Companies in Spain: The Types of Business Entities for Companies in Spain
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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.
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)
- Comunidad de Bienes (C.B.)
- Partnership (Sociedad Civil)
- Public Limited Company, or Corporation (Sociedad Anónima or S.A.)
- Limited Liability Company (Sociedad de Responsabilidad Limitada, S.R.L., or S.L.)
- New Enterprise Limited Company (Sociedad Limitada Nueva Empresa)
- Worker-Owned Company (Sociedad Laboral)
- General Partnership (Sociedad Colectiva)
- Limited Partnership (Sociedad Comanditaria)
- Cooperative (Sociedad Cooperativa)
Note: The information contained here in “Companies in Spain: The Types of Business Entities for Companies in Spain” should not replace professional business, legal or financial advice. Savvy?
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 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).
Comunidad de Bienes (C.B.) in Spain
The Comunidad de Bienes is almost identical to the Spanish 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 Code), 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, or Sociedad Civil, in Spain 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, 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 register 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, or Sociedad Anónima, in Spain is highly structured and regulated, 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 Company Tax (Impuesto sobre Sociedades), currently at 30 to 35% for Sociedades Anónimas.
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 €60,101.21. You will also need to register with the Commercial Registry in Spain (Registro Mercantil), request a CIF (Código de Identificación Fiscal, Tax Identification Code), register to pay IAE tax (Impuesto de Actividades Económicas), register with Social Security (Seguridad Social) for you and workers if you plan to hire some and 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, or Sociedad de Responsabilidad Limitada, in Spain 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 Company 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 €3,005.06. You will also need to register with the Commercial Registry in Spain (Registro Mercantil), request a CIF (Código de Identificación Fiscal, Tax Identification Code), register to pay IAE tax (Impuesto de Actividades Económicas), register with Social Security (Seguridad Social) for you and workers if you plan to hire some and 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, or Sociedad Limitada Nueva Empresa, in Spain 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 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 €3,012 and €120,202 and must pay Company Tax (Impuesto sobre Sociedades), currently at 25 to 32.5% for this type of sociedad.
Consult with your comunidad autonóma and a legal advisor for further details.
…Continue reading PART 2 of
Companies in Spain: The Types of Business Entities for Companies in Spain, Business Structures in Spain
Last updated 30 01 2008
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.