Business types in Spain

The vast majority of new companies in Spain now are limited liability companies (SLs). Spain streamlined the process of creating a sociedad limitada with standard bylaws, using an automated platform called CIRCE. The original law was passed in 2003 (termed an SLNE (sociedad limitada nueva empresa), though it took many years before one could find a notary willing to process it.

These days, it is rare to create a new Sociedad Anónima.

The following chart summarizes the different types of business entities.


Business Type Liability # of Partners Backing Capital Taxation
Autónomo (self-employed, freelancer) individual 1 not required individual taxation
Sociedad Limitada (limited liability company) corporate 1 to 50 minimum 3000€ corporate taxation
Sociedad Anónima (corporation) corporate 1 or more minimum 60,102€ corporate taxation
Sociedad Colectiva (co-partnership) corporate 2 to 50 0 - 250,000€ corporate taxation
Sociedad Cooperativa (cooperative) corporate 3 or more (if Cooperativa Laboral, 1 must be a Spanish citizen) minimum 25,000€ corporate taxation
Sociedad Limitada Laboral (limited partnership) corporate 3 or more (1 must be a Spanish citizen) minimum 25,000€ corporate taxation

Articles:

FAQs:

Questions? We're here to help!

Contact Us

What is the difference between a Sociedad Limitada (SL) and a Sociedad Anónima (SA)?

  • An SL is similar to the British "Ltd" or the American "LLC", while an SA is similar to a corporation.
  • Accounting:

    SL: Accounting for an SL is fairly simple, and in the first three years, you can apply for "simplified accounting".

    SA: Accounting for an SA is more complicated, and yearly auditing is required.

  • Share Capital:

    SL: Requires backing capital of 3000€.

    SA: Requires 60,102€, though only 25% of this needs to be deposited in the bank at the time of incorporation.

  • Administration:

    SL: There is wide flexibility regarding how the bylaws can establish the administrative organization (sole director, joint directors, board of directors). The duration of the director's position is indefinite in this case, unless there is a limit stated in the bylaws.

    SA: The bylaws must establish a concrete administration system. Any changes must be modified in writing. The duration of the directors' positions is limited to six years (with the possibility for re-election in equal periods).

  • Bylaws:

    SL: Flexible: The bylaws can contain certain variations from the legal regime.

    SA: Rigid: There are more limited possibilities of establishing variations to the legal regime.

  • Non-monetary Contributions:

    SL: Such contributions can be made without the necessity of a report by an independent expert.

    SA: Such contributions must be accompanied by a report from an independent expert.

  • Share Transfers:

    SL: The law establishes limitations with regards to the transfer of shares to third parties. These limitations can be expanded or reduced in the bylaws.

    SA: In principle, there is freedom of share transfers, although the bylaws can also establish additional requisites.

  • Meeting of Shareholders:

    SL: The meeting can be called by direct communication to the shareholders, if the bylaws allow it.

    • SA: The call for a Meeting of Shareholders should be published in the Official Bulletin of the Mercantile Registry, as well as in the newspaper.

  • Dissolution:

    SL: If the shareholders agree to dissolve the company, it is not necessary to publish the agreement in the newspaper.

    SA: The agreement for the dissolution of the company should be published in the Official Bulletin of the Mercantile Registry and in the newspaper.

You might choose an SA:

  • if you want to be able to sell stock or company bonds, or go public (IPO).
  • as part of international estate planning.
  • to establish a non-resident company in Spain.

Otherwise, you would choose an SL. Most companies formed are now SLs, and not only for small businesses.

Call us at 932 155 393 or fill out the form below.