If you are thinking about doing business in Spain, there are a few tips from the legal corporate perspective.

Starting your business.

First, you have to think about the way to operate in Spain, you can operate as a Sole Trader or through a Corporate Enterprise.

The main difference between the two is the liability, as a sole trader you have personal liability for the business’s debts and as a partner or shareholder of a Corporate Enterprise you will not be held personally liable for company debt.

Also, the Corporate Enterprise company has its own legal personality, contrary to the branch or representative office who doesn’t have a separate legal personality and consequently their partners will be liable for their obligations and debts.

Corporate Enterprise.

The most common Corporate Enterprises in Spain are:

  • Limited Liability Company, Sociedade Limitada (S.L.)
  • Join Stock Company, Sociedad Anonima (S.A.)

The difference between the two is mainly:

  • Share restrictions, an SL is traditionally a closed company therefore it has restrictions on free transfer of shares unlike the open character of an SA.
  • The cost, an SL is cheaper than an SA, for example:
    • Minimum Capital: 3.000 € (SL) against 60.000 € (SA)
    • Valuation of non-cash contribution: an SA needs a valuation report from Expert.
  • Versatility, the legal regulation is more versatile in an SL than in an SA.
  • Stock Market, only an SA can be listed.

There are more differences but these are a few of most relevant examples.

Legal Steps to build a Corporate Enterprise.

  • Claim a provisional Spanish Tax Identification Number (NIF).
  • Claim the Name Clearance Certificate issued by the Central Commercial Registry.
  • Obtain a Bank Certificate with the Minimum Capital contribution, 3.000 € (SL), 60.000 € (SA)
  • Redact By-Law executed by a Notary Public.
  • Obtain the notarial deed of incorporation.
  • Register the deed of incorporation and by-law in the Commercial Registry.
  • Claim the permanent Spanish Tax Identification Number (NIF).

 

There are other ways to invest in Spain such as different Joint Venture agreement, or through a franchise, agency or distribution relationship with a third party established in Spain. We will talk about them in a new article.

I hope this basic information can help you understand a little more about doing business in Spain.