Incorporate a company in Spain: What you need to know! 💼🇪🇸
May foreigners come to us with lots of questions about how to incorporate a company in Spain. When it comes to the incorporation of a company in a foreign country, you might feel a bit overwhelmed. There are a lot of formalities to keep in mind, but don’t worry because we’re here to make it easy.
Our goal is to give you a summary of what you need to start your business in Spain.
👉 The essential
– 1️⃣ First of all, NIE Number
In case you are new to Spain, you must obtain your Foreigner’s Identification Number (NIE). See our post on How to Obtain your NIE.
– 🔍 The company name
The company name is the name you give to a company, which makes it unique with respect to other companies. It is the name that appears in any type of official documentation (such as public deeds). The company name is what legally identifies a company before public administrations, customers, and suppliers.
This concept should not be confused with the trademark and trade name of a company.
You can do this procedure remotely at the Central Mercantile Register, and usually takes about 24 hrs to obtain a response.
– Share capital 💰💰 (EDITED OCTOBER 2022)
The share capital of a company is the minimum capital that a company must have in order to be incorporated. The minimum share capital will depend on the legal form that you choose.
- LLC (Sociedad Limitada). A limited liability company usually requires an initial capital of 3,000 euros. In this case, you have to pay up 100% of the share capital. Since the recent amendment to the Companies Act, through Law 18/2022 the minimum share capital for incorporation is € 1.*
*The recent amendment to the Companies Act through Law 18/2022 of September 28, on the establishment and growth of companies, which, among other things, approves the incorporation of limited liability companies with a minimum capital of 1 euro. For this purpose, the following must be complied with: Companies with a share capital of less than 3,000 euros, in order to safeguard the interest of creditors, (i) the endowment of a legal reserve of at least 20% of the profit until the amount of the legal reserve and the share capital reaches the amount of 3,000 euros, and (ii) the joint and several liability of the shareholders with the company, up to the difference between the amount of 3,000 euros and the figure of the undersigned share capital if, in the event of liquidation, the company’s assets would be insufficient to meet the payment of the corporate obligations.
- Corporation (Sociedad Anónima). A public limited company requires a minimum capital of 60,000 euros, of which a minimum of 25% of the total must be paid up.
Once you have decided the amount that you will to contribute as social capital, you will have two possibilities:
- Monetary contribution. In this case, the shareholders must open a corporate bank account for the company (in formation) and deposit the agreed amount as share capital. Each shareholder must deposit the amount equal to their participation in the company.
The bank will issue a certificate of the account where it appears both the details of the shareholder(s) and the contribution that has been made to the company’s account. You’ll need to present this certificate to the Notary at a later stage.
- Contribution in kind. The law provides the alternative of allocating assets with a monetary value to the share capital, however, this is not frequent in practice as it may entail problems afterwards (due to the depreciation of the assets, for example).
– Drafting up the Bylaws 📑
The Articles of Association or Bylaws will regulate the company’s organization.
They must contain the following:
- The name of the company;
- The corporate purpose, describing the activities that will be carried out;
- The registered address of the company;
- The share capital, the participations or shares into which it is divided, their nominal value and their correlative numbering;
- The method or methods of organizing the administration of the company, the number of directors or, at least, the maximum and minimum number, as well as the term of office and the system of remuneration, if any; and
- The manner of deliberation and adoption of resolutions by the company’s collegiate bodies.
👉 Incorporate a company, the process.
– Signing of the deed of incorporation ✍️
All the founding shareholders, either by themselves or through a representative, must execute the Deed of incorporation before a Notary Public.
The Deed of incorporation of any capital company shall include at least the following information:
- The identity of the shareholder(s);
- The will to constitute a capital company, with the choice of a specific type of company;
- The shareholder(s)’ contribution(s), and the numbering of the participations or shares attributed in exchange;
- The articles of association (bylaws) of the company;
- The identity of the person or persons who are initially responsible for the administration and representation of the company.
– Paying the Stamp Duty Tax at the Tax Office 🧾
Currently, the incorporation of companies is exempt from payment of the Transfer Tax and Stamp Duty (ITP/AJD). However, it is necessary to obtain proof of the Tax (Form 600) from the relevant Autonomous Community.
– Registration and publication of the deed in the Mercantile Register 📰
Once you have signed the Deed, you will have to submit it to the Mercantile Registry for registration, within two months from the date of execution. Founding shareholders will be jointly and severally liable for any damages caused by failure to comply with this obligation.
Upon registration, the company will acquire the legal personality corresponding to the type of company chosen. Failure to submit the documents for registration after 1 year, will constitute a reason for the dissolution of the company.
In our next post, we’ll inform you of what you’ll need to start the company’s activity.
Feel free to leave your comments / question below! 👇👇
Also, don’t forget to see our Corporate services section.
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