Company Registration in Spain

Spain is considered one of the countries that offer the most favorable conditions for opening and running a business. This is evidenced by the increasing foreign investments in the local economy and the growing number of companies owned by foreigners. In 2022, there were more than 13,000 such companies, employing about 15% of the total workforce.

Before starting the company registration process in Spain, which can now be done remotely, it is necessary to determine its legal form. This is due to differences both in standard procedures and in the cost of the entire process.

The most common type of legal entity is Sociedad de Responsabilidad Limitada (S.L.), which corresponds to a Limited Liability Company. An S.L. can be established with a minimum share capital of €1, although special legal requirements apply until the capital reaches €3,000. In the case of Sociedad Anónima (S.A.) (Public Limited Company), the minimum share capital is €60,000.

The process of registering a company in Spain starts with choosing a name, for which three options should be sent to the central office of the Commercial Registry in Madrid (Registro Mercantil) for verification of their uniqueness. This takes approximately two weeks, after which the required capital contributions must be arranged according to the chosen legal form.

Since October 2022, Law 18/2022 has allowed the establishment of an S.L. with a minimum share capital of €1. However, special legal requirements apply as long as the company’s share capital remains below €3,000. In essence, this law only opens up access to the business world for individuals who do not have sufficient funds, but ultimately, by putting them within strict limits, still requires proof of financial soundness.

The preparation of the set of founding documents includes gathering information about all the company’s shareholders, their shares, the type of activities, the management structure of the company, its reorganization and liquidation, accounting reporting, and dispute resolution procedures. All the collected documents must be presented to a notary by all founders and the executive director for authentication in their presence.

After paying the ITP/AJD tax (1% of the share capital), the company must be registered with the Chamber of Commerce, the tax inspection, which assigns a CIF identification number (equivalent to a tax identification number), and registered in the social security system (Seguridad Social). Depending on the type of activity, it may be necessary to request licenses and permits, which is most often the case for companies in the medical or educational fields, although it is also required for certain types of entertainment.

By that time, it is necessary to have an office and a registered address for the company. In the final stage, the order for the company stamp is placed, official accounting books are purchased, along with a complaints book, and municipal fees are paid.

If, for various reasons, there is no possibility to independently handle the entire process of opening a company, assistance can be sought from a bureau providing legal, economic, and consulting services (gestoría or asesoría). In such a case, it is important to carefully choose such a bureau and be prepared for additional expenses in the amount of several thousand euros.

Another option is to purchase an existing company, which is the fastest but also the most expensive. Moreover, a functioning company may have serious problems, such as debts, losses, or a tarnished reputation, which can be identified by specialists familiar with the local business practices.

If you want to open or buy a company in Spain, our team of professionals at Lusa Legal will be happy to assist you in all stages of this process.