and decision-making processes.
3. Minimum Capital Requirement
- Affordable Capital: The minimum required share capital is €3,000, which is relatively low compared to other European countries, making it accessible for small businesses and startups.
4. Tax Advantages
- Corporate Tax Rate: The standard corporate tax rate in Spain is 25%, which is competitive within the European Union.
- Incentives and Deductions: Spain offers various tax incentives and deductions for certain types of investments and business activities, particularly in innovation, research and development (R&D), and job creation.
5. Legal and Regulatory Benefits
- Streamlined Incorporation Process: The process for setting up an SL is straightforward and well-documented, making it easier for foreign investors to navigate.
- Established Legal Framework: Spain has a robust legal framework that provides clear guidelines and protections for businesses.
6. Access to the European Market
- Strategic Location: Spain’s geographic location offers access to both European and North African markets, making it a strategic base for international trade.
- EU Membership: As a member of the European Union, businesses in Spain benefit from free movement of goods, services, capital, and labor across member states.
Documents Required to Register a Spanish LLC
Documents required to register a limited liability company in Spain includes:
- Deed of Incorporation
- Business Plan
- Company Bylaws
- Articles of Association
- Shareholder Agreement
- Proof of Share Capital Deposit
- Shareholder Identification
- Tax Identification Number (NIF)
- Notarized Signatures
How Much Does it Cost to Setup an LLC in Spain
The most popular type of business structure in Spain is a sociedad limitada (S.L.), or limited liability corporation. To form a limited liability company in Spain, you’ll need a minimum share capital of €3,000, plus an additional €1,500 – €2,000 for certificates, notary costs, legal expenses, and trademarks.
Frequently Asked Questions
What is the timeline for starting a limited liability company in Spain?
The time it takes to start an LLC in Spain can vary depending on certain factors. If investors are physically present in Spain during the incorporation process, it can be done in about five days. However, if investors are outside of Spain and need legal representation through a power of attorney, it may take up to two weeks. In general, the whole process of opening an LLC in Spain can take anywhere from 72 hours for the provisional Tax Identification Number (NIF) to around three weeks for the formal registration in the Mercantile Registry. It’s a good idea to consult with legal professionals to navigate the process smoothly and ensure the company is established in a timely manner.
What is a taxation structure for an LLC in Spain?
The tax system for a Limited Liability Company (LLC) in Spain is known for its corporate tax rate that promotes the growth of businesses, especially startups. When new companies start making profits, they enjoy a reduced corporate tax rate of 15% for the first two years. After this initial period, the tax rate becomes 25%, which is the general rate. It’s worth mentioning that this tax policy is applied uniformly throughout Spain, except for the autonomous cities of Ceuta and Melilla and the Canary Islands, which have their own unique tax systems. This fiscal strategy aims to stimulate entrepreneurship and encourage investment in the Spanish economy.
How OnDemand International helped you in setting up your LLC in Spain?
At OnDemand International, we are here to guide you and provide comprehensive support in navigating the complexities of setting up a Limited Liability Company (LLC) in Spain. Our team of experienced lawyers and economists specializes in offering personalized legal, tax, and accounting advice that is tailored to the specific needs of our international clients. What sets us apart from our competitors is our innovative approach and our commitment to truly understanding each client’s business, ensuring a smooth and seamless incorporation process. From the initial consultation all the way to the successful registration of your LLC, We take care of every legal and fiscal aspect with meticulous attention, allowing you to focus on growing your business with confidence. Our dedication to expertise, efficiency, and client satisfaction makes us the perfect partner for establishing your LLC in Spain.