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Characteristics

GENERAL
Type of entity
Limited Liability Company (SL)
Joint-Stock Company (SA)
Type of law
Continental law
Shelf company availability
Yes
Our time to establish a new company
15 days
Migration of Domicile permitted
Yes
Corporate taxation
25 %
Minimum government fees
Not applicable
Double taxation treaty access
More than 90 countries
SHARE CAPITAL OR EQUIVALENT
Standard currency
EUR
Permitted currencies
Any
Minimum paid up
3,000 EUR
DIRECTORS OR MANAGERS
Minimum number
1 director
Local required
No
Corporate directors permitted
No
Publicly accessible records
Yes
Location of meetings
Anywhere
SHAREHOLDERS OR MEMBERS
Minimum number
1 shareholder
Publicly accessible records
Yes
Location of meetings
Anywhere
COMPANY SECRETARY
Required
No
Local or qualified
No
ACCOUNTS
Requirement to prepare
Yes
Audit requirements
Yes for large companies
Requirement to file accounts
Yes
Publicly accessible accounts
No
OTHERS
Language
Spanish
Thin capitalization Controlled foreign companies
Transfer pricing
Yes
Exchange control
No
Change in domicile permitted
Yes

INTEREST OF THE JURISDICTION

Advantages of a company in Spain

  • Prestigious European jurisdiction;
  • Stable and developing economy;
  • A relatively low corporate tax rate;
  • A large consumer market of the EU and close economic ties with the countries of Latin America and North Africa;
  • Simple procedure for registering a company.

Possible disadvantages of a company in Spain

  • A fairly high minimum paid up capital;
  • It is necessary to keep accounting and financial statements;
  • In some cases, a Spanish representative is required to set up a company.

Main info

Spain is a developed West European jurisdiction that attracts investors and businessmen around the world. Spain is an EU member, that gives many advantages for doing business. Given the historical past, Spain today has very close trade and business ties with the countries of Latin America.

This country is bordered by France, Portugal, Andorra, Morocco and Gibraltar. The country is located on the Pirine Peninsula and has an area of more than 500,700 km², and the population of Spain is 47 million people.

The Kingdom of Spain is a parliamentary monarchy, Spanish king is the head of the country. He represents the country in the international community. According to the Constitution, the legislative, executive and judicial branches are divided and independent in Spain. Legislative power is concentrated in the parliament, whose deputies are elected for 4 years. Parliament consists of Congress and the Senate. They are endowed with legislative power, have the functions of adopting the state budget, managing the work of the government, as well as other powers and duties belonging to them under the Constitution.

The government, headed by the Prime Minister, implements the executive power, directs domestic and foreign policy, civil and military administration and defense.

In Spain, decentralization is very developed, regions have broad rights to solve internal issues and problems.

Types of companies and incorporation procedure

Such forms of companies as Joint-Stock Company (SA – Sociedad Anónima) and Limited Liability Company (SL – Sociedad de Responsabilidad Limitada) are most often chosen for business purposes in Spain. Recently, so-called new companies (SLNE – Sociedad Limitada Nueva Empresa), which are a type of company with limitated liability are also created regularly.

Registration of a company is carried out by a notary who is provided with constituent documents.

01. Limited Liability Company

A Limited Liability Company is created most often, because for its creation statutory capital of only 3,000 EUR is needed. Its governing body is also the general meeting of shareholders. Just like SA, SL can have a director or several directors, but its board can consist of no more than 12 directors. Directors can be represented by individuals or legal entities.

Since Spain is a member state of the European Union, European companies and groups of European economic interests can be registered or established there or can transfer their place (registered office) to Spain from another member state.

02. Joint-Stock Company

A Joint Stock Company can be created by only one shareholder. The statutory capital of such a company consists of the contributions of its participants, and they bear responsibility only in the amount of their contributions. The minimum statutory capital is 60,000 EUR. The management bodies are the general meeting of shareholders, which is convened at least once a year for approval of financial statements and distribution of profits. The daily management of the company is carried out by the board of directors. Only SA may issue shares and sale them to the public.

03. Partnerships

The commercial code of Spain obliges to conduct an audit if within two consecutive financial years the company has satisfied at least two of the following three criteria:

  • The total balance is more than 2,850,000 EUR;
  • The annual turnover is more than 5,700,000 EUR;
  • The average number of employees exceeds 50.

Taxation

  • The Spanish tax system is attractive for investments and the creation of companies and holdings, the corporate tax rate here is not much lower than in other EU countries and is 25%.

    Spanish resident companies are taxed analogously to their worldwide income, non-residents only on income received from sources in Spain.

    Taxable income is calculated from accounting profit calculated in accordance with Spanish generally accepted accounting principles and increases or decreases based on tax adjustments determined by law.

    Capital gains are considered regular income and are taxed in the same way as the incomes of other enterprises.

    There is an exemption from participation, under which dividends are fully exempted if:

    – The recipient company owns at least 5% of the share capital of the distribution company, or its holding is valued at more than 20 million EUR; and
    – This holding existed for an uninterrupted period of at least one year.

    The same conditions for exemption apply to dividends with foreign sources, with the additional requirement that the foreign distribution company be taxed on income comparable to the Spanish corporate tax, without the possibility of release. Interest is subject to income tax of 19%.

    Partial exemption applies to royalties from the appropriation of qualifying intangible assets, subject to certain conditions, which include the following:

    – The assignor must have at least 25% of the cost of creating the asset;
    – The assignee should not be a resident of a tax haven and should use this asset for business purposes.

  • Outgoing dividends usually fall under the withholding tax by 19% unless a specific exemption, such as exemption from participation or a double tax treaty, is applied.

    Spain’s transfer-pricing rules generally follow OECD guidelines.

  • Spain has CFC rules, which apply to both resident companies and residents. The rules apply where:

    – A resident participant has, either alone or in conjunction with related parties, the direct or indirect ownership of more than 50% of the rights to shares or voting rights or in a subject controlled by foreign companies (CFCs);
    – CFC has basically passive income; and
    – CFC is located in a low-tax jurisdiction, by which is meant the one in which the effective income tax rate is less than 75% of the corporate tax that will be paid in Spain. Although in most cases these rules do not apply if the foreign person is in an EU member state.

    As a member state of the European Union, Spain has a VAT regime similar to the EU VAT regime. Spain has three VAT rates. The standard rate is 21%, but there are also reduced rates of 10% and 4%.

Banking system and economy overview

After Spain’s accession to the European Union in 1986, Spain’s economic policy is largely oriented towards domestic European needs.

Today, Spain’s economy is built on market principles, most of the country’s income is based on trade and services market. Industry and agriculture are also well developed. An important role is played by the development of tourism, information and communication technologies. In the past few years, Spain has demonstrated high growth rates of the economy, and high export volumes contribute to GDP growth. Also of great importance is the favorable fiscal policy of the government, thanks to which the level of unemployment is reduced.

The banking system of Spain is distinguished by its stability and tradition. The main bank of the country – the Bank of Spain controls the activities of financial institutions and ensures the stability of the financial and banking sector. For their clients, Spanish banks provide reliable protection and confidentiality.

HOW TO
PROCEED

To incorporate or purchase a company the following documentation should be provided:

01

A completed application form signed by the company or by the representative

03

A personal bill, which is less than 3 months old from the date of the application

02

Copy of valid passport

04

Payment of our fees

Note: additional documents may be required depending on the certain offshore bank.

Set-up time: From the moment, we are in possession of all required documents:

3 days

Incorporation of
a company or purchase
of an existing company

15 days

Delivery of the original
company documents

3 weeks

Offshore Bank: offshore
bank account opening