Spanish Sociedad Limitada (SL) Company Formation

Incorporating in Spain is very quick and simple ae.

A Spanish Sociedad Limitada (SL) is equivalent to a Limited Liability Company in the UK or a GmbH in Austria and Germany in that it is a legal entity which is separate and distinct from the individuals who run it. For sole traders and for people in partnerships, the individuals’ personal assets are at risk if there is a claim against the organisation but shareholders in an SL are liable to lose only the value of the share capital to which they subscribe.

Incorporating an SL allows access to the lucrative Spanish market and Formacompany is uniquely qualified to help you establish and maintain your Spanish business, we have 20 years’ experience incorporating business in Spain and our Madrid office can facilitate everything from drafting the initial documentation for your company to processing and running the payroll for your employees.

Assistance in obtaining your NIE number

We offer two services:

• NIE through visit to our office in Madrid

• NIE if you are unable to visit

Through a visit

You will sign a Power of Attorney with a Notary here.

This is a specific notarial protocol which is used for this purpose, and we prefer you to use this document as it is very familiar to the Police.

This Power only gives us:

• Authority to complete the application form
• Authority to present the application form, and a legalised copy of your passport to the Police
• and authority to collect the number and your personal certificate, once the number is issued

If you are unable to visit

If visiting Spain is not possible you can sign a dual language version of the Power of Attorney, which we draft for you, for use with a notary in your home country. The notary will witness your signature, and send the notarial document and your identity document to be apostilled or legalised for use in Spain.

This Power then gives us:

• Authority to complete the application form
• Authority to present the application form, which is accompanied by the Power of Attorney
• and authority to collect the number and your personal certificate, once the number is issued

VAT/IVA Registration

We obtain a company name certificate from the Mercantile Register, confirming that your company name is acceptable and not already registered. This certificate for company name clearance is important as it is given to the notary, and a copy is also given to your bankers and the tax authorities.

We submit your company name to the Mercantile Registry and obtain a Company Name Certificate.

We then apply for a provisional company tax identification code (código de identificación fiscal/CIF) and register for VAT (IVA). Your CIF will act as your VAT number and allows you to open a bank account in the company’s name and deposit the required amount of capital, which you must do before incorporation can take place. You, or your accountant, can apply for a CIF at the tax office. To apply for your CIF number, you must provide the following details: the name of your company (and the Negative Name Certificate from the Mercantile Registry), the registered address of the company, and identification in the form of your passport or residence permit. The tax office will then issue you with a certificate called an Identificación Fiscal that has your CIF number on it.

Once you have a CIF, you can open a bank account in the company’s name and deposit the required amount of capital. The certificate from the tax office states your company name with the addition of the words en constitución, which means that your company is in the process of being incorporated. You will receive another certificate ( Certificado del Desembolso Efectuado) proving that you’ve paid this amount into your business account. The certificate is also required to obtain your permanent CIF just before you start trading.

The company constitution, or deed of incorporation, can then be prepared and signed before a notary

• The Company Name Certificate from the Mercantile Registry
• The company’s provisional CIF
• The certificate showing the deposited share capital
• Documents to prove the identity of the founding partners.

The notario will also need to see the company bylaws, which should include such details as your corporate name and business purpose, the business address, your capital and the number of shareholders. You will also have to state whether any directors or administrators will be paid and, if so, what the payment arrangements will be. Finally, you must detail your corporate fiscal year, which can be no longer than one calendar year. The fiscal year is from 1st January to 31st December, and it’s simpler if your company’s fiscal year is the same. After the signing, your company bank account can be activated and the authorised signatories registered with the bank.

We pay the 1 per cent tax on the share capital at your local regional tax office.

Then we register your company with the Mercantile Registry by lodging the notarial deeds and forms showing name clearance, the CIF number and payment of the share capital tax.

The final step is to obtain your permanent CIF from the tax office and register your company for the ‘tax on economic activities’ ( Impuesto sobre Actividades Economicas – IAE) in order to be issued with a business licence. For this you will need the certificate showing your provisional CIF, your deed of incorporation and a photocopy of your registration with the Mercantile Registry.

• Modern and efficient multilingual banking & financial services sector;
• Excellent air and sea connections and telecommunications services;
• Professional, reputable and efficient Government and Tax Authorities;
• A mature professional services sector;
• Very low expense level (fees) for financial and professional service provision compared to other EU Jurisdictions. The difference is more evident in the case of professional service recurring costs (administration, accounting & tax compliance) are estimated to be at 35- 40% of Western European rates. One could very easily be misled by the low quoted start up costs for major European Jurisdictions as to the final total costs which can be considerable if one calculates recurring costs.