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Companies in Spain: The Types of Business Entities for Creating Companies in Spain

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Companies in Spain: The Types of Business Entities for Creating Companies in Spain

The Sociedad Civil doesn’t actually need to become an "official" business except in certain cases...

Posted by Dreamer

Tagged: business in spain, business, businesses, negocios, business type spain, legal business structures spain, set up a business spain, business entity spain, formas de negocios, set up a corporation spain

Here you'll find general legal, financial, and set-up information on the ten types of business entities for companies in Spain.

The type of business entity you’ll need is an important consideration when starting a business in Spain. Each one has a different set of legal and fiscal responsibilities.

So without further ado, Spain offers the following business entity options for companies in Spain, which are also called legal business structures (formas jurídicas):

Sole Trader or Sole Proprietor (Empresario Individual or Autónomo) in Spain

The easiest and most common business entity to set up and get your Spanish company up and running is the Sole Trader (Empresario Individual) business. This business is legally considered one and the same with the person running it. For that reason, the business owner does not have to file any special tax forms come tax time (just the normal Impuesto sobre la Renta de las Personas Físicas or IRPF, which you should be filing anyway) and is responsible for all debts incurred by the company. There is no minimum financial investment to start a Sole Trader (Empresario Individual) business in Spain.

To become an Empresario Individual, you will need to: 1) register to pay IAE tax (Impuesto de Actividades Económicas), although as a small business in Spain you probably won’t be required to actually pay any, 2) file a declaration that you’re opening your business (Declaración Censal de Inicio de Actividad) and 3) register with Social Security (Seguridad Social).

Jointly Owned Company (Comunidad de Bienes or C.B.) in Spain

The Jointly Owned Business in Spain, or Comunidad de Bienes, is almost identical to the Sole Trader (Empresario Individual) business, except that the business is composed of more than one individual and these members share ownership of a common property or right to something. The members or owners of the Comunidad de Bienes are personally liable for debts, but there is no minimum financial investment and tax is reported on each individual’s IRPF tax form. 

To start a Comunidad de Bienes in Spain, you will need to: 1) create a partnership agreement for the business (contrato de constitución), 2) request a CIF (Código de Identificación Fiscal, Tax Identification Number), 3) register to pay IAE tax (Impuesto de Actividades Económicas) and 3) register with Social Security (Seguridad Social).

Partnership (Sociedad Civil) in Spain

The Partnership in Spain, or Sociedad Civil, is a business relationship formed by two or more people who contribute money, equipment and/or labor and divide the profits amongst themselves as they have agreed. Accordingly, any debts or financial obligations will also be divided amongst the parties. It’s good to keep in mind that anything not expressly agreed upon, either publicly or privately, will be governed by Spain’s Civil Code.

The Sociedad Civil doesn’t actually need to become an “official” business except in certain cases, like if one of the parties should contribute real estate, for example. For that reason, no minimum financial investment is required. However, if you do make the business “official”, the business name should include the words Sociedad Civil

An “official” Sociedad Civil in Spain must create a partnership agreement for the business (contrato de constitución) that is then signed before a notary, and be registered to pay IAE tax (Impuesto de Actividades Económicas), though in some cases the Sociedad Civil may not be required to pay it. Consult with your regional Spanish government (comunidad autonóma) and a legal advisor for further details on the obligations of starting a Sociedad Civil in Spain.

Public Limited Company or Corporation (Sociedad Anónima or S.A.) in Spain

As a stock company, the Public Limited Company in Spain, or Sociedad Anónima, is highly structured and regulated. Major decisions are decided by the majority and annual audits are required. This type of Spanish company is an autonomous legal entity and shareholders are not responsible for debts incurred by the company. All sociedades, not just the Sociedad Anónima, must pay some form of Corporate Income Tax (Impuesto sobre Sociedades).

To start a Sociedad Anónima in Spain, you will need to draft and notarize the articles of incorporation and have a minimum available investment of €60,000. You will also need to register with the Commercial Registry in Spain (Registro Mercantil), request a CIF (Código de Identificación Fiscal, Tax Identification Number), register to pay IAE tax (Impuesto de Actividades Económicas), register with Social Security (Seguridad Social) for you and your workers if you plan to hire some, as well as fulfill other obligations, like obtaining a CNN (Certificación Negativa de Denominación), which proves that another sociedad is not already using the name you propose to use. Consult with your regional Spanish government (comunidad autonóma) and a legal advisor for further details on the obligations of starting a Sociedad Anónima.

Limited Liability Company (Sociedad de Responsabilidad Limitada, S.R.L., or S.L.) in Spain

The Limited Liability Company in Spain, or Sociedad de Responsabilidad Limitada, is another type of Spanish stock company. Like the Sociedad Anónima, the Sociedad de Responsabilidad Limitada is an autonomous legal entity and shareholders are not responsible for debts incurred by the company. All sociedades must pay Corporate Income Tax (Impuesto sobre Sociedades). Yet the Sociedad de Responsabilidad Limitada’s minimum required investment is considerably less than for a Sociedad Anónima. (There are also different reporting requirements for each type of sociedad.) In addition, a Sociedad de Responsabilidad Limitada’s shares cannot be traded on the stock exchange. 

To start a Sociedad de Responsabilidad Limitada in Spain, you will need to draft and notarize articles of incorporation and have a minimum available investment of €3,000. You will also need to register with the Commercial Registry in Spain (Registro Mercantil), request a CIF (Código de Identificación Fiscal, Tax Identification Number), register to pay IAE tax (Impuesto de Actividades Económicas), register with Social Security (Seguridad Social) for you and your workers if you plan to hire some, as well as fulfill other obligations. Consult with your comunidad autonóma and a legal advisor for further details.

New Enterprise Limited Company (Sociedad Limitada Nueva Empresa) in Spain

The New Enterprise Limited Company in Spain, or Sociedad Limitada Nueva Empresa, is considered to be a simplified form of the Limited Liability Company (Sociedad de Responsabilidad Limitada) and as such is an autonomous legal entity, but the Sociedad Limitada Nueva Empresa has its own set of requirements, including a set of particular naming requirements: the company name must include a registration number, one of the founders’ names and the words Sociedad Limitada Nueva Empresa or S.L.N.E. At the beginning, there may only be from one to five founders or shareholders, yet by transfer, the company may incorporate new shareholders as long as they are actual, physical people and not legal persons, i.e. other companies or corporations.

In addition, a Sociedad Limitada Nueva Empresa requires an available investment of between €3,000 and €120,000 and must pay Corporate Income Tax (Impuesto sobre Sociedades).

Consult with your comunidad autonóma and a legal advisor for further details.

There are two kinds of cooperatives.

The Worker-Owned Company (Sociedad Laboral) in Spain

The Worker-Owned Company in Spain, or Sociedad Laboral, is a special type of Public Limited Company (Sociedad Anónima) OR Limited Liability Company (Sociedad de Responsabilidad Limitada). The shares are held by A) workers, in this case the clase laboral, and B) those who do not work for the business, the clase general. Workers who directly contribute their labor to the business must own at least 51% of the shares. Workers who do NOT own shares must not work more than 15% of the total hours worked each year, or not more than 25% if the company has less than 25 workers with shares.

The Worker-Owned Company (Sociedad Laboral) is created and governed as either a Public Limited Company (Sociedad Anónima) or Limited Liability Company (Sociedad de Responsabilidad Limitada), but with a few exceptions. Before registering with the Commercial Registry in Spain (Registro Mercantil), the company must be registered at the Registro de Sociedades Laborales del Ministerio de Trabajo y Asuntos Sociales. According to its base entity type, the company’s name must also include Sociedad Anónima Laboral (or S.A.L.) or Sociedad de Responsabilidad Limitada Laboral (or S.L.L.).

General Partnership (Sociedad Colectiva) in Spain

The General Partnership in Spain, or Sociedad Colectiva, is a type of company that is personally managed and owned by the partners. This type of sociedad is singular though in that it is a separate legal entity or “person”, yet it is the partners who are personally liable for the company’s debts. The partners must abide by certain requirements, which include personally managing the company unless it is agreed to be delegated to someone else, and not competing with the company.

To start a Sociedad Colectiva in Spain, you will need to draft and notarize the articles of incorporation and register with the Commercial Registry in Spain (Registro Mercantil). The company’s name must include the name of at least one of the partners. In the case that not all of the partners’ names are used in the company name, the phrase “and Company” (y Compañía) must be used. Consult with your comunidad autonóma and a legal advisor for further details on the obligations of starting a Sociedad Colectiva in Spain.

Limited Partnership (Sociedad Comanditaria) in Spain

The Limited Partnership in Spain, or Sociedad Comanditaria, consists of two types of partners: general partners and limited liability partners. The general partners (socios colectivos) are, as in the case of the General Partnership (Sociedad Colectiva), personally liable for the company’s debts, but the limited liability partners (socios comanditarios), are not. The participation of limited liability partners may or may not be represented by shares. However, if there are no general partners, then at least one of the limited liability partners will be held personally responsible for the company’s debts. The obligations of the general partners are the same as for the General Partnership (Sociedad Colectiva), which include personally managing the company unless it is agreed to be delegated to someone else, and not competing with the company.

The creation of a Limited Partnership (Sociedad Comanditaria) is similar to that of a Public Limited Company (Sociedad Anónima) (see that section above for details), but the Sociedad Comanditaria has its own specific naming conventions. Consult with your comunidad autonóma and a legal advisor for further details on the obligations of starting a Sociedad Comanditaria.

Cooperative (Sociedad Cooperativa) Business Types in Spain

The Cooperative, or Sociedad Cooperativa, is designed for groups of people or companies in Spain to work together as a democratic block for common economic and/or social reasons, while operating with a profit motive. Some examples include producer cooperatives, trade cooperatives, consumer cooperatives and financial cooperatives. Unless stipulated otherwise, all cooperative members have the same rights.

There are two kinds of cooperatives: grade one and grade two cooperatives. Grade one cooperatives consist of at least three people and/or companies. Grade two cooperatives consist of two or more cooperatives.

The minimum required investment is established by the articles of association. As a sociedad, the Sociedad Cooperativa must pay Corporate Income Tax (Impuesto sobre Sociedades), yet it has certain tax advantages other sociedades don’t have. Consult your tax or financial advisor for details.

To create a Sociedad Cooperativa you will need to: 1) Request a Certificado de Denominación de la Sección Central del Registro de Cooperativas from the Cooperatives Registry (Registro de Cooperativas). Like the CNN for Public Limited Companies (Sociedades Anónimas), this is designed to prove that another sociedad is not already using the name you propose to use. 2) Draft and notarize the articles of incorporation. 3) Create a public deed for the Cooperative’s incorporation (Escritura Pública de Constitución). 4) Register with the Cooperatives Registry (Registro de Cooperativas). 5) Request a CIF (Código de Identificación Fiscal, Tax Identification Number).

The Cooperative will also be required to keep at least three types of official “accounting books”: the Libro Registro de Socios (a record of the Cooperative’s members), the Libro Registro de Aportaciones al Capital Social (a record of the financial contributions of each member) and the Libro de Actas de la Asamblea General (a record of the General Assembly’s minutes).

Consult with your regional Spanish government (comunidad autonóma) and a legal advisor for further details on the obligations of starting a Sociedad Cooperativa in Spain.

For details on how to put all this information into practice and start a business in Spain, see Start a Business in Spain and Business in Spain.

Last updated 07 03 2014

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Comments

If you'd like to ask a question for discussion, please mosey on over to the Spain Forum. See our posting rules and instructions here.

09/Dec/2010:
didong said:

May I know if non European shareholders or owners of limited liability company are granted work permit to operate the company in Spain?

I read some feedback stating that it is not a given to receive a work permit even though you are shareholder of a company in Spain. This takes me back to pursuing business in Spain.

Thanks.

 
29/Sep/2011:
rushmo said:

Hi

No, owners of an SL are not automatically granted a work permit in Spain. If you plan to open a business in Spain and would also like a work permit, you should pursue an investor's visa -- see http://www.strongabogados.com/investor-visa.php for more information.

Thank you

 
11/Feb/2012:
mdavidfrost said:

Hi,

Does anyone know what an S.A.U. company is? Could it be some kind pf wholly owned subsidiary of another company?

Thank you!

 
22/Feb/2012:
rushmo said:

Hi,

S.A.U. is Sociedad Anonima Unipersonal. The "unipersonal" means the owner is a single person (or company -- so yes, it can be a wholly owned subsidiary of another company).

For the differences between an S.A. and an S.L., see http://www.strongabogados.com/company.php#slsa

Thank you!

 

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