Setting up a company in Spain
Setting up a company in Spain
In recent years, Spain has been one of the Eurozone countries where the economy has grown above the average European index.
For many reasons, Barcelona and Madrid are two multicultural and world recognised cities which provide foreign investors with the confidence and tools needed to grow their businesses.
Whilst setting up a company in Spain should not be a complex activity, we recommend our clients seek independent legal advice .
Types of entity
Under current regulations, Spain offers two types of entity. You should choose the appropriate corporate structure depending on the size of your business as well as the industry the company operates in.
The most popular types of entities are the following:
Limited Liability Company -Sociedad de Responsabilidad Limitada- (S.r.l.);
Public Limited Company -Sociedad Anonima- (S.A.)
This table shows some of the main differences between these two structures:
Limited Liability Company
Sociedad de Responsabilidad Limitada- (S.r.l.)- The duration of the position of Director could be for the entire life of the entity
- The capital share is divided into shares. The minimum capital share will be € 3.005,06, and it should be paid in full prior the entity being incorporated.
- The shares can be transferred by way of public deed and the Notary Public’s interventions will be required. The general principle established is that the other shareholders will have privilege right to acquire the shares.
Public Limited Company
Sociedad Anonima (S.A.)- The duration of the position as Director could be for a maximum period of 6 years
- The minimum capital share will be equal to € 60.101,21. At least its 25% shall be paid and subscribed in full.
- The transfer of the shares will not require the intervention of a Notary Public, however other specific clauses could be stated within the Articles of Association
The Limited Liability Company -Sociedad de Responsabilidad Limitada- (S.r.l.) is the main type of structure chosen by Small and Medium Enterprises (SMEs).
Should the entity have a sole shareholder, the current regulation establishes that the corporate name should contain the acronym S.r.l.u., so that any third party interested in trading with the company is aware that there is one shareholder only.
Taxation
From January 2016, the rate of corporation tax applicable is equal to 25%. In some particular cases, such as for cooperatives or non-governmental organisations, the applicable rate will be lowered to 20% and 10% respectively.
Spanish VAT
Spanish VAT is a tax applied to transactions involving the transfer of goods or services, and the applicable rate is equal to 21%. In limited cases this rate is applied at a reduced proportion. For instance, for food and services such as transport of passengers, the applicable rate is equal to 10%. Furthermore a 4% rate is applied for basic products such as medicines, essentials, books, magazines and newspapers.
The Canary Islands’ tax regime
For several years, despite being part of Spain, the Canary Islands have had a special tax regime (REF).
In relation to the formalities to set up a company here, note that there is no difference compared to other cities on the mainland. There are, however, other aspects that should be considered related to VAT aspects. In fact, in the Canary Islands no VAT (21%) applies but, instead, there is another tax known as IGIC, with a current rate equal to 7%.
Furthermore, the Canary Islands also benefit from a special tax regime known as the Special Area (ZEC). This is a legal and authorised tax regime, approved by the European Union. This regime has been designed for the islands in order to attract investment and companies to the area. The regime has recently been extended by the Spanish Government and the EU until 2026.
CONTACT US
SERVICES
S.r.l. o S.r.l.u (Mainland) | |
The service is comprehensive of the following:
Time frame to incorporate the company is between 5 and 10 working days. |
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S.r.l. o S.r.l.u (Canary Island) | |
The service is comprehensive of the following:
Time frame to incorporate the company is between 5 and 10 working days. |
Bank account
Assistance with the bank account opening for the new company | |
Assistance with the bank account opening for an existing company | |
Assistance with the bank account opening for individuals |
Other services
VAT number application | |
Tax Code application for individuals | |
Registered office in Madrid | |
Set of documents legalised “Apostille” | |
Set of documents translated and legalised “Apostille” |
Should you require any other service not listed above, please do not hesitate to contact us.
* All above costs are subject to applicable taxes.