Company Registration in Spain- An Overview

Spain is present in South Western Europe and is accessible through the Atlantic Ocean. It shares land borders with France. It is one of the largest countries in South Europe. Company Registration in Spain is quite straightforward; however, it is important to comply with the rules of local law for company registration in Spain.

It is one of the largest markets in the European Union for conducting business. Hence investors would go for the process of company registration in Spain. Spain is considered as the second largest tourism market in the world. Hence there are different opportunities for investors in Spain.

Spain is a strategic location for investors from Africa and Europe. Spanish is the third largest spoken language in the world. This opens doors to potential customers in South America also.

When it comes to tourism, Spain is the second largest tourism market in Europe and is the fifth largest in the world. All the above reasons make it one of the best destinations for carrying out business.

Benefits of Company Registration in Spain

The following are the benefits of company registration in Spain:

• Tourism Market

  When it comes to tourism, Spain is the second largest tourism market in Europe and is the fifth largest in the world. Madrid and Barcelona are thriving locations for tourism in Spain. Barcelona has one of the largest beaches in the world which makes it an attractive tourist destination and hub. Madrid has various tourist attractions which include the bull fighting arena.

• Government Incentives

  There are lot of government incentives offered for foreign companies in Spain. Companies which go and invest in different forms of training programs for employees would secure 75% rebate on the social security contributions. Financial subsidy is provided by the Spanish government, which includes some form of interest subsidy on bank loans.

• Tax benefits for Trading Companies

  If a trading company is incorporated in Spain, then it is taxed at 15% for the first two years. Then the amount of tax levied on the trading company from the third year would be standard at the rate of 25%. There are different forms of Spanish Free Zones established. These free zones offer certain amount of incentives, such as some form of reduced corporate tax. VAT and stamp duty reductions would also be applicable for such companies.

• Double Taxation Agreements

  Spain has different forms of DTAAs with other countries such as the UK, India and America. Hence an investor would not get taxed twice.

Eligible Business Structures for Company Registration in Spain

The following are the business structures for company registration in Spain:

• Branch office

  This type of entity is also known as Sucursal. A branch office in Spain is a mere extension of the foreign parent company. The board of directors have to take the resolution for forming the branch office in Spain. The branch office is also considered as a subordinate office to the principal establishment. Branch offices in Spain would require to pay specific amount of corporate taxes. Apart from this, they would also require to pay quarterly VAT returns as per the prescribed authority.

• Limited Liability Company

  This type of entity is also known as Sociedad Limitada. This type of entity has limited liability. This would mean that there is no form of personal liability for the members of the company. The articles of association and other laws related to the company would form the requirements of the company laws (estatutos socials). Annual accounts of the company have to be registered with the respective company registry of Spain.

• Joint Stock Company

  This type of entity is also known as Sociedad Anónima. A joint stock company can be compared to a public limited company, which lists shares in the public stock exchange. Such form of company can list its shares in a publicly traded stock exchange. The company would have to pay corporate tax. However, dividends would also be separately taxed. Managers and Directors have the sole responsibility of running the company. Annual accounts of the company have to be registered with the respective company registry of Spain.

Minimum Eligibility Criteria for Company Registration in Spain

The following eligibility criterion has to be sufficed for company registration in Spain:

• Minimum Capital

  The minimum capital which is required for company registration in Spain is EUR 3000. Hence from the above, it is known that registering a company in Spain is quite inexpensive. There is no requirement of minimum capital for establishing a branch office in Spain. For forming a branch office in Spain only the resolution of the Board of Directors would be required. This resolution would be supported by a general meeting.

• Residence Requirements

  There are no residency requirements for any key management executives that go for the process of company registration in Spain. Hence a foreigner can own the company.

• Minimum Number of Shareholders

  A branch office does not require to have minimum number of shareholders to operate. A public limited company and private limited company have to have at least one shareholder.

• Minimum Number of Directors

  A branch office does not need to have minimum number of directors to operate. In a limited liability company, the board of directors have to comprise of at least three members. The maximum number of directors which can be appointed for a private limited company would be 12. In a public limited company, the board must comprise of minimum three members.

Procedure for Company Registration in Spain

The following procedure is considered for company registration in Spain:

Branch Office

• For opening a branch office in Spain, first the registered parent company must take a resolution to open a branch office in Spain. This resolution has to be supported by the board. After the board resolution is passed, then the resolution would be followed up in the general meeting.
• Once of the agendas in the general meeting would be to open a branch office in Spain. After this the process of opening the branch office in Spain would take place.
• After the resolution is taken by the principal office, then the documents along with the application have to be submitted. These documents would be notarised and registered in the official commercial registry.
• Finally, the registration requirement would be published in the Official Gazette of the Commercial Registry.

Limited Liability Company

• The process of company registration in Spain for registering a branch office is different from the limited liability company.
• First and foremost, the applicant for company registration in Spain would have to apply to the name registry for registering the name of the company. The name registry would ensure that all the formalities are carried out with respect to securing the name of the company. The name of the company must be unique and not taken by any other form of company.
• After this the applicant would have to open a corporate bank account. This would be required so that the minimum capital can be deposited in the bank account.
• Once the above step is carried out, the deed of incorporation and drafting the bye laws of the company has to take place.
• Finally all the incorporation deed, bye laws and other documents would be filed with the registry. The documents have to be notarised and filed with the registry to complete the incorporation process.

Joint Stock Company

• First and foremost, the applicant for company registration in Spain would have to apply to the name registry for registering the name of the company. The name registry would ensure that all the formalities are carried out with respect to securing the name of the company. The name of the company must be unique and not taken by any other form of company.
• After this the applicant would have to open a corporate bank account. This would be required so that the minimum capital can be deposited in the bank account.
• Once the above step is carried out, the deed of incorporation and drafting the bye laws of the company has to take place.
• Finally all the incorporation deed, bye laws and other documents would be filed with the registry. The documents have to be notarised and filed with the registry to complete the incorporation process.
• This company is allowed to issue securities to the public. This process is formally known as an IPO.

Compliances required for Company Registration in Spain

Once the company registration process is carried out, there are several compliances which have to be adhered. The following are the compliances which have to be followed:

• Shareholders Meeting

  Private Limited Companies and Joint Stock Companies are required to hold shareholder meeting within the first six months of the financial year. This meeting is carried out to vote on specific matters related to the company. This would be approval of the accounts and voting.

• Board Meetings

  Board Meetings have to be mandatorily held quarterly. In some cases, the board meeting would be called by the members. Branch offices do not mandatorily require to have board meetings.

• Taxes

  Branch offices would have to pay corporate tax and VAT. Private limited companies and joint stock companies would have to mandatorily pay respective taxes. Other annual filing requirements have to be carried out by the company.

• Other registration

  Branch offices would have to register with the Commercial registry and tax authorities. A tax identification number (NIF) would be provided to the branch office to file the requirements related to tax. Joint Stock Companies and Private Limited Companies would also have similar compliances, but they would also have to secure respective business licenses. Branch offices have to annual accounts with the commercial registry. Such annual accounts have to be separate from the foreign entity.

Documents Required

The following documents are required for company registration in Spain:

• Deed of Incorporation
• Bye Laws of the Company
• Articles of Association and Memorandum of Association of the Company
• Information on the shareholders and directors of the company
• Organisational structure of the company.

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