More and more entrepreneurs choose to start a company in Spain – whether to benefit from the growing market, the strategic location, or the attractive tax framework. To ensure a smooth setup, it is essential to understand the different legal forms and the detailed incorporation process.
Which company types exist in Spain?
Spain offers several legal structures depending on size, liability, and capital requirements:
- Sociedad Limitada (S.L.) – Limited Liability Company. The most common option for small and medium-sized businesses. Minimum capital: €1 (since 2022). Liability is limited to company assets.
- Sociedad Anónima (S.A.) – Public Limited Company. Suitable for larger businesses or those planning to attract investors. Minimum capital: €60,000, with at least 25% paid upfront.
- Autónomo – Self-employed individual. Ideal for freelancers and small businesses. Fewer formalities, but personal liability applies.
- Sociedad Civil – Partnership, used for smaller projects. Partners are personally and jointly liable.
- Branch or Subsidiary – Allows foreign companies to operate in Spain without forming a separate entity.
Key considerations before starting
Before incorporating, it is important to choose the right legal structure for the planned activities. Factors such as liability, financing, taxation, and long-term strategy should be considered. Equally relevant are tax and social security obligations, which vary depending on the company type.
The incorporation process in Spain
Setting up a company in Spain involves several legal steps. The typical process includes:
- Obtain NIE number – every founder needs a Spanish tax identification number.
- Reserve company name – verify availability at the Central Mercantile Register.
- Open a bank account – deposit the share capital and obtain a bank certificate.
- Notarial deed of incorporation – company is established before a notary with articles of association and shareholders.
- Register at Mercantile Registry – legal personality is acquired upon registration.
- Apply for CIF tax number – necessary for any business activity.
- Register with authorities – including Social Security and local licenses if required.
Common mistakes to avoid
Entrepreneurs often underestimate Spanish bureaucracy. Common mistakes include choosing the wrong legal form, failing to register with Social Security, or preparing incomplete articles of association. Professional advice helps avoid these risks.
Comparison of Company Types in Spain
| Company Type | Capital | Liability | Best for |
|---|---|---|---|
| Sociedad Limitada (S.L.) | from €1 | limited to company assets | Small and medium-sized businesses |
| Sociedad Anónima (S.A.) | €60,000 (25% upfront) | limited to company assets | Large businesses, investors |
| Autónomo | no minimum | personal, unlimited | Freelancers, small business |
| Sociedad Civil | no minimum | personal and joint liability | Small partnerships |
| Branch / Subsidiary | depends on parent company | depends on parent company | Foreign companies |
Conclusion: Start successfully with the right preparation
Starting a business in Spain offers many opportunities but requires careful preparation and the right company structure. With proper planning, legal advice, and local support, entrepreneurs can efficiently complete the process and successfully enter the Spanish market.
Photo credit: Rawpixel.com – bigstockphoto.com