How to set up a Spanish company

 Man writing a check

 

 

 

 

 

 

 

 

“Spain will be the next Germany!” This was the headline in “EL PAIS” last week, a popular Spanish newspaper.

Is this true? Well, even though the headline may be exaggerated in my opinion, there are grounds for optimism as recent labour reforms will  benefit business development and the fall in salaries will increase both investment opportunities and businesses.

Times are tough, yes, but this is also a time of change and evolution.  We have seen an increase of enquiries from UK companies wanting to do business in Spain or set up a Spanish Limited company. Sometimes this is due to tenders or “one of” jobs but in other occasions we have seen UK corporate clients willing to enter into the Spanish market in very niche areas where there is a lack of specialisation or specific products needed.

But how is it done? Is it difficult to create a Spanish SL (Limited Liability company)?

Creating a Spanish SL when the shareholders are individuals is not complicated. It is a matter of choosing a name and then incorporating the company at the Notary’s office in Spain. On the other hand, complications start to appear when the Spanish company will be owned by a UK company. Below you will see a list with the steps that need to be taken to incorporate a Spanish Limited company when the shareholder is a UK company.

–          First of all, before creating a company we must decide its name and this involves applying for a Negative Certification of Name with the Spanish Companies house. This certification will indicate whether the name is available or not.

–          Once you have the name secured, you will have to go to the tax office in Spain to apply for the UK company’s  CIF  number (Tax Identification Number). However, this tax number will not be given unless you provide the Tax office with certified and translated copies of the company’s corporate documents. This means supplying the certificate of incorporation, memorandum and articles of association duly legalised and translated.

–          At the same time, you must open a Bank account in Spain, in which you will deposit the necessary capital for the company. The minimum capital is € 3,005.06 but nothing stops you from setting up a higher capital if this is convenient.

–          The incorporation of the Spanish company needs to be signed by the Director at the Notary’s office in Spain. If the Director cannot attend the signature, a power of attorney can be sorted and given to someone to act on his behalf.

–          Once the Deed of incorporation is signed, the stamp duty needs to be paid and the company will get registered with the Spanish Companies house.

–          If the company is going to have employees, the final step is to register the company with the Social Security Schedule because if not, the company will be unable to enlist its employees with the Social Security.

All these procedures should be done in person. If the procedure seems complicated to you, then the best thing is to instruct a firm of lawyers like ourselves or any other similar firm with experience in this field to prepare the documentation in the UK and the incorporation in Spain.  Your lawyers should also be able to put you in touch with the various Chambers of Commerce of the different regions in Spain which will inform you of the benefits for new incorporated companies as well as any potential business opportunities.

Spanish Limited companies- New advantages

On the 3rd December 2010, the Spanish Parliament issued a new law that speeds and reduces the costs of setting up a Spanish Limited company.

 The aforementioned law was a response to the current climate in which the raising unemployment rate has forced many Spaniards to become self-employed.

Up until December 2010 the costs for setting up a simple Spanish Limited Company were astronomical. The timescales involved were also too long as it used to take more than a month to set up a limited company.  

 The new law shortens the timescales involved to a quite satisfactory level more in line with other European countries. For instance, on applying for a name for the company, the “Registro Mercantil” (Spanish equivalent of the Companies House) will have to issue the name within 24 hours, allowing the Notary Public who prepares the Deed of Incorporation to have the deed ready in the following 24 hours. Once the Deed of Incorporation has been signed, the “Registro Mercantil” will get the deed registered in the following 3 days. The above means that the timescale to set up a Spanish Limited company has been shortened from 30 plus to 5 days.

The cost of setting up the company has also been noticeably reduced. It used to be in the region of 800 € but now a Spanish Company can be set up for only 100 €.

 This is a clear advantage for entrepreneurs willing to set up their own company in Spain and this will incidentally help the currently damaged Spanish Economy as more business will be created. On the other hand, Notaries and Registrars from the Companies House are a little bit sceptical about whether these new measures will make any difference to the already tumbled Spanish Economy. I wonder whether these comments from Notaries and Registrars are genuine and honest comments or just a simple rant after seeing their fees cut dramatically. As we say in Spain “It does not rain for the taste of everyone” (No llueve a gusto de todos).