Types of Companies in Spain: the Different Business Structures
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Types of Companies in Spain: the Different Business Structures

The different types of business entities in Spain: characteristics, requirements and which to choose for your company

In Spain, the landscape of business entities is both diverse and complex, offering numerous options for foreign entrepreneurs. Choosing the right business structure is a critical decision that can significantly impact your venture’s success: this article provides a comprehensive overview of the various types of companies in Spain, to guide you in making an informed choice.

Entrepreneurs discussing types of company in Spain at a business meeting

Business structures in Spain: how are they classified?

The myriad of company types available in Spain presents a kaleidoscope of opportunities for entrepreneurs, but selecting the right one is a nuanced task that necessitates an understanding of each business structure’s distinct characteristics.

In this article we will help you navigate these options, guiding you through the essential considerations and information pertinent to each business structure in Spain, allowing you to make the right choice, tailored to your needs. Before delving into the characteristics of each business structure in Spain, however, it is important to know how there are two main categories of companies in the Spanish business ecosystem: individual companies and corporate companies.

This classification serves as the cornerstone for understanding the different business entities in Spain available to both domestic and foreign entrepreneurs. Individual companies are generally operated by a single person and are closely tied to the owner’s personal finances. On the other hand, corporate companies exist as separate legal entities, providing a layer of protection between the business and its owners. We will now delve into the intricacies of each category, offering valuable insights to guide your decision-making process.

Individual companies

Individual companies in Spain are business structures that are solely operated by a single individual, without the existence of a separate legal entity. These types of companies are relatively straightforward to establish and offer the owner complete control over the business operations. However, this comes at the cost of personal liability, as the owner is directly responsible for all debts and obligations of the business. In contrast, corporate companies are distinct legal entities, providing a separation between the business’s assets and liabilities and those of its owners. This key difference often makes individual companies more suitable for smaller operations, while corporate structures are generally preferred for larger, more complex ventures.

Corporate companies

Corporate companies in Spain exist as separate legal entities, distinct from the individuals who own or manage them. This structure offers a significant advantage in terms of limiting the personal liability of shareholders, as the corporate entity itself is responsible for debts and obligations. Unlike individual companies, where the owner’s personal assets are at risk, corporate structures provide a protective layer that shields the personal finances of its members. Additionally, corporate companies often have more complex governance and regulatory requirements, including mandatory audits and reporting. These characteristics make corporate entities more suitable for larger, more complex business operations that may involve multiple shareholders and substantial financial transactions.

What are the different types of companies in Spain?

The array of business structures available in Spain is extensive, each with its unique set of characteristics and legal implications. To provide a comprehensive understanding, this article will dissect the various types of companies one can establish in Spain. For each type, we will delve into key aspects such as liability, initial capital requirements, the number of shareholders involved, company naming conventions, taxation, and the steps involved in setting up that particular type of company. This structured approach aims to offer a detailed yet concise overview, equipping you with the essential knowledge to make an informed decision and choose the right business structure for your company in Spain.

Navigating the intricate terrain of establishing a company in Spain as a foreigner can be daunting due to the complex legal frameworks and processes involved. Our dedicated team of seasoned lawyers is here to demystify these complexities, providing comprehensive support and guidance to ensure a seamless entrepreneurial journey in Spain.

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Business professionals exploring different company structures in Spain

Sole trader or sole proprietor (autónomo)

The Sole Trader, also known as Autónomo, is a business structure that in Spain is ideal for individuals who wish to operate independently. This form of business entity is particularly popular among freelancers, consultants, and small business owners in Spain. It offers a straightforward way to start a business, but it comes with personal liability for business debts.

  • Liability: In the Autónomo structure, the individual is personally liable for all business debts and obligations, meaning that personal assets can be seized to cover business liabilities.
  • Initial Capital: There is no minimum initial capital requirement for starting as an Autónomo, making it an accessible option for many entrepreneurs.
  • Number of Shareholders: This business structure is designed for individual entrepreneurs; therefore, there are no shareholders.
  • Company Name: Autónomos generally operate under their own name, although they can also register a trade name if they prefer.
  • Taxation: Autónomos are subject to personal income tax (IRPF) and are required to charge Value Added Tax (IVA) on their invoices. They must also make social security contributions.
  • How to Set Up an Autónomo: The process is relatively simple and involves registering with the Spanish Tax Agency (Agencia Tributaria) and the Social Security System (Seguridad Social). Subsequently, you’ll need to obtain a Tax Identification Number (NIF) and complete the necessary tax and social security forms.

Limited Liability Company or SL (Sociedad Limitada)

The Sociedad Limitada (SL) in Spain is one of the most prevalent corporate structures, particularly suitable for small to medium-sized enterprises. This entity provides the benefit of limited liability, ensuring that shareholders’ personal assets remain separate from business debts.

  • Liability: Shareholders are only liable up to the extent of their capital contributions, offering a layer of financial protection for personal assets.
  • Initial Capital: A minimum initial capital of €3,000 is required, which must be fully subscribed and paid upon incorporation.
  • Number of Shareholders: An SL can be established with just one shareholder or multiple shareholders, offering flexibility to meet diverse business requirements.
  • Company Name: The chosen name must be unique and is subject to approval by the Mercantile Registry. It should also include the abbreviation “SL” to signify its legal structure.
  • Taxation: The standard corporate income tax rate for SLs is 25%. However, during the first two years in which the company generates profits, a reduced rate of 15% may apply under certain conditions. It’s worth noting that corporate taxation is uniform across Spain, managed by a single Tax Agency. The only exceptions are the special zones: the Canary Islands’ ZEC Zone, and the autonomous cities of Ceuta and Melilla in North Africa, which have different tax regimes.
  • How to Set Up an SL: The formation process includes drafting the Articles of Association, acquiring a Tax Identification Number (NIF), and registering with the Mercantile Registry. Additional steps may involve opening a dedicated company bank account and meeting other regulatory obligations.

The SL structure is frequently recommended for its adaptability and the limited liability it offers, making it an attractive option for both domestic and international investors seeking to establish a business in Spain.

Newly Created Limited Liability Company (Sociedad Limitada Nueva Empresa)

The Sociedad Limitada Nueva Empresa (SLNE) is a special type of limited liability company designed to expedite the incorporation process for new businesses. However, it’s worth noting that this structure is often considered a “low-cost” version of the standard SL and may not be suitable for all investors. It is generally recommended for small startup projects, although, in our opinion, even startups should aim for excellence in their choice of business structure (read our guide to the new spanish Startup Law).

  • Liability: Like the standard SL, the liability of shareholders is limited to their capital contribution.
  • Initial Capital: A minimum initial capital of €3,000 and a maximum of €120,000 is required.
  • Number of Shareholders: Between one and five shareholders can establish an SLNE.
  • Company Name: A pre-approved name is assigned from a list provided by the Mercantile Registry.
  • Taxation: Subject to corporate income tax, with potential for certain tax incentives for new businesses.
  • Administrative Structure: In an SLNE, all administrators must be partners in the company, and the existence of a board of directors is not contemplated. This is in contrast to SLs, where a board is mandatory and administrators need not be partners.
  • Capital Contributions: Contributions to the share capital can only be monetary, unlike in SLs where both monetary and in-kind contributions are accepted.
  • How to Set Up an SLNE: The process is streamlined and involves fewer bureaucratic steps compared to a standard SL, including a simplified registration process with the Mercantile Registry and the Tax Agency.

Read our guide on hiring employees in Spain

Stock Corporation (Sociedad Anónima, SA)

The Sociedad Anónima (SA) in Spain is a form of corporate structure that is generally suitable for large businesses or those planning to go public. This entity type offers the advantage of being able to raise capital through the issuance of shares, which can be publicly traded if the company is listed on a stock exchange.

  • Liability: Shareholders’ liability is limited to their investment in the company, offering a level of protection for personal assets.
  • Initial Capital: A substantial initial capital requirement of €60,000 is necessary for the formation of an SA, of which at least 25% must be paid up at the time of incorporation.
  • Number of Shareholders: An SA can be established with a minimum of one shareholder, but it is generally more common for these types of companies to have multiple shareholders.
  • Company Name: The name of the SA must be unique and is subject to approval by the Mercantile Registry. It must also include the abbreviation “SA” to indicate its legal form.
  • Taxation: Similar to SLs, SAs are subject to a corporate income tax rate of 25%. The reduced rate of 15% may apply during the first two years of profitability under specific conditions. Corporate taxation is uniform across Spain, except for special zones like the Canary Islands’ ZEC Zone, and the autonomous cities of Ceuta and Melilla.
  • How to Set Up an SA: The incorporation process involves more complex requirements compared to an SL. This includes drafting the Articles of Association, obtaining a Tax Identification Number (NIF), registering with the Mercantile Registry, and potentially fulfilling additional obligations related to being a publicly-traded company if applicable.

The SA structure is often chosen by businesses that require significant capital investment or aim for a public listing, making it a strategic choice for large-scale operations and foreign investors with substantial financial backing.


Jointly Owned Company (Comunidad de Bienes, CB)

The Comunidad de Bienes (CB) is a simple business structure where two or more individuals jointly own a business without creating a separate legal entity.

  • Liability: All partners share unlimited liability for the business’s debts and obligations.
  • Initial Capital: No minimum initial capital is required.
  • Number of Shareholders: Requires at least two partners.
  • Company Name: The company can operate under a trade name or the names of the partners.
  • Taxation: Partners are individually subject to personal income tax on their share of the profits.
  • How to Set Up a CB: The process is relatively straightforward and involves drafting a partnership agreement and registering with the Tax Agency.

Partnership (Sociedad Civil)

The Sociedad Civil is a form of partnership where two or more individuals or entities come together to operate a business.

  • Liability: Partners are personally liable for the debts and obligations of the business.
  • Initial Capital: No minimum initial capital is required.
  • Number of Shareholders: Requires two or more partners.
  • Company Name: The company can operate under a trade name or the names of the partners.
  • Taxation: Partners are individually subject to personal income tax on their share of the profits.
  • How to Set Up a Sociedad Civil: The process involves drafting a partnership agreement and registering with the Tax Agency.

Workers’ Owned Company (Sociedad Limitada Laboral, SLL)

The Sociedad Limitada Laboral (SLL) is a special form of limited liability company where the majority of the capital is owned by the workers.

  • Liability: Liability is limited to the amount of capital contributed.
  • Initial Capital: A minimum initial capital is required, the amount of which varies.
  • Number of Shareholders: Requires a minimum of three worker-members.
  • Company Name: Must include the words “Sociedad Laboral” or the abbreviation “SLL.”
  • Taxation: Subject to corporate income tax.
  • How to Set Up an SLL: The process involves registering with the Mercantile Registry and obtaining approval from the labor authorities.

Cooperative (Sociedad Cooperativa, S. Coop)

A Cooperative is a business entity owned and operated by its members for mutual benefit.

  • Liability: Liability is generally limited to the amount of capital contributed.
  • Initial Capital: Varies depending on the type of cooperative.
  • Number of Shareholders: Requires a minimum of three members.
  • Company Name: Must include the word “Cooperativa” or the abbreviation “S. Coop.”
  • Taxation: Subject to specific cooperative taxation rules.
  • How to Set Up a Cooperative: The process involves registering with the Cooperative Registry and fulfilling specific operational requirements.

General Partnership (Sociedad Colectiva)

The Sociedad Colectiva is a business structure where all partners are personally and jointly liable for the debts and obligations of the company.

  • Liability: Partners are personally and jointly liable for the company’s debts.
  • Initial Capital: No minimum initial capital is required.
  • Number of Shareholders: Requires two or more partners.
  • Company Name: Can operate under a trade name or the names of the partners.
  • Taxation: Subject to corporate income tax.
  • How to Set Up a Sociedad Colectiva: The process involves drafting a partnership agreement and registering with the Mercantile Registry.

Limited Partnership (Sociedad Comanditaria)

In a Limited Partnership, there are two types of partners: general partners who manage the business and are personally liable, and limited partners who contribute capital and have limited liability.

  • Liability: General partners have unlimited liability, while limited partners have liability up to their capital contribution.
  • Initial Capital: No minimum initial capital is required.
  • Number of Shareholders: Requires at least one general partner and one limited partner.
  • Company Name: Must include the names of the general partners and the word “Comanditaria.”
  • Taxation: Subject to corporate income tax.
  • How to Set Up a Sociedad Comanditaria: The process involves drafting a partnership agreement and registering with the Mercantile Registry.

Branch Office (Sucursal)

A Branch Office, in Spain Sucursal, is not a separate legal entity but rather an extension of the parent company. It operates under the same name and business scope as the parent company and is fully controlled by it. Unlike a subsidiary, a branch office does not offer the advantage of limited liability, making the parent company fully responsible for its debts and obligations in Spain.

  • Liability: The parent company bears full liability for the actions, debts, and obligations of the branch office in Spain.
  • Initial Capital: There is no minimum initial capital requirement for establishing a branch office, although sufficient funds must be allocated for its operations.
  • Number of Shareholders: Not applicable, as the branch is an extension of the parent company.
  • Company Name: The branch office operates under the same name as the parent company.
  • Taxation: The branch is subject to corporate income tax on its net income derived from its activities in Spain. It is essential to note that the parent company is liable for its debts incurred in Spain.
  • How to set up a Branch Office in Spain: To establish a branch in Spain, one needs to register a public deed with the local Trade Register and appoint a legal representative residing in Spain.

This structure is often chosen for its ease of setup and operational flexibility but comes with the caveat of unlimited liability for the parent company. Therefore, it is crucial to weigh the benefits and drawbacks carefully before opting for this business structure in Spain.

Subsidiary

A Subsidiary is a distinct legal entity that is partially or wholly owned by another company, commonly referred to as the parent company. Unlike a branch office, a subsidiary operates independently and has its own legal personality, separate from the parent company. This structure offers the advantage of limited liability, thereby protecting the parent company from the subsidiary’s debts and obligations.

  • Liability: The parent company’s liability is limited to its investment in the subsidiary, offering a layer of financial protection.
  • Initial Capital: The initial capital requirements for a subsidiary depend on the type of corporate structure chosen, such as an SL or SA.
  • Number of Shareholders: A subsidiary can have one or multiple shareholders, including the parent company.
  • Company Name: The subsidiary operates under its own unique name, distinct from the parent company.
  • Taxation: A subsidiary is subject to the standard corporate income tax rate of 25% in Spain, with potential reductions under specific conditions. It is also subject to the same tax regulations as any other independent company in Spain.
  • How to Set Up a Subsidiary in Spain: The process for establishing a subsidiary involves selecting the appropriate corporate structure, drafting the Articles of Association, registering with the Mercantile Registry, and fulfilling other legal and regulatory requirements.

The subsidiary structure is often chosen for its operational independence and the limited liability it offers, making it a strategic choice for companies looking to expand their business activities into Spain while minimizing risk.

Representative office (Oficina de representacion)

The Representative Office, also known as the Liaison Office, serves as a non-independent legal extension of the parent company in Spain. It is primarily designed for market research and establishing business relationships rather than conducting commercial activities.

  • Liability: The parent company is fully responsible for the activities and debts of the Representative Office.
  • Initial Capital: No initial capital is required as it is not a separate legal entity.
  • Number of Shareholders: Not applicable, as it is an extension of the parent company.
  • Company Name: Must be the same as the parent company.
  • Taxation: The Representative Office itself is not subject to corporate taxes as it cannot engage in business activities. However, it must register for tax and employment and social security purposes.
  • How to Set Up a Representative Office: The establishment is generally done through a public deed signed in front of a Spanish public notary. However, it is also possible to set it up for specific projects without the intervention of a notary. Preliminary consultation is crucial to determine which form is most suitable for your needs.

This structure is ideal for companies looking to explore the Spanish market without committing to full-scale operations. However, it is essential to note that the Representative Office cannot engage in any form of economic activities, limiting its scope and functionalities.

team deliberating over the selection of company types in Spain

How Lawants Can Help

Navigating the complexities of Spanish corporate law can be a daunting task, especially for foreign investors unfamiliar with the local legal landscape. Lawants, S.L. offers specialized services to guide you through every step of the process, from choosing the right business structure to ensuring compliance with all regulatory requirements. Our team of experts is committed to delivering excellence, irrespective of the size or scope of your business venture.

Starting a business in Spain

As a leading law firm in Spain, with international, experienced and expert professionals, we understand how important it is for […]

Read More… from Starting a business in Spain

Find out more

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