Setting up a Company in Spain - the Most Important Information for Entrepreneurs
Like Poland, Spain offers the opportunity to establish different types of companies depending on entrepreneurial needs and preferences. Without a doubt, Spain is an attractive option for those looking to expand into international waters.
Eight steps to setting up a company in Spain:
1. Legal Form of the Company
The most common form chosen is the Limited Liability Company. It allows you to operate a business with limited liability for its debts.
2. Company Name
When choosing a company name, it is worth betting on originality. In addition, you should ensure that the name is easy to remember, write down and pronounce. Before registering the company, you should check whether the name is available at the National Business Register (Registro Mercantil Central) or the municipal office (Ayuntamiento).
And when it comes to choosing a name for your company - in my opinion, it's worth having a few aces up your sleeve - ideally four to five!
Why?
To save yourself time and headaches caused by having a great idea ignored by superiors!
I experienced this first-hand when, after hours of intensive work to create the perfect name for my company, I had to throw three of my ideas into the virtual trash.
3. Company Agreement
The next step is to draw up a company agreement. This contract should include the name of the company, its purpose, the amount of share capital, the method of contribution, the personal details of all the founders and how the company will be managed.
Signing the articles of incorporation in the presence of a Spanish notary is a crucial point.
4. Bank Account
The company must have an account at a Spanish bank. To open a bank account, present the company registration documents, shareholders' IDs, and an N.I.E. number.
The company's capital must be deposited into the bank account. Its amount depends on the legal form of the company chosen. For example, the minimum share capital is €3,000 for a Company Ltd. (Sociedad de Responsabilidad Limitada, S.L.) and €60,000 for an S.A. (Sociedad Anónima).
5. Company Registration with the National Commercial Registry
Registering a company in Spain requires filling out a registration form and delivering it to the National Commercial Registry (Registro Mercantil).
The form must include the company's name, legal form, registered office address and shareholder information. Required documents for company registration include the original incorporation act, memorandum of association, confirmation of share capital payment, identity documents of the founders, and documents confirming the company's name reservation. Electronic registration is also possible. Upon registration in the commercial registry, the company becomes a legal entity.
6. Obtaining a NIF Number
Every company operating in Spain must obtain a tax identification number (NIF - the equivalent of the Polish NIP). To obtain a NIF, you must register with the Spanish tax authorities (Agencia Tributaria). When the shareholders are foreigners, they must first obtain an N.I.E. number (of which I wrote about in an earlier article, "Working in Spain for Poles without knowing Spanish (...)").
An N.I.E. number is also required for a foreign legal entity. In this case, the foreign company must provide a copy of the registry (for Poland - a copy of the KRS registry) and a certified Spanish translation.
7. Permits and Licenses
Certain business activities require special permits or licenses from local or national authorities. Before starting a business, check which permits and licenses your industry needs. These are obtained from the City Hall (Ayuntamiento).
8. Registration of Employees
If the company is hiring employees, they must be registered with the Spanish social security system (Seguridad Social). Likewise, it must comply with Spanish labour and wage laws.
Company incorporation procedures typically take six to eight weeks, and the cost varies depending on the chosen legal form.
The Most Common Spanish Company Types:
Limited Liability Company (Sociedad de Responsabilidad Limitada, S.L.) - Spain's most common form of company. It is a legal entity, with the liability of its owners limited to the amount of capital contributed.
Public Limited Company (Sociedad Anónima, S.A.) - another popular form of company in Spain. It is also a legal entity whose owners are liable only up to the amount of capital contributed. The owners are shareholders, and the company issues shares that can be sold on the stock market.
General Partnership (Sociedad colectiva) - it isn't a legal entity, and its owners are liable for the company's debts without limitation. Professionals, such as lawyers, doctors or architects usually establish it.
Limited Partnership (Sociedad Comanditaria) - this company has at least two owners, one of whom is liable only to the amount of capital contributed (limited partner), and the other is liable without limitation (general partner).
Single-Member Limited Liability Company (SRLU) - this is a limited liability company but with one owner. The owner is only liable for the amount of capital contributed.
When choosing the type of company in Spain, entrepreneurs should consider the level of owners' liability, the rules of management, the number of owners and the cost of registering and running the company.
Keep in mind that additional paperwork and documents may be required; this depends on the type of company and individual circumstances. Seek assistance from a lawyer or tax advisor to ensure the company is set up correctly and avoid legal ambiguities.
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