A Spanish SL is actually a limited liability company or sociedad limitada. It 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 usually is 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
What is the minimum share capital for an SL in Spain in 2024?
At least EUR 3,000 have to be provided in order for the limited liability company to be established in Spain. In other countries, such as Italy, the minimum share capital for opening an LLC is much lower – EUR1, which may attract more foreign investors. Contributions can be made in a wide category of assets, such as cash, credit rights, real estate property or any others. No expert’s evaluation is required. The capital is divided into shares, which are not free for transfer and investors can receive further information on the share capital from our team of representatives in company registration in Spain.
It is important to know that the shares of a Spanish limited liability company can’t be sold, but they may be transferred to specific types of entities. For example, the shares of the company can be transferred within the company, to its members, or to the close family members of the shareholders. At the same time, the shares can also be transferred to other companies, provided that the SL is included in a group of companies.
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.
More details on the Spanish SL (limited liability company) are available in the presentation below:
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 and they are elected by the general meeting, which represents the highest managing body in the rank of a Spanish company.
How can an SL in Spain be verified?
It is not necessary to keep accounting documentation according to Spanish law, but all records must be available on request if the Spanish authorities want to evaluate them. 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.
The Spanish legislation referring to accounting procedures applicable to Spanish companies is given by the Spanish Generally Accepted Accounting Principles (GAAP). This is also available for a limited liability company, which must offer complete annual financial statements that should contain an income statement, the cash flow statement, the balance sheet as well as any other documents attesting to other financial activities of the company. The company must also prepare additional documents related to tax returns, once it completed the formalities for VAT registration in Spain and other specific corporate taxes.
Those who want to open a Spanish SL must be aware that the VAT system for certain Spanish regions might follow different regulations in 2024. For instance, companies registered in the Canary Islands, Melilla, and Ceuta, which are Spanish regions, are not considered VAT territories under Spanish law, but they are considered parts of the European Community. According to the Spanish budget for 2024, these regions can be liable for VAT but will be not taxed in Spain.
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 an SL 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 on 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 Tributary Agency;
- once the company will hire 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 started its operations (no later than 30 days from the first day of business activity).
One should note that newly created companies in Spain, such as SLs, are subject to 15% tax rate for both the first tax period and the following tax period. However, such tax does not apply to equity companies or to newly created enterprises that are part of a local or international groups.
What are the legal grounds for the dissolution of a Spanish SL?
The Spanish legislation prescribes several legal grounds on which a Spanish SL can be dissolved. Most of these situations refer to financial difficulties experienced by the company, but the legal entity may also be terminated in a situation in which its investors consider that the business has reached its goal. Besides this, the Spanish SL can be closed down when the company’s net assets have a total value of less than half of the company’s share capital.
In a situation in which the company has less than half of the company’s share capital, it is compulsory under Spanish legislation to dissolve the company. However, other types of reasons can also be stipulated under the company’s articles of incorporation and businessmen can receive more information regarding these stipulations from our team of consultants in company registration in Spain.
The corporate tax in the case of an SL in Spain is set at a 25% rate, however, a lower rate of 22% rate might be available. This offers great flexibility for this kind of structure.
According to the general tax rules in Spain, the minimum taxation rule will apply to those corporate income taxpayers with net turnover of at least EUR 20 million in one year prior to the date in which the tax period starts and for taxpayers subject to the special tax regime for CIT purposes, nevertheless the net turnover sum.
On the other hand, online intermediary services, online advertising, and data transmission services concerning users located in Spain are levied with a 3% tax rate.
We can also help you with opening a bank account and accounting services in Spain.
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 last approximately five 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 the power of attorney. In this case, the registration can last up to two weeks.
We remind, that it is important to make a name verification prior to the registration of an SL in Spain. This way one can avoid the situation where the application is rejected due to a similar business name already taken.
Our team of agents in company formation in Spain can help you incorporate any type of company. Investors are invited to contact our specialists for in-depth assistance on the registration of a limited liability company in Spain, who may also offer tailored information on the business permits that are necessary when opening a company in this country. If you want to open a company in another country, such as Austria, we can put you in touch with our local partners.