Public limited company (Sociedad anónima)
A public limited liability company is a corporation with a mininum share capital of Eur 60.000, divided into shares, which must completely subscribed upon the incorporation of the company, although only a 25% must be paid up.
The name of the company must include the indication “Sociedad Anónima” or its acronym “S.A.“
No minimum number of shareholders is required, although specific publicity rules apply to sole shareholders companies.
Shareholders may be individuals or companies of any nationality and residence, and their liability is generally limited to the amount of capital contributed by each of them.
Private limited company (Sociedad de responsabilidad limitada)
A private limited liability company is a corporation with a mininum share capital of Eur 3.000, divided into quotas, which must completely subscribed and paid upon the incorporation of the company.
The name of the company must include the indication “Sociedad Limitada” or “Sociedad de Responsabilidad Limitada“, or its acronyms “S.L.” or “S.R.L.”.
No minimum number of quotaholders is required, although specific publicity rules apply to sole quotaholders companies.
Quotaholders may be individuals or companies of any nationality and residence, and their liability is generally limited to the amount of capital contributed by each of them.
A private limited liability company has to comply with less strict corporate rules (thus it has lower regulatory costs) than a public limited liability company, which makes it more suitable for small companies with a limited number of quotaholders.
Any individual may engage in business activities in Spain as a Sole Trader. All income derived from his business activities will be added to his personal taxable base and he may deduct from this base all costs incurred directly related to these activities.
The Sole Trader will be personally and unlimitedly liable for all debts incurred in his activities.
A Sole Trader must register himself with the tax authorities (036 form) and file quarterly VAT and annual Personal Income Tax declarations. He must also maintain an accounting of his operations and register in the Social Security if he is going to hire any workers.
There is not any initial financial investment required.
Partnership (Sociedad civil)
The Partnership, or “Sociedad Civil“, is a contractual relationship formed by two or more persons who contribute assets or their work and divide the profits amongst themselves. Accordingly, any debts or financial obligations will also be divided amongst the parties as per regulated in the partnership agreement. In any case, the partners will be personally and unlimitedly liable for all debts of the partnership.
For tax purposes, all income and costs of the partnership are directly assigned to the partners according to their agreed participation, and consequently added or substracted from their taxable for Personal Income Tax purposes. The partnership must not file CIT, but it must be registered with the tax authorities and make quarterly VAT filings.
It is created by an association agreement which does not necessarily has to be formalized through a notarial deed (except in case any immovable goods were assigned to the partnership). In any case, it is highly recommendable to do so. It may not be registered in the Trade Register and its business name should use the words “Sociedad Civil“.
No initial financial investment is required.
Business Partnership (Sociedad colectiva)
A Business Partnership (Sociedad Colectiva) is an entity formed by two o more persons who contribute with certain assets and their work to a business object. It is a legal subject distinct from its partners and it is governed by the rules set out in the articles of association, which must be formalized in a notarial deed and registered in the competent Trade Register.
Although a Business Partnership constitutes a separate legal entity, the partners are personally and unlimitedly liable for the debts of the partnership. It must register itself with the tax authorities (036 form) and in the Social Security if it is going to hire any workers.
The partnershipâs name must include the name of at least one of the partners. In the event that not all of the partnersâ names are used in the company name, the phrase “y Compañía“ (or “y Cía“) must be added.
No initial financial investment is required.
Limited Partnership (Sociedad en comandita or Sociedad comanditaria)
The Limited Partnership (“Sociedad Comanditaria“ or “Sociedad en comandita“), is an entity formed by general partners (socios colectivos), personally and unlimitedly liable for the debts of the company, and who contribute at least with their work to the company, and limited liability partners (socios comanditarios), who only contribute with money or in kind to the company and will only be liable up to an amount equivalent to their contribution.
The participation of limited liability partners may or may not be represented by shares (if shares are issued, the company is called “Sociedad Comanditaria por Acciones“). Their name may not appear in the company name. The name of the company must include the name of at least one of the general partners, plus the phrase “y Compañía“ and “Sociedad en comandita“ (or “S. Com.“, “Sociedad en comandita por acciones“ or “S. Com por acciones“).
The company is taxable under CIT and VAT and no initial financial investment is required.