Spain-S.L.


Spanish history traces back to the ancient times. Celts, Visigoths, and Arabs controlled the territory of the country. In the 16th century Spain turns into one of the most powerful colonial empires due to its successful expeditions to the New World. Subsequent failure to embrace the mercantile and industrial revolutions caused the country to fall behind Britain, France, and Germany in economic and political power. Spain remained neutral in World Wars I and II but suffered through a devastating civil war (1936-39). A peaceful transition to democracy following the death of dictator Francisco FRANCO in 1975, and rapid economic modernization (Spain joined the EU in 1986) gave Spain a dynamic and rapidly growing economy and made it a global champion of freedom and human rights. At the beginning of 2004 he new socialist government of José Luis Rodríguez Zapatero reversed a foreign policy of the country – now it is mainly about coordination of its activities with the countries of the EU.

Service packages

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Service item Express Standard Optimum
Company registration
Legal address per year
Secretarial services for the first year
Fees and duties for the first year
Apostilled bound set of incorporation documents
Compliance fee
Nominee service per year
Bank Account Pre-approval
Price

8 250 USD

8 250 USD

8 750 USD

I want to order «»

Contact method: and / or

Core Services

6 800 EUR

— Incorporation

including incorporation tax, state registry fee, including Compliance fee

Included

— Annual government fees

Stamp Duty and Mercantile Registry incorporation fee

4 100 EUR

— Corporate legal services

including registered address and registered agent, NOT including Compliance fee

150 EUR

—Delivery of documents by courier mail

DHL or TNT, at cost of a Courier Service

500 EUR

— Apostilled set of Statutory documents

Related services

Tax Certificate

Company’s tax residence certificate for access to double tax treaties network

Certificate of Good Standing

Document issued by a state agency in some countries (Registrar of companies) to confirm a current status of a body corporate. A company with such certificate is proved to be active and operating.

Compliance fee

Compliance fee is payable in the cases of: renewal of a company, liquidation of a company, transfer out of a company, issue of a power of attorney to a new attorney, change of director / shareholder / BO (except the change to a nominee director / shareholder)

250 USD

Basic

simple company structure with only 1 physical person

50 USD

For legal entity in structure under GSL administration

additional compliance fee for legal entity in structure under GSL administration (per 1 entity)

100 USD

For legal entity in structure not under GSL administration

additional compliance fee for legal entity in structure NOT under GSL administration (per 1 entity)

350 USD

For client with high risk Status

Cost of incorporation, including first year servicing 8250
Cost of annual service, starting from the second year 4975
Open account in 26780
Incorporation timescale for a turnkey company 5 weeks
Country 26748

General information shortly

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Total area Population Capital Unemployment Corruption perceptions index rank
505.370 sq. km 47.370.542 (2013) Madrid 25.1% (2012) 40 (2013)
Location Southwestern Europe
National currency Euro
Conditional reduction of currency EUR
Against USD 0.73
Climate, average max and min t° temperate; hot summers in interior, more moderate along coast; cold winters in interior; summer avg. max. day temperature in central Spain +30°C; avg. minimum winter temperature 5°C
Time difference from Moscow - 3 hours
Dialing code +34
State language Castilian Spanish
Ethnic groups Composite of Mediterranean and Nordic types; aboriginal population - spanish (castilian), catalan, basque and galician
Literacy rate 97.9%
Credit rating BBB+
Government type Constitutional monarchy
Executive branch Council of Ministers headed by the Prime Minister
Legislative branch bicameral General Courts consists of the Senate (257 seats as of 2013) and the Congress of Deputies (350 seats)
Judicial branch Supreme Court, National Court , High Courts of Justice, provincial courts, courts of first instance
GDP per capita rank 27 (2013)

Corporate info

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Shelf companies permitted Legal system Incorporation timescale for a turnkey company Cyrillic alphabet permitted in company name Local registered office
Yes civil law 5 weeks No Yes
Types of entity Sole Trader (Empresario Individual or Autónomo); General Partnership (Sociedad Regular Colectiva, abbreviated as “S.R.S.” or “S.C.”); Limited Partnership (Sociedad en Camandita, abbreviated as “S. en Com. or “S. Com.”); Cooperative (Sociedad Cooperativa); Corporation (Sociedad Anónima, abbreviated as “S.A.”); Limited Liability Company (Sociedad de Responsabilidad Limitada, abbreviated as “S.L.” or “S.R.L.”); New Limited Liability Company (Sociedad Limitada Nueva Empresa abbreviated as “S.L.N.E.”)
Incorporation timescale for a new company 15 days
Company suffix Sociedad de Responsabilidad Limitada, abbreviated as “S.L.” or “S.R.L.”
Sensitive words the name or pseudonym of any individual or body corporate without authorization or consent; identical names including identical names in other languages; abbreviation or anagram of the company
Local registered agent No
Information to be kept at the registered office register of shareholders; accounting records (for the last 4 years) in tax purposes; by-laws
Seal required, type of seal not required
Redomiciliation (to, from) permitted permitted

Director and secretary

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Minimum number of directors Residency requirements for directors Corporate directors permitted Disclosure to local agent Disclosure to public
1 No Yes Yes Yes
Directors’ meetings/frequency/location Yes / annually / anywhere
Company secretary required No
Residency requirements for a secretary No
Qualified secretary required No
Corporate secretary permitted No

Shareholder and beneficiary

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Minimum number of shareholders Residency requirements for shareholders Corporate shareholder permitted Disclosure to local agent Disclosure to public
1 No Yes Yes No
Meetings/frequency/location Yes / annually / anywhere
Beneficiary info disclosure to Yes

Shares and share capital

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Minimum authorized share capital Minimum issued share capital Minimum paid share capital Authorized capital payment deadlines Bearer shares permitted
No requirements 3000 3000 No requirements No
Issued capital payment deadlines Before registration
Standard currency Euro
Standard authorized share capital 3000
Standard par value of shares 10
Shares with no par value permitted No

Taxes

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Min. rate for corporate tax Capital gains tax VAT Withholding tax Exchange control
25% Regular rate 21% 19%/19%/24% No
Personal tax 19-47%
Corporate tax (in detail) Companies - tax residents in Spain pay income tax on their global income, and foreign companies - on income from sources in Spain. Profits of newly formed companies are taxed at a rate of 15%.
Capital gains tax. Details Capital gains are taxed at the general income tax rate.
VAT. Details Standard rate is 21%; reduced rates are 10% and 4%
Other taxes Capital duty, real property tax, transfer tax, wealth tax
Stamp duty 0,75-1,5%

Accounts

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Requirement to file accounts Publicly accessible accounts Audit required Requirement to file Annual Return Publicly accessible Annual Return
Yes Yes No Yes Yes
Requirement to prepare accounts Yes
Double tax treaties network 96
Tax Exchange Information Agreement network 11
OECD member Yes
Offshore/onshore status according to the RF laws No

GENERAL INFORMATION

General Info

The Kingdom of Spain is the Member State of the European Union and of the Economic and Monetary Union, formed by Euro-zone countries. The area consists of two autonomous cities - Ceuta and Melilla - and 17 autonomous communities including Balearic Islands and Canary Islands, and three small Spanish possessions off the coast of Morocco.
Total area of Spain is 505.370 sq.km, population is over 46 million people.
The capital is Madrid, the biggest city (population is over 5 million people).
Official language is Castilian Spanish - 74%. Catalan (17 %) is official in Catalonia, the Balearic Islands, and the Valencian Community, where it is known as Valencian; Galician (7%) is official in Galicia; and Basque (2%) is official in the Bascue Country.
Most population profess Catholicism (94%).
The official languages are English and French.
The official currency is euro (EUR). 1 USD is equal to 0.73 EUR.
Climate of Spain is temperate; hot summers in interior, more moderate along coast; cold winters in interior; summer avg. max. day temperature in central Spain +30°C; avg. minimum winter temperature 5°C.
Time difference with Moscow is -3 hours.
Literacy rate is 97.9%.
Calling code is +34.

History

Spanish history traces back to the ancient times. Celts, Visigoths, and Arabs controlled the territory of the country. In the 16th century Spain turns into one of the most powerful colonial empires due to its successful expeditions to the New World. Subsequent failure to embrace the mercantile and industrial revolutions caused the country to fall behind Britain, France, and Germany in economic and political power. Spain remained neutral in World Wars I and II but suffered through a devastating civil war (1936-39). A peaceful transition to democracy following the death of dictator Francisco FRANCO in 1975, and rapid economic modernization (Spain joined the EU in 1986) gave Spain a dynamic and rapidly growing economy and made it a global champion of freedom and human rights. At the beginning of 2004 he new socialist government of José Luis Rodríguez Zapatero reversed a foreign policy of the country – now it is mainly about coordination of its activities with the countries of the EU.

Government

Spain is a constitutional monarchy.
The head of state is the king. At present, the monarch is King JUAN CARLOS I (since 1975).
The executive power is vested in the Council of Ministers (cabinet) headed by the Prime Minister. Prime Minister is nominated and appointed by the monarch and confirmed by the Congress of Deputies following legislative elections.
Legislative branch is represented by the bicameral Parliament. General Courts or Las Cortes Generales (National Assembly) consists of the Senate or Senado (257 seats as of 2013) and the Congress of Deputies or Congreso de los Diputados (350 seats). Members of the Parliament are elected by universal suffrage for a four-year term.
Judiciary branch comprises Supreme Court or Tribunal Supremo which consists of the court president and is organized into the Civil Chamber, the Penal Chamber, the Administrative Chamber, the Social Chamber, and the Military Chamber. Constitutional Court (Tribunal Constitucional de Espana) consists of 12 judges; National Court (Tribunal Superior de Justicia); High Courts of Justice - in each of the autonomous communities (Audiencias Provinciales); provincial courts (Juzgados de primera instancia e instrucción); courts of first instance (juzgados de paz).
Each of the 17 Spanish Autonomous Communities can levy taxes; each has wide legislative and executive autonomy with their own parliament and regional governments.

Economy

Spain is one of the largest economies in Europe.
Spain’s main items of export are machinery, tourism and foodstuff. Spain’s main items of import are energy and manufactured goods. It is also a popular destination for retirement and second homes.
After almost 15 years of above average GDP growth, the Spanish economy began to slow down in late 2007 and entered into a recession in the second quarter of 2008 (as a consequence of international financial crisis).
The unemployment rate rose from a low of about 8% in 2007 to 26.0% in 2012. The economic downturn has also hurt Spain's public finances. The government budget deficit peaked at 11.2% of GDP in 2010 and the process to reduce this imbalance has been slow (10,6 % of GDP in 2012) despite the central government's efforts to raise new tax revenue and cut spending.
The Spanish government’s ongoing efforts to introduce flexibility into the labor markets are intended to assuage a source of concern for foreign investors.

GENERAL CORPORATE INFORMATION

Legal System

The Spanish legal system is a civil law system based on comprehensive legal codes and laws rooted in Roman law.

Types of Business Entities

The principal forms of business organization in Spain are:
  • Sole Trader (Empresario Individual or Autónomo)
  • General Partnership (Sociedad Regular Colectiva, abbreviated as “S.R.S.” or “S.C.”)
  • Limited Partnership (Sociedad en Camandita, abbreviated as “S. en Com. or “S. Com.”)
  • Cooperative (Sociedad Cooperativa)
  • Corporation (Sociedad Anónima, abbreviated as “S.A.”)
  • Limited Liability Company (Sociedad de Responsabilidad Limitada, abbreviated as “S.L.” or “S.R.L.”)
  • New Limited Liability Company (Sociedad Limitada Nueva Empresa abbreviated as “S.L.N.E.”)

The most common structure is the limited liability company.

COMPANY INCORPORATION

Company Name

There is a range of requirements to the company name of SL in Spain:
  • A company name may make reference to one or several economic activities or it may be imaginative.
  • A company name which makes reference to an activity that is not included in the corporate purpose may not be chosen.
  • It may not include, totally or partially, the name or pseudonym of any individual or body corporate without authorization or consent. Whenever authorization is required for a company name request, this should be presented along with the signature of the authorizing party, duly legalized by a Notary. The authorization of a body corporate should be effected by the corresponding board of directors, whose decision shall be duly certified.
  • The company name should be followed by its company type: in case of SL it is Sociedad de Responsabilidad Limitada, abbreviated as “S.L.” or “S.R.L.”.
  • The abbreviation or anagram of the company may not be added to it.
  • A company or organization whose name is identical to another already existing may not be recorded in the Mercantile Register. When a company name already exists in another language, it is understood that these are identical.

Incorporation

The incorporation of a Spanish SL includes the following steps:
  1. Grant an apostilled power of attorney for incorporation to the legal representative: Incorporation is carried out by a legal partner in Spain. Shareholders and directors should grant the power of attorney to the person, who is to incorporate a new company. The power of attorney should be legalized with the Apostille of the Hague Convention of 1961, provided that the country where the power of attorney is going to be granted is a member country); a sworn translation into Spanish is required. It is also important to fulfill all the formalities relating to assignment of a N.I.F. (in case of legal person) and N.I.E. (in case of individual) to the foreign directors and shareholders of the company. The power of requesting foreign identification number from Spanish authorities should be reflected in the power of attorney. The representative, if he or she is not a resident in Spain, should also request a foreigner identification number (N.I.E.).
  2. Obtain a certification of uniqueness of proposed company name (certificación negativa de la denominación social) from the Mercantile Register – 2 days: The certification of uniqueness will be granted within one day if its application is done online. In this case, applicants will need a digital signature. Otherwise, if applied in person at the Mercantile Registry, it will take three days. Alternatively, it can be requested by regular mail. Once the Registry issues the certification, the requested corporate name will be reserved for a maximum of 6 months from the certification’s date of issuance. Each certification of uniqueness of the corporate name is valid for 3 months from its date of issuance. Furthermore, once the certificate's validity has expired (3 months), the certificate can only be renewed once, after which a new certificate must be requested. The cost of the certificate is EUR 13.52 + VAT.
  3. Open a bank account for the company; deposit capital in the bank and obtain a deposit certificate – 1 day: The contributions can also be directly given to the notary public before whom the deed of incorporation is going to be granted, at the time of the granting, so that the notary can deposit them in the Company's bank account.
  4. Grant a public deed of incorporation before a public notary – 1 day: The public deed of incorporation must include (a) the identity of the company shareholders; (b) their will to incorporate the company; (c) the disbursement made by each of shareholder and the number of shares subscribed to by each; (d) the company bylaws; (e) the type of administrative body that will manage the company; and the identity of its administrators or directors; (f) fiscal identification number for each shareholder and for each shareholder representative and director; (g) the certificate of uniqueness of the corporate name and the bank-issued certification must be attached to the public deed of incorporation. It must be noted that Royal Decree -Law 13/2010, dated 13 December 2010, concerning measures for encouraging investments and employment, introduced new procedures for the incorporation of companies through electronic means. In the said procedures, the Notary Public directly requests the certificate of uniqueness of the corporate name on behalf of the shareholders. Furthermore, once granted, the public deed is sent by electronic means by the Notary Public to the Commercial Registry for registration. These procedures are only applicable to the incorporation of companies that fulfill certain requirements, such as, among others, having (i) a maximum share capital of EUR 30,000 (simplified incorporation procedure) or EUR 3,100 (express incorporation procedure), (ii) a management body other than a Board of Directors and (iii) use standard by-laws passed by official authorities. In the event the future company fulfills all requirements indicated by the said Royal Decree-Law and is incorporated through the aforementioned procedures, the Notary fees can be reduced to EUR 60 (express incorporation procedure) or EUR 150 (simplified incorporation procedure).
  5. Submit Declaración Censal de Inicio de Actividad and obtain the Tax Identification Number (Numero de Identificación Fiscal, NIF) from the Delegación Provincial de la Agencia Estatal de la Administración Tributaria – 1 day: The definite Tax Identification Number can only be obtained after the company has been duly registered in the Commercial Registry. Notwithstanding this, the provisional Tax Identity Number can be obtained from the Tax Authorities prior to the granting of the incorporation public deed through the filing with the Tax Authorities of (a) a declaration of the shareholders regarding their will to incorporate the company, (b) a copy of the original certification of uniqueness of the corporate name, (c) copies of the identity documents of the shareholders, and (d) form 036 signed by the shareholder and the future director/s. It must be noted that the Spanish Royal Decree 13/2010 (article 5) also allows the Notary granting the Public Deed of incorporation to companies that fulfill certain requirements to apply telemetrically for a provisional NIF to the Agencia Estatal de la Administración Tributaria.
  6. Obtain a tax declaration of exemption from the Dirección General de Tributos - Consejería Hacienda Comunidad Madrid – 1 day: According to article 3 of Royal Decree 13/2010, all operations regarding the incorporation, capitalization and maintenance of companies are exempt from the Asset Transfer and Legal Documented Acts Tax. This implies that limited liabilities companies are exempted from the payment of this tax to the Dirección Gral de Tributos - Consejería Hacienda Comunidad Madrid (1% of the capital of the company). The application form (Form 600) to obtain a tax declaration of exemption has to be filed with the Autonomous tax authorities. Otherwise, the incorporation may be denied at the Company's registry. The Spanish Royal Decree 13/2010, allows the Notary, the interested party, the registrar or a third authorized party to electronically submit the corresponding application and taxes with the Agencia Estatal de Administración Tributaria (AEAT).
  7. File the public deed of incorporation of the company for its registration with the Mercantile Registry – 6 days and up to 15 days: The registration costs are based on variables such as the amount of the company share capital, the number of shareholders, and the type of administrative body. For example, if company share capital does not exceed EUR 3,005.06: the fee is EUR 6.01. In any case, the regulated applicable global tariff will not exceed EUR 2,181.67. Complementary to the registration fees, a provision of funds is also required when filing the incorporation deed with the corresponding Commercial Registry in order to cover the costs of publication of the registration in the Commercial Registry Official Gazette. At present, such provision of funds is set at EUR 55,10 for the Commercial Registry of Madrid. Once the public deed of incorporation has been registered, the company incorporation will be published in the Official Journal of the Mercantile Registry. Upon registration, the company acquires the status of a legal entity.
  8. Legalize company books – 10 days: Legalizing the Company Books is a formal obligation but it is not a prerequisite to begin the company´s business. Only the Company Book that registers the Minutes of the shareholders, and the Board of Directors meetings precise to be legalized before use. The other books can be legalized later (within 4 months after the closing of the economic year of the company), and can be legalized by electronic means or presented as physical books (Arts 329 and following Mercantile Register Reglament, and Instruction Ministry of Justice 31 dec 1999). Although this is not a step required to start a company, it is an ex post procedure required by law.
  9. Submit a notification of start of operations (declaración responsable) to a private agency authorized by the municipality (ECLU) – 1 day (simultaneous with previous procedure): On December 26, 2012, Spain adopted law 12/2012. This law removes the requirement for certain commercial activities to obtain a municipal license to initiate the execution of works and start operations. A company can start operations after submitting a simple notification (declaracion responsable sin certificado de conformidad) to the private agencies authorized by the Municipality (ECLU). Within 5 days, the ECLU will verify the documentation and conduct an ex-post inspection to ensure compliance.
  10. File for social security and affiliate all workers with the local general treasury of social security (Tesorería General de la Seguridad Social) – 1 day (simultaneous with previous procedure): Upon registration of the company with Social Security, a state supervisory number is issued and assigned to the company. The required documents are (a) the corresponding form; (b) a copy of the public deed of incorporation; (c) a photocopy of the applicant’s national identity document or power of attorney; and (d) the company tax identification number. Registration of the company and affiliation of all the workers must be made before starting any business activities.
  11. Notify the Delegación Provincial de la Consejería de Trabajo e Industria – 1 day (simultaneous with previous procedure): The company must keep a visits book (libro de visitas) at all times. Information that must be noted includes the details of the company and the work place and a description of its business activity. The corresponding autonomous community must be notified within the first 30 days of the start of activities and the opening of the workplace. Every autonomous community has its own form. Some require that work injury and safety documentation (corresponding to the specific business or workplace in question) be filed along with the forms. Other forms and documents might be needed depending on the workplace activities. Pursuant to Spanish Labor Inspection's resolution of November 25, 2008, the company can now register through the Labor Inspection's visits book's electronic system.

Restriction of Activity

Non-EU nationals should obtain work visa and residence permit; they also should be granted the proper kind of a work permit, which depends on the type of work and its duration.
As a general rule, foreign investments are subject only to notification after the investment to the Investments Register at the Ministry of Economic Affairs and Competitiveness. Both the owner of the investment and Spanish public notary, acting in the transaction, are obliged to notify authorities about the investment. Investments from tax havens must be reported before and after the transaction.
The General Directorate for Trade and Investments (monitors foreign investments) can require Spanish companies, which have foreign shareholders and Spanish branches of non-resident persons specially or generally to file an annual report on the status of their foreign investments; information about certain cases can also be required by DGCI.
During the two years following incorporation, shareholders’ meeting must approve acquisition of assets for a consideration involving amounts in excess of 10% (before the deal), unless such acquisitions are within the scope of ordinary business of the company. Approval procedure contains a director’s report on the topic and an independent valuation by the expert appointed by the Commercial Registry.

Registered Office

It is a legal requirement for your company to have a registered office in Spain, which may be any address where the Spanish company declares to have its headquarters. The registered office will be public.
The following should be kept at the registered office: register of shareholders; accounting records (for the last 4 years) in tax purposes; by-laws.

Company Seal

There is no statuary requirement to have a seal.

Redomiciliation

Redimiciliation to and from Spain is permitted.

COMPANY STRUCTURE

Directors

Spanish company should have at one director or several directors (acting jointly or individually), it being necessary to establish a Board of Directors when the number of joint directors is three or more. There are no legal restrictions on the nationality of the shareholders and/or directors, although practical reasons make it advisable that day-to-day management be carried out by a Spanish resident. Directors can be both individuals and corporate bodies.
A director can act for an indefinite period of time.
Directors should attend shareholders’ meeting. There are no requirements for directors’ meetings.
Directors’ details appear on public profile.

Secretary

There are no statuary requirements for a company secretary.

Shareholders

A Spanish company should have 1 shareholder, but it should be noted, that concerning companies with 1 shareholder there are some special reporting requirements. The fact that the company has one shareholder should be registered in the appropriate Commercial Registry, all the contracts between the company and its sole owner need to be recorded in a special company register.
Founders' details appear on a public profile, but not other shareholders.
The shareholders’ meeting is the supreme governing body of the company. It should be held in the municipality where the company has its registered office. However, the articles of association may legitimately establish otherwise.

Beneficiary

In Spain, beneficial owner is disclosed on the stage of registration, since according to Spanish law Notary Public is obliged to file “real owner” declaration to the Commercial Registry.
Commercial Registry, Tax authorities and Public notary (in case) have full ownership information, or have an access (through getting information from each other) to such information.
Companies have an obligation to identify by name and N.I.F. all persons, owning at least 5% of the capital in their Annual Corporate Income Tax return.
Moreover, the person conducting the transfer of shares (bank or public notary) should include in an annual information tax return the information about the deal without limits about the percentage of ownership being transferred.
Nominee institute does not exist in Spain.

Share Capital and Shares

The minimum subscribed capital for an S.L. is 3,000 euro; the whole capital must be paid before incorporation. The standard share capital is 3000 EUR.
The share capital is not divided into shares but into "quotas" (participaciones), the main difference being that quotas are not securities as such. Quotas are subject to restrictions on transfer and are not represented in certificates. An SRL cannot be publicly quoted and cannot issue debentures.
Bearer shares and shares with no par are not permitted.

COMPANY LIQUIDATION AND RESTORATION

Dissolution

Dissolution is entailed as per the law or by-law, under court ruling, by mere decision of general meeting.
Causes of dissolution:
  • upon interruption of the activity or activities that constitute its corporate purpose; in particular, inactivity for over one year shall be deemed to constitute interruption;
  • upon termination of the mission that constitutes its corporate purpose;
  • where achievement of the corporate purpose is manifestly impossible;
  • due to governing body standstill, rendering it impossible to conduct business;
  • due to losses that reduce its equity to an amount lower than one half of the share capital;
  • due to a capital reduction to a sum below the legal minimum;
  • because the par value of non-voting stakes or shares exceeds one half of the paid-up capital and the due proportion is not recovered within two years;
  • for any other cause established in the by-laws.

Dissolution of corporate enterprises should be registered at Mercantile Register and published in the Official Journal of the Mercantile Registry.

Restoration

The general meeting may agree to restore a dissolved company to active life, provided that the cause for which it was dissolved is remedied. Reactivation decisions may not be made where the dissolution was constituted as per the law.

Liquidation

Dissolution initiates a liquidation period.
Liquidation may be instituted in insolvency proceedings.
Where dissolution is the result of the institution of liquidation proceedings in a company having arranged a composition with creditors, liquidators shall not be appointed.
Unless the shareholders unanimously decide otherwise, they shall be entitled to receive their dividend liquidation in cash.
The public instrument on liquidation shall be registered in the Mercantile Registry.

TAXATION

Personal Income Tax

Tax residents pay tax on their worldwide income, while non-residents pay tax on income from Spanish sources.
Income tax is paid at progressive tax rates.
The tax rates are the total of the national rate and the rates approved by autonomous communities, and therefore differ depending on the individual’s place of residence.
The following rates can only be used as a general guideline, specific rates should be checked based on the community where the individual is residing:
  • Income up to EUR 12,450 – 19%
  • Income from EUR 12,450 to 20,200 – 24%
  • Income from EUR 20,200 to 35,200 – 30%
  • Income from EUR 35,200 to 60,000 – 37%
  • Income from EUR 60,000 to 300,000 – 45%
  • Income over EUR 300,000 – 47%

Investment income is taxed at the following rates:
  • The first EUR 6,000 of income – 19%
  • Income from EUR 6,000 to EUR 50,000 – 21%
  • Income from EUR 50,000 to EUR 200,000 – 23%
  • Income over EUR 200,000 – 26%

Corporate Income Tax

Spanish resident companies pay corporate income tax on their worldwide income, while foreign companies – on income from Spanish sources. Profits of newly created companies are taxed at the rate of 15%.
Capital gains are taxed at the general corporate income tax rate.
There are some exemptions. Thus, 95% of the profits from the sale of companies with a participation interest of at least 5% or with an acquisition cost of more than EUR 20 million and a holding period of at least one year can be exempt from tax.

Withholding Tax

Dividend and interest payments are subject to withholding tax at the rate of 19%, royalties – at the rate of 24%.
The tax may be withheld on certain other income payments.
The tax rates can be reduced under double tax treaties and EU directives.

VAT

The standard VAT rate is 21%.
Some goods and services are subject to the reduced rates of 10% and 4%.

Social Security Contributions

Employers pay a social security contribution (under the general social security regime) at the rate of 29.9%.
There is also an occupational injury insurance contribution. The rates vary depending on the sector of the economy.
Employees pay a social security contribution (under the general social security regime) at the rate of 6.35%.
These rates apply to the employee’s remuneration. The base cannot be less than the established minimum (from EUR 1,050 to 1,466.4, depending on the professional category) and more than EUR 4.070.1 per month.

Tax on Tax-Haven Resident Companies

Companies that are resident in low-tax jurisdictions (tax havens) pay tax at the rate of 3% on the value of Spanish real estate.

Real Estate Transfer Tax

Transfers of real estate (in some cases, transactions with shares that cover a real estate transfer) and VAT-exempt real estate leases are subject to this tax, usually at the rate of 5% to 11% (depending on the region).

Stamp Duty

Stamp duty applies to notarial instruments and transactions registrable in public registers, as well as certain other transactions.
The rate ranges from 0.75% to 1.5%, depending on the region and type of transaction.

Capital Duty

A 1% duty is payable by shareholders in the event of a company's capital reduction or company liquidation.

Real Estate Local Tax

Real estate tax is levied by the regional authorities.

Wealth Tax

This tax is payable on the value of assets held as of the end of the year.
There are nationally established exemptions for minimum amounts in general and for certain types of assets, the regional authorities can adjust them.
The tax rates are progressive and are set by regional authorities; if the regional authorities do not establish their own rates, then the nationally established rates apply (0.2% to 3.5%).

Gift and Inheritance Tax

Tax is payable on inheritance and donation of assets and rights.
The relevant rules are established at the regional level.
The tax liability depends on a number of factors, including the degree of relationship.
The tax rates are progressive and, depending on the value, range from 7.65% to 34%. These rates can be modified by regional authorities.

CFC Rules

A foreign company is considered a controlled foreign company (CFC) if a resident company holds, individually or jointly with related parties, more than 50% of its shares, capital, voting rights, and rights to distributable profits.
CFC rules may apply if the foreign company pays corporate income tax that is less than 75% of the applicable Spanish tax.
CFC rules do not apply to EU-domiciled companies established for economic reasons and conducting real economic activity there.
The CFC rules are applicable if there are no economically justified reasons for using the CFC, it does not have enough assets and personnel, etc.
The taxable income can include investment/passive income – interest income, rental income, royalties, invoicing income, etc.
There are exceptions.

Exchange Control

There are generally no restrictions on foreign exchange transactions. However, in some cases such as the export of banknotes, giving notification or obtaining permits may be required.

Avoiding International Double Taxation

Spain has entered a whole range of double tax and tax information exchange mechanisms:
  • 96 DTCs: Albania, Algeria, Andorra, Argentina, Armenia, Australia, Austria, Azerbaijan, Barbados, Belarus, Belgium, Bolivia, Bosnia and Herzegovina, Brazil, Bulgaria, Canada, Chile, China, Colombia, Costa Rica, Croatia, Cuba, Cyprus, Czech Republic, Dominican Republic, Ecuador, Egypt, El Salvador, Estonia, Finland, Former Yugoslav Republic of Macedonia, France, Georgia, Germany, Greece, Hong Kong, Hungary, Iceland, India, Indonesia, Iran, Ireland, Israel, Italy, Jamaica, Japan, Kazakhstan, Korea (Republic of), Kuwait, Latvia, Lithuania, Luxembourg, Malaysia, Malta, Mexico, Moldova (Republic of), Morocco, Netherlands, New Zealand, Nigeria, Norway, Pakistan, Panama, Peru, Philippines, Poland, Portugal, Romania, Russian Federation, Qatar, Saudi Arabia, Senegal, Serbia, Singapore, Slovakia, Slovenia, South Africa, Sweden, Switzerland, Tajikistan, Thailand, Timor-Leste, Trinidad and Tobago, Tunisia, Turkey, Turkmenistan, Ukraine, United Arab Emirates, United Kingdom, United States, Uruguay, Uzbekistan, Venezuela, Vietnam;
  • 11 TIEAs: Andorra, Aruba, Bahamas, Bonaire (Saint Eustatius and Saba), Curaçao, Denmark, Jersey, San Marino, Saint Maarten.

ACCOUNTS

Annual Return

Generally speaking, Annual Return is a short review on the current state of the company, which is prepared by the company secretary annually. As a rule it includes the following information:
  • Incorporation information (registration date, registered address);
  • Information about directors and their resignation;
  • Information about secretaries and their resignation;
  • Information about registered capital, nominal value of shares and amount of issued shares;
  • Information about shareholders and share transfer.

Spanish companies are required to prepare and file Annual Return in Spain.

Financial Statements

There is a general obligation to maintain reliable accounting records (chronologically monitoring all the operations). The provisions of Commercial Code require periodical preparation of balance sheets and inventories. The following books should be maintained:
  • A Book of Inventories (the totals and trial balances are entered at least every three months)
  • Annual Accounts (a balance sheet, profit and loss account, a statement of changes in equity, a cash-flow statement and the notes)
  • a Journal (records every day all the operations of a company).

Within a maximum of three months of the closing of the fiscal year, directors shall prepare the annual accounts, management report and proposal for the application of results. If certain limits are exceeded, the annual accounts should be audited. The annual accounts should be filed in the Companies Register within one month of shareholders' approval.
Those S.A. and S.L. that do not exceed a certain size may present abbreviated accounts and are exempt from the obligation to audit their accounts.

Tax Returns

Tax Returns

The tax year coincides with the financial year of the company, but cannot exceed 12 months.
The annual corporate income tax return is filed within 25 days following the six months after the end of the tax year. There are three advance tax payments; the final payment is made together with the filing of the annual return.

COMPANIES WITH SPECIAL PERSONALITY

Temporary Business Alliances

Temporary business alliances are not corporations and have no legal personality. U.T.E.s form business cooperation, set up for a specified or unspecified period of time, for the purpose of carrying out mutual project or service. This form of association is very common for engineering and construction projects but can also be used in other sectors.
U.T.E.s can qualify for the special regime of flow-through taxation, if they are registered with the Finance’s Special Register of U.T.E.s at the Spanish Ministry of the Finance and Public Administrations.
Furthermore, they may be registered at the Commercial Register.
U.T.E.s must comply with bookkeeping and accounting requirements similar to those of corporations.
These entities are taxed in the same way as EIGs (see below) with the exception that the foreign-source income (derived from activities carried out abroad) of UTEs is tax-exempt (subject to application to the tax authorities).

Economic Interest Groupings

E.I.G.s have been created with the same purpose as U.T.S.s - to help members achieving their objectives.
The main difference between U.T.E.s and E.I.G.s is that E.I.G.s are entities of a mercantile nature; E.I.G. is most commonly used within the context of a broader association or group of companies, such as centralized purchasing, sales, information management or administrative services.
The E.I.G.s may not act on behalf of their members or substitute them in their operations.
E.I.G.s must be formed by notarial deed and registered in the competent Commercial Register.
The main obligation of the E.I.G. members is to contribute to the E.I.G.s capital on the agreed terms and to share in its expenses.
There are two governing bodies - the members’ meetings and the managers. The managers are jointly liable with the E.I.G. for all tax obligations accrued and for any damage caused, unless they are able to prove that they acted with due diligence.
E.I.G.s do not pay corporate income tax on the portion of their taxable income attributable to shareholders resident in Spain. The non-resident shareholders of a Spanish E.I.G.s are taxable as Non-residents (taking into account tax treaties rules).

Participation Account Agreement (silent partnership)

This form of business partnership consists of a financial cooperation of one or more entrepreneurs (non-managing investor-participants) provide cash contributions or contributions in kind to another entrepreneur (the managing participant) in order to take up an interest (both income or losses) in the results of the activities of the managing participant.
It’s important to remember, that silent partnership is just an agreement, the contributions can’t be qualified as capital contributions; non-managing investors do not have shareholder status at the managing company.
Remuneration obtained by non-managing investors must be recorded as an expense in the accounts of the managing participant.
This type of agreement does not require any legal formality (public deed or filing with the Commercial Register) under the provisions of Commercial Code. But in practice, parties record the agreement in a public deed (as the proof before third parties).

Foundations, trusts and investment companies

It is impossible to establish a private foundation (only public interest non-profit purpose) or a trust under the Spanish Law. Consequently, the trustee will be the only owner of the assets, acquired by him for the trust, so he will be taxed.
Investment institutions in Spain are investment funds (separated assets without legal personality) and investment companies (in the form of S.A.). It is obligatory to have a depository, responsible for all the assets.

International law relations

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Party to the Hague Convention (Apostille) Legal system Double tax treaties network OECD member Offshore/onshore status according to the RF laws
Yes civil law 96 Yes No

Public authorities and legal acts

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List of laws and regulations
Act name Scope of law
Code of Commerce commerce
Corporate Enterprises Act corporate enterprises
Spanish Civil Code civil matters
Civil Procedure Act civil procedure
Act on Insolvency insolvency
Tax treaties entered Albania, Algeria, Andorra, Argentina, Armenia, Australia, Austria, Azerbaijan, Barbados, Belarus, Belgium, Bolivia, Bosnia and Herzegovina, Brazil, Bulgaria, Canada, Chile, China, Colombia, Costa Rica, Croatia, Cuba, Cyprus, Czech Republic, Dominican Republic, Ecuador, Egypt, El Salvador, Estonia, Finland, Former Yugoslav Republic of Macedonia, France, Georgia, Germany, Greece, Hong Kong, Hungary, Iceland, India, Indonesia, Iran, Ireland, Israel, Italy, Jamaica, Japan, Kazakhstan, Korea (Republic of), Kuwait, Latvia, Lithuania, Luxembourg, Malaysia, Malta, Mexico, Moldova (Republic of), Morocco, Netherlands, New Zealand, Nigeria, Norway, Pakistan, Panama, Peru, Philippines, Poland, Portugal, Romania, Russian Federation, Qatar, Saudi Arabia, Senegal, Serbia, Singapore, Slovakia, Slovenia, South Africa, Sweden, Switzerland, Tajikistan, Thailand, Timor-Leste, Trinidad and Tobago, Tunisia, Turkey, Turkmenistan, Ukraine, United Arab Emirates, United Kingdom, United States, Uruguay, Uzbekistan, Venezuela, Viet nam
Tax Exchange Information Agreement (TEIA) Andorra, Aruba, Bahamas, Bonaire (Saint Eustatius and Saba), Curaçao, Denmark, Jersey, San Marino, Saint Maarten
List of state regulatory authorities
Spanish Government http://www.lamoncloa.gob.es/lang/en/Paginas/index.aspx
Congress http://www.congreso.es
Senate http://www.senado.es
Ministry of Foreign Affairs and Cooperation http://www.exteriores.gob.es/Portal/en/Paginas/inicio.aspx
Ministry of Economy and Competitiveness http://www.minhafp.gob.es/en-GB/Paginas/Home.aspx
Ministry of Justice http://www.mjusticia.gob.es/cs/Satellite/Portal/es/inicio
Ministry of Labor and Social Security http://www.empleo.gob.es/index.htm
General Council of Justice http://www.poderjudicial.es/cgpj/es/Poder_Judicial
Central Mercantile Registry http://www.registradores.org/
State Tax Agency http://www.agenciatributaria.es/
Invest in Spain http://www.investinspain.org/invest/en/index.html
Spanish Institute for Foreign Trade (ICEX) http://www.icex.es
Directorate General for Small and Medium Enterprise Policy http://www.ipyme.org
Spanish Small and Medium Sized Enterprise (SME) Confederation http://www.cepyme.es
Bank of Spain https://www.bde.es/bde/en/

    Legal Partner of Review:

    Juan Costa Abogados y Asesores

    The firm Juan Costa Abogados y Asesores, which was founded in 1993, is a medium-sized professional firm specializing in tax, payroll and accounting compliance and advice services for businesses. The firm has offices in Valencia and Castellón, and an office is being planned for the near future in Madrid. Our activities are focused in the three main areas of business practice: taxation, employment and commercial law. In these areas we provide not only advisory and consultation support, but can also offer a complete litigation service.

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