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F company formation
In Spain, the two primary types of companies are the Sociedad de Responsabilidad Limitada (SL) and the Sociedad Anónima (SA). The SL is preferred due to its straightforward management and the limited liability it provides to shareholders. In contrast, the SA is less frequently adopted by small businesses and freelancers, unless they plan to go public or operate in specialized sectors like banking, investment, or insurance.
Common Company Legal Structure
Société à Responsibilité Limitée (SARL)
This is the most simplistic and frequently used company type in Ireland. The members’ liability, if the company is wound up, is limited to the amount, if any, unpaid on the shares they hold. T
Public Limited Company (PLC):
A PLC is permitted to have shares listed on a stock exchange and offered to the public. The nominal value of the company’s allotted share capital must not be less than €25,000, at least 25% of which must be fully paid up
Designated activity company (DAC):
A DAC has a 2 document constitution consisting of a memorandum and articles of association. A DAC must have a main objects clause included in its constitution which will restrict the activities of the company
Branch office
A foreign company may also establish an external company within the State. Any company that so establishes itself must register with the Irish Companies Registration Office (“CRO”) within 30 days of its establishment in the State.
Branches have similar incorporation requirements to regular private companies
Limited Partnership (LP)
These partnerships have at least one general partner who runs the business and is personally liable for any business debts. The partnership also has at least one limited partner whose input is purely financial and who is only liable up to the amount they’ve contributed.
Company limited by guarantee not having a share capital (CLG):
This is a public company type. The members’ liability is limited to the amount they have undertaken to contribute to the assets of the company, in the event it is wound up, not exceeding a specified amount and subject to a minimum of €1.00
Common Company Legal Structure
Private Limited company (Sociedad de Responsabilidad Limitada SL)
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Founding capital 3,000.-€ subscribed and paid out
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One or several sole / joint directors or a board of directors formed by a minimum of 3 and maximum of 12 members
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Duration of the appointment: Unlimited, unless otherwise state in the company bylaws.
Public Limited Liability Company (Sociedad Anónima SA)
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Founding capital 60,000.-€ subscribed (at least 25% paid)
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One or several sole / joint directors with a maximum of 3 members or a board of directors with at least 3 members and no maximum.
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Duration of the appointment: Limited to a maximum of 6 years. With the possibility of further equal renewals.
Incorporation process in Spain
When launching a business in Spain certain steps must be adhered to throughout the company formation process. For foreign entrepreneurs, particularly those unfamiliar with local laws, seeking legal assistance and representation is highly recommended. The company formation services offered by Yan Incorporation will be extremely beneficial.
Steps for company formation in Spain
Step 1:
Choosing legal
There are two main types of companies in Spain which are the Sociedad de Responsabilidad Limitada (SL or SRL) and the Sociedad Anónima (SA).
Step 2:
Choosing a company name
Before setting up a company in Spain the Companies Registry must issue a certificate confirming that the names chosen for the company are valid and available for its use.
The certificate stating the availability of a name will be issued for 3 months (renewable for 3 extra months), a period in which the company must be incorporated.
Step 3:
Obtain NIE/NIF numbers for the shareholders/directors
An essential requirement for setting up a company in Spain is obtaining a Numero de Identificación de Extranjero NIE number for a natural person, or a Número de Identificación Fiscal NIF number for the foreign entity that would become a shareholder or director in the newly formed company.
An NIE/NIF number is a tax identification code given to any foreign person/entity that, for social, professional or economic reasons – such as creating a company -, must identify itself before the Spanish authorities
Registration of the foreign natural person or a foreign entity with the Spanish tax office, once the NIE/NIF number is granted, is also mandatory through a 030 or 036 form.
Step 4:
Open bank account
As described in the SL vs. SA chart mentioned above, limited liability companies must have a founding capital which, normally, is deposited by the founding partners in a bank account opened in a Spanish bank.
The Spanish Corporate Enterprises Act allows companies to be formed providing goods or rights liable to economic appraisal other than money too (properties, patents, assets, etc.).
Once the name reservation certificate from the Spanish Companies Registry is granted, we can go to any bank in Spain where they will open a temporary bank account in which the founders will deposit the founding capital, which will remain frozen in this account until the company is effectively incorporated and registered in the Spanish Companies House.
Step 5:
Draft the articles of association and decide how the company will be managed
In the articles of association, the founding partners decide the essential matters of the company i.e. founding capital, shareholders, company address, object, duration, internal management, directors and shareholders meetings, etc, it is fundamental that the articles of association are adapted to the company needs.
Standard model articles of association are available to both SL and SA companies and can be drafted and registered in the English language when accompanied by a Spanish translation.
Step 6:
Sign the incorporation deed of the company before a notary public
Step 7:
Register the company with the Spanish tax office (VAT number obtention)
To validly setting up a company in Spain a deed of incorporation must be signed before a notary public. This deed of incorporation will include the articles of association which would have been previously drafted by the founding shareholders.
In case of a third company being the shareholder whoever represents it must grant a UBO declaration (Ultimate Beneficiary Owner) before the notary public in which they identify the ultimate beneficiary owners who hold or control, directly or indirectly, more than 25% of the company shares, majority of voting rights, or controls the company by other means.
Once incorporated all limited liability companies must register with the Spanish Tax Office to obtain a NIF number which is equivalent to the VAT number TIN number in other countries. From this moment the company will be required to a minimum set of tax compliance and bookkeeping formalities.
SOCIAL SECURITY REGISTRATION
Before starting the activity the company would normally be registered with the Social Security system and obtain its employer number Código de Cuenta de Cotización. Time-wise the incorporation process usually takes from two to six weeks depending on the complexity of its structure
Branch Office Registration in Spain
Within the spectrum of legal entities available to operate or invest in Spain, a branch office is a valid option to access the market with full guarantees. Mixed up often for subsidiary companies, branches are not a separated legal entity to its parent company but an extension to it.
Differences between a branch office and a subsidiary company can be seen below:
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No require founding capital
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No legal capacity in its own
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No local management, decisions are taken by parent company.
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The parent company is liable for all actions or omissions of its branch
Branches have similar incorporation requirements to regular private companies
Get in touch with us
Contact us today to receive a quotation for our company formation in Spain. We are here to assist you every step of the way.
Contact
Email: info@yanincorporation.com
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