Company Registration in Spain

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What is Company Registration in Spain?

Spain has the fourteenth-largest economy in the world, and it is also among the largest countries in the world by purchasing power parity. It is a member of the European Union, the Organization for Economic Co-operation and Development, and the World Trade Organization.

The Spanish economy is the fifth-largest; and the fourth-largest in the Euro zone , based on nominal GDP statistics.

Spanish law protects the property rights. However, enforcement of contracts is slow. The courts of Spain, however, have a solid record of investigating and prosecuting cases of corruption, but they are often overburdened. Anti-corruption laws in Spain are enforced on a generally uniform basis. Also, in addition to public officials in Spain, several wealthy and well-connected business executives have been prosecuted for corruption.

Procedures for setting up a business in Spain have been streamlined, and the number of licensing requirements has also been reduced. However, labor regulations still remain restrictive despite the progress.

Business Structure

limited liability Company (Sociedad Limitada {S.L.} )

Private Limited Liability Company (Sociedad Limitada Laboral) is the most popular form of business in Spain. The capital of the company is divided into nontransferable shares, and the liability of the members is limited to their contribution to the capital. When opening a company in Spain, a minimum share capital of EUR 3,005.06 is required to be deposited. All the decisions of the Spanish Limited Liability Company are taken by the general meeting of the shareholders. Which will A director disappoint in the meeting, in order to ensure that the regulations of the articles of association are respected, documents for the meetings and documents which need to be delivered to the authorities are prepared and take all the daily decisions?

Public Limited Liability Company (Sociedad Anonima {S.A} )

The Public Limited Company in Spain requires high amounts of capital and it is also known as the joint stock company. The minimum share capital requirement for opening this type of company in Spain is 60,101.21 EUR (at least one-quarter of this sum must be paid up before company registration). The liability of the members incorporating the company is limited to the contribution to the capital. The major decisions of the company are taken, by the general meeting of the shareholders. However, the daily decisions of the ordinary course of business are taken by a board of managers supervised by a supervisory board.

General partnership

This type of entity is formed by at least two members with equal responsibilities and rights. In Partnership, the liabilities that arise to the business are extended on the personal assets of the partners. And, in case of dissolution of the partnership, personal assets of the partners can be used to cover the outstanding claims. 

Limited partnership

Another form of Spanish partnership is the limited partnership which requires at least one member to be a general partner and at least one to be a limited partner. The liability of the limited partner is limited o the extent of his or her contribution to the capital. Only the general partner is allowed to take the major decisions and, in case it is excluded, the partnership ceases to exist.

Sole trader

A sole trader is an option if a natural person decides to open a company in Spain on his or her own. It is the simplest form of doing business in Spain. The business has the same entity as its owner (because there is no legal distinction between the entrepreneur and the company) and, in case of company’s dissolution, the claims can be covered with the investor’s assets. No minimum share capital is required for this type of entity and all the profits can be used freely by the user.

Incorporation Procedure

The very first step of opening a company in Spain is finding the desired name and checking the availability of that name in the Mercantile Register. The name can be check directly at the office of the Central Mercantile Registry or via e-mail. To incorporate a company in Spain, a bank account must be open upon which a certificate of deposit is received from the bank where the account is opened. After getting the certificate, the founders of the company are required to notarize the documents of incorporation. 

While incorporating a Spanish company the first effective step is obtaining a Tax Identification Code (Codigo de Identification Fiscal, CIF) from the Delegation Provincial de la Agencia Estatal de la Administration Tributaries. 

Once the decision for registration is taken, the certificate of name reservation, the certificate of capital deposit and theincorporationdeeds must be submitted to the Mercantile Registry in maximum two months from the date the decision of registration was taken. On receiving the proper documents. The Mercantile Registry issues a certificate of incorporation. On receiving the certificate the announcement regarding the incorporation of the company in Spain is published in the Official Journal of the Mercantile Registry. After the publication of announcement, the founders are required to legalize the corporate books and accounting books. This process is performed through an application at the Commercial Registry, which can be deposited either electronically or in person.

To open business premises in Spain, all the companies incorporated there must obtain a municipal license. To obtain a municipal license, an application is made at the Department to de Urbanism del Ayuntamiento. The process usually takes up to 15 days.

The last step of company incorporation process is the registration of the employees of the company at the local general treasury of social security at the Tesoreria General de la Seguridad Social.

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