Investors who are operating on the Spanish market under a certain legal entity should know that they are allowed to change the business form of their company in certain conditions. The Spanish legislation allows changing any type of company, from a very small to a larger one, such as a corporation. In order to change the legal structure of the company, the investors will have to close down the current legal entity and to re-register under the preferred business form. Our team of Spanish company formation representatives can offer an in-depth presentation on the main steps of the procedure and can help entrepreneurs interested in this process.
The following video offers a short presentation on how to change the company type in Spain:
Table of Contents
The simplest type of company in Spain, the sole proprietorship, can be changed into a limited liability company (LLC). Numerous local and foreign investors are carrying out their business operations under a sole proprietorship because this business form is simple to manage in terms of accounting and taxation (the sole trader is not required to pay corporate taxes as a regular company).
However, the advantages of a sole trader can become obsolete when the business grows and the investor may want more security for his or her business. In this case, it is recommended to change the current structure into an LLC, because the shareholder will be protected in the situation in which the company may incur liabilities (in an LLC, the shareholder is responsible only in respect to the shares he or she owns in the business); our team of Spanish company formation agents can offer more details on this matter.
The investor will need to open a separate bank account for the newly formed company, in which the minimum share capital will be deposited. The business will need a trading name, registered and approved by the Mercatile Register.
The Spanish authorities enabled a new system which will reduce the time referring to the registration of an LLC, as the investors can file the Single Electronic Document on the online platform available at the Ministry of Industry, Energy and Tourism. The document will be sent to relevant authorities to inform on the company’s situation.
Businessmen interested in receiving more details on how to change the type of the legal entity of a company in Spain can address to our team of Spanish company incorporation consultants for assistance.