A Spanish SL is actually a limited liability company or sociedad limitada. This represents the most popular type of business in Spain, for both local and foreign investors. The limited liability company is characterized by a high degree of flexibility, considering that the shareholders are allowed to establish their own rules inside the company. A Spanish SL is usually used for small and medium-sized companies and our team of specialists in company formation in Spain can advise on the registration of this business form.
| Quick Facts | |
|---|---|
| Minimum share capital | EUR 3,000 |
|
Minimum number of shareholders |
1 |
|
Number of directors |
1 |
| Mandatory residency requirements for setting up a Spanish SL company | Not applicable |
| Local director required (Yes/No) |
No |
| Time frame for setting up an SL in Spain |
Approximately 2 weeks |
| Corporate tax rate in Spain |
Generally 25% |
| Dividend tax rate |
19% withholding tax on dividend payments – Exceptions can apply. |
| VAT rate in Spain |
21% standard rate, with reduced rates of 10%, 5%, and 4% |
| Number of double taxation treaties (approx. ) | More than 100 |
| Annual meeting required |
A general shareholder’s meeting once a year |
| Accounting and filing requirements |
Companies prepare and file annual financial statements. |
| Foreign-ownership allowed |
Yes |
| Tax exemptions or incentives for setting up an SL in Spain |
Research and development incentives, a technological innovation tax credit, a patent box regime, etc. Conditions apply. |
| Additional licenses | Industry-specific ones |
Table of Contents
About the minimum share capital for an LLC in Spain
The Spanish government has managed to make some changes in recent years regarding the minimum share capital for limited liability companies. Thus, if previously EUR 3,000 was required to set up an SL in Spain, now only one euro is required. In practice, the company formation formalities have been simplified from this point of view, allowing the entrepreneur to deposit this 1 EUR, and then assign a part of the company profit in the firm’s legal reserve until a capital of EUR 3,000 is reached/registered. These new changes to the legislation regarding the business environment in Spain can only represent benefits that can be enjoyed by both local and foreign entrepreneurs because they are no longer required to deposit the entire capital of EUR 3,000 at the time of incorporation.
About LLC in Spain set up as a Sociedad Limitada Nueva Empresa (SLNE)
The simplified limited liability company in Spain is the New Business Limited Company or SLNE. This structure is intended to help small and medium-sized entrepreneurs in terms of incorporation. A SLNE in Spain benefits from simple registration, management, and control procedures and is suitable for the business needs of entrepreneurs, which can only be an important advantage. Among the characteristics of an SLNE, we mention:
- Natural persons can register SLNEs in Spain. A partnership of a maximum of 5 people is allowed in this case.
- The Single Electronic Document or DUE allows the rapid registration of a New Business Limited Company. Our Spanish agents can guide you in this matter.
- The corporate income tax is imposed on SLNE in Spain. However, there is the possibility of splitting the corporate income tax payments.
- This business structure is flexible, it can be registered with a few documents in a rapid manner compared to the traditional SL in Spain.
The minimum share capital for SLNE is EUR 3,000, but shareholders can add a maximum of EUR 120,000 to the firm. Therefore, SLNE in Spain can be another business option for young entrepreneurs looking for flexibility, less bureaucracy, and a simplified business structure. You can always opt for the services of our specialists in company formation in Spain and find out more about the pros and cons of SL and SLNE, as well as the incorporation formalities. Considering all these things, you can make a smart business decision when you want to develop in the Iberian Peninsula, specifically in Spain.
The presentation below provides information on the steps necessary for opening a Spanish SL:
How many shareholders are necessary for an SL in Spain?
The limited liability company in Spain can be registered with only one shareholder, having no limit with regard to the maximum number of shareholders. The shareholders of the Spanish SL are liable for the company’s debts only to the extent of their contribution to the company’s capital. It is also important to know that this business form allows registration with 100% foreign ownership.
What is the management structure for a Spanish SL?
A board of directors has to be appointed when starting an SL in Spain, which has to be comprised of a minimum of three and a maximum of twelve members. It is important to know that a director can be elected for an unlimited period during the general meeting of the shareholders. Another feature of the Spanish SL is given by the fact that the directors of the company can’t have the quality of shareholders. Managers can be elected during a general meeting.
More details on the Spanish SL (limited liability company) are available in the presentation below:
How can an SL in Spain be verified?
According to the Commercial Code in Spain, companies must keep accounting documentation and make it available for the Spanish authorities in case of an evaluation. Financial statements must be completed annually, and any changes regarding the organization of the company or its statutory documents have to be approved by the general meeting of the shareholders. Here, we recommend the services of our accountants in Spain who can tell you more about bookkeeping, payroll, audits, and annual financial statements, among other things.
An SL can be established quite fast in Spain, meanwhile, the VAT tax number is prepared and issued for the business. Some of the formalities of opening a company in Spain can be done online, through official platforms.
Are there other special requirements for a Spanish SL?
The limited liability company in Spain must have a name that mentions its structure, therefore the words “sociedad limitada” are mandatory for company registration in Spain. All companies must be registered with the Trade Register in Spain. At the same time, the company’s trading name can also contain the abbreviation “S.L.” or “S.R.L”.
During the incorporation procedure, the investors will need to draw the company’s articles of association, which will have to be notarized by a public notary in Spain; such documents will then have to be filed with the Commercial Registry in Spain. The registration procedure will also include the following:
- a trading name that has to be unique in the country’s territory;
- opening of a corporate bank account at a local bank in Spain, in which the company’s capital will be deposited;
- apply for a tax identification number, issued by the Tax Agency;
- once the company hires employees, it will be necessary to register them with the Social Security authorities;
- it is also compulsory to notify the local authorities once the company starts its operations (no later than 30 days from the first day of business activity).
How long does it take to register a Spanish SL?
The registration procedure for a Spanish SL can last depending on whether the investors are in the country or not. In the situation in which the investors are present in Spain during the incorporation of the company, the procedure can take approximately 5 days. If the investors are outside the Spanish territory, they may request legal representation from our team of specialists in company registration, who can represent them through a power of attorney. In this case, the registration can take up to 2 weeks.
Taxation of LLCs in Spain
If you want to incorporate a limited liability company in Spain, you should familiarize yourself with the taxes associated with this business structure:
- 25% is the standard corporate income tax for LLCs in Spain. This tax is calculated on net income, minus allowable deductions, as the case may be.
- There is also a 3% tax for LLCs that offer online advertising, and data transmission services or online intermediary services in Spain.
- The standard VAT rate in Spain is 21%. Companies that offer services and products that include VAT must file VAT returns on a quarterly basis.
- The withholding tax in Spain is 1.24% for dividends, royalties, and interests of SLs in Spain.
Our team of agents in company incorporation in Spain can help you register any kind of company, including an SL. Our accountants in Spain can provide tailored services right from the start of the business. Investors are invited to contact our specialists for in-depth assistance on the registration of a limited liability company, who may also offer information on the business permits that are necessary when opening a company in Spain. If you want to open a company in another country, such as Austria, we can put you in touch with our local partners.