Description

Formation of a Limited Company in Spain

This service includes:

  • Obtain a certificate from Mercantile Registry that the company name you want is not already taken.
  • Writing of the official statutes for the company
  • You can use your address as a Registered Office Address.
  • € 3,006 Authorised Share Capital.
  • Prepare the company constitution (Escritura).
  • Arrange a local Notary appointment for you to sign the Escritura.
  • Obtain a temporary tax code (CIF) from the Tax Office.
  • Pay Stamp Duty at 1% of the initial share capital.
  • Obtain a certificate from the Mercantile Registry that the constitution has been signed.
  • Assistance at the Notary Public when signing the documents of the Deeds of Incorporation
  • Register your company trading activity in Spain at the Tax Office.

Introduction

General considerations that should be borne in mind when starting up a business.

Under the Spanish law there are different types of legal framework for partnerships and commercial companies such us:

  • Comunidad de Bienes: a kind of partnership based in joint ownership of a business, goods and property. Unlimited liability for partners
  • Sociedad Civil: private partnership agreement for an specific business. Unlimited liability for partners
  • Sociedad Anonima: Convenient for big investments and a large number of shareholders. No liability for the shareholders. many legal requirements and formalities, normally used by banks and insurance companies.
  • Sociedad Anónima laboral. A kind of «Sociedad Anonima» formed by workers who own the the company´s share capital and are employed by the company.
  • Cooperatives. These type of companies are a vehicle to provide a stable job to its partners and can also be used to formalize partnership agreements between self – employed individuals.
  • Sociedad Colectiva. A commercial company but the shareholders are liable for company debts. Normally is used as joint ventures and therefore partners are companies.

But the most common is the limited company, above all in the case of small businesses. In the last decade, the number of sole businesses or self-employed people has fallen by 10%, while the number of newly created limited companies amounts to around 90.000 per year. There are no particularly strong reasons for choosing one kind of setup over the other, but general considerations do exist that should be borne in mind when starting up a business. In general, in order to set up a limited company, it is necessary to execute a notaries instrument containing the following information: the identify of the members and their intention to constitute the company; the share of capital provided by each of them; the manner in which the company is to be run initially and the persons who shall be responsible for its management and corporate representation; and its articles of association. The articles should include the company or trading name, its objects and the activities proposed to be carried out, its registered office, commencement and termination of financial year, share capital (creditors of the company may only claim up to the limit of the company’s share capital) stating share holdings and distribution, and the management system of the company (sole manager, board of management or joint management). It is important to note that a member may not freely transfer or sell his shares to a third party, unless such person is another member, his spouse or his ancestors or descendants.

Once the deed of incorporation of the company has been executed, if should be registered for tax purposes with the Tax Office including the Fiscal Declaration stamp (036 or 037). The company will then receive a Fiscal Identification Code number (CIF). The company should be given a heading in relation to its principal activity for the purposes of registration for payment of the local economic activity tax (IAE). Tax treatment varies in respect of economic activity, depending on the locality where the business is to be carried out. Lastly, in the event of winding-up of the company, registration with the tax authorities and the Companies Register should be cancelled. As far as tax liabilities are concerned, companies generally pay VAT and Company Commercial Activity tax (IAE), and are required to submit annual returns relating to Operations with Third Parties. On winding-up, there are numerous administrative and accounting formalities to be carried out.

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1. Procedures, Legal Formalities, Time Scale, Cost Fees and Expenses

TIME SCALE for company formation and paperwork: a maximum of 3 months approx including registration. Please bear in mind that the company can trade even if registration formalities has not been finalized

PROCEDURES: cost, fees and expenses: minimum – 3006.-euros pesetas (Share capital) + 2000 pesetas (Cost, fees and expenses approx.).

PROCEDURES Cost, fees and expenses

  1. Consultation: Lawyers and legal consultants Fees To be agreed. Normally your lawyer will guide you through all formalities as stated below.
  2. Registration of business name OFFICIAL CERTIFICATE: between 30 euros and 60 euros handling fee.
  3. Bank OPENING A BANK ACCOUNT: 3006.-euros minimum share capital
  4. Notary THE DEED: 300-450 euros – notary’s legal fees
  5. Tax declaration and Fiscal Identification Number TAX IDENTIFICATION CODE (CIF) a handling fees is normally charged by the professional who deal with this matter (fill in the form for you and lodge it with the Tax office. 60.- euros.
  6. Payment of Stamp Duty STAMP DUTY TAX: «Impuesto de Transmisiones Patrimoniales» 1% of share capital 31.-euros. (minimum share capital) Companies formed in Canary Islands do not have to pay stamp duty tax
  7. Registration of Deeds REGISTRATION OF DEED: . You will be asked to pay 120/150 euros for the publication in the BORME (Official Gazette of the Company registry). When the Deed has been registered you will be charged with the Company registry fees approx. 200.-euros.
  8. Registration for commercial activity tax REGISTRATION FOR TAX PAYMENT: This tax it is paid once a year (next year)
  9. Registration of self-employed workers and company administrators (directors) REGISTRATION WITH LAB OUR AUTHORITIES – fees to be agreed with lawyer and labor expert (Graduate Social).
  10. Registration of businesses with Department of Social Security. Official books REGISTRATION WITH LABOUR AUTHORITIES – fees to be agreed with lawyer and labour expert (Graduado Social).
  11. Registration of contracts with employees and self- employed (administrators and directors) LABOR CONTRACTS – fees to be agreed with lawyer and labor expert (Graduado Social).

Opening of premises (Labour Authorities) OPENING PERMITS: – fees to be agreed with lawyer and labor expert (Graduado Social).

Building works license if Must be granted before 6 months from the date when the application was lodged at the town hall

Opening license (Local Town hall) Must be granted before 6 months from the date when the application was lodged at the town hall

2. Official books an taxation

Official books an taxation We now offer a SUMMARY of the legal procedures involved in the setting-up of a business.

IMPORTANT REMARKS: In order to properly keep your accounts we strongly advise you to use the services of a «Gestoria Administrativa» a qualified accountant or tax advisor.

The following steps for the fiscal constitution of any business are obligatory:

At the offices of the «Delegacion de Hacienda AEAT » (Tax Office) where the business is located:

  1. Registration by tax declaration: models 036 or 037.
  2. Registration for Economic Activity Tax.In addition, the following procedures require to be carried out depending on the commercial activity and circumstances of each business:At the Tax Office
  3. Legalization of Books, after the end of the financial year.At the offices of the Town Council where the business is located
  4. Opening license.
  5. License for building works.
  6. Construction tax. 4

3. Obligatory Books Required for Businessmen, professionals and artists relating to VAT

Taxpayers using the simplified system should keep the following books:

Register of bills received.

Register of sales and income:

for those taxpayers whose rates or modules operate on the basis of operational volume.

Remaining taxpayers are required to keep:

Register of invoices issued.

Register of invoices received.Register of capital assets:

for taxpayers who carry out regularization of capital assets.

Register of certain intracommunitary operations, as appropriate.

IMPORTANT REMARKS: In order to properly keep your accounts we strongly advise you to use the services of a «Gestoria Administrativa» a qualified accountant or tax advisor. using the services of a qualified professional you will save time and money and you will not be involved in getting the above mentioned paperwork.