Spanish Corporation Formation
Spain is a sovereign country located in southwest Europe on the Iberian Peninsula. Its official name is the “Kingdom of Spain”. Spain is bordered by the Mediterranean Sea to its east and south, to the west and northwest by Portugal and the Atlantic Ocean, to the north and northeast by France, Andorra, and the Bay of Biscay, and Gibraltar & Morocco to the south. Spanish territories also includes the Canary Islands off the North African Atlantic coast, the Balearic Islands in the Mediterranean Sea, several small islands near the Moroccan coast, with two cities Ceuta and Melilla in the North African mainland.
Spanish land area totals approximately 195,300 square miles (500,000 square kilometers) making it Southern Europe’s largest country and second largest in the European Union (EU). Spain’s population is estimated at 46 million making it the sixth largest country in Europe. Spain’s capital and largest city is Madrid.
Corporations are regulated by the Company Act. The Company Act in Spain was amended in 1989, which is also known as the Corporations Law. Offshore corporation formation and regulations follow the Commercial Code and the Corporations Law.
Two other laws that regulate Spanish corporations are the Limited Liability Companies Law and the Mercantile Register Regulation.
Another law effecting corporations in Spain is The Capital Companies Act, which achieved approval in 2010 and changed some of the share capital requirements for corporations in Spain.
There are several benefits for Spain’s corporations including:
• Political and Economic Stability: Spain offers political and economic stability.
• EU Membership: As a member of the European Union (EU), Spain opens opportunities to do business with other EU member countries and their currency is the Euro.
• Small Corporations Thrive: The Spanish business sector is very friendly to small businesses with around 90% of the companies set up in Spain being small and hires fewer than ten employees. Thus, small and medium companies are important to the Spanish economy, and the Spanish government does much to offer incentives to these small business investors.
• Foreign Owned Corporations: Around 10,000 companies have incorporated in Spain. The government is constantly looking to increase this number, and does much to offer incentives to foreign investors.
• One Shareholder: The minimum requirement for a Spanish corporation is one shareholder.
Spanish corporations must pick a unique name that is not similar to already existing corporation names. Typically, three versions of the corporate name are submitted with the expectation that one of them will be approved.
The Spanish government maintains a website of corporate names to make selection easier for new corporations. It normally takes three business days to obtain approval of the corporation’s name.
After picking an original company name, the business owner must register for a certificate (known as the no-name coincidence certificate) with The Mercantile Registry to verify that the corporate name is not being used by an already existing corporation.
Office Address and Local Agent
Spanish corporations must have a local registered agent and a local office address. This address will be used for process service requests and official notices.
Spanish corporations must have at least one shareholder.
Directors and Officers
Spain’s corporations must have at least one director. A director cannot be a corporate entity and must be a private person.
The minimum capital for an S.L. (Sociedad Limitada, equivalent to an LLC) is as follows:
1. Paid capital of €3 000 (accredited in a Spanish bank account) or
2. Corporate assets worth €3 000 or more (e.g. computer, mobile phone, etc.).
The minimum capital for an SA (Sociedad Anónima – typical corporation) is €60 000. Only 25% of this needs to be deposited in the bank at the time of incorporation. The company will deposit the remainder within the first 3 years of activity. Once you deposit the funds, the bank will issue a Certificate. It will say that you have deposited the money to form a Sociedad Anónima (corporation). You can put the money in to establish a bank identity. The next day you can withdraw 90% of it out of the bank.
Since 2016, the corporate tax rate is 25%.
Standard corporation formation costs are €1200 based on the minimum share capital of €3000.
Spanish corporation’s records regarding directors and shareholders may be made open to the public. However, for those that wish to keep privacy, nominee directors and shareholders can be utilized for privacy and confidentiality.
Accounting and Audit Requirements
A SL (Limited Liability Corporation) has a fairly easy accounting process, and one can apply for “simplified accounting” in the first three years of incorporation.
For an SA (Typical Corporation), accounting is more complex and a yearly audit must be completed.
Annual General Meeting
Every Spanish corporation is required to hold an annual general meeting.
Time Required for Incorporation
Spanish corporations can expect the entire process to take around 30 to 40 days. This completion time depends on the acceptance of the corporate name, as well as, how accurately the applicant completes its registration documents.
Spanish corporations can purchase shelf corporations for faster incorporation.
Spanish corporations have several benefits including: only one shareholder is required to incorporate, Spain is an EU member where small companies thrive and a large number of foreigners incorporate there; and the political and economic systems are stable.