Company incorporation in Spain

If you do business in Spain there may be a point that it makes sense to set up a local company. Then you need to know how to comply with local regulations and who can help you.

This article describes:

the most likely types of company to set up;
how you do this and who can help you;
a few important fiscal regulations.

Your legal entity in Spain

Spain is an attractive destination for foreign businesses due to its strong economy, access to the European Union, and growing markets in industries like tourism, technology, and agriculture.

Most Common Business Forms for Foreign Companies

The most common legal structure for foreign businesses in Spain is the Sociedad de Responsabilidad Limitada (SL).

Similar to a limited liability company (LLC) in other jurisdictions.
Requires a minimum share capital of €3,000, fully paid upon incorporation.
Liability is limited to the company’s assets, protecting shareholders from personal liability.

For larger businesses, the Sociedad Anónima (SA) is an alternative, requiring a minimum share capital of €60,000.

Setting Up a Company in Spain

The process to incorporate an SL involves the following steps:

Obtaining a tax identification number (NIE) for all shareholders and directors.
Checking the availability of the company name and reserving it with the Commercial Registry (Registro Mercantil).
Drafting and notarizing the company’s Articles of Association (Escritura Pública).
Depositing the share capital in a Spanish bank account and obtaining a deposit certificate.
Registering the company with the Commercial Registry and obtaining a tax number (CIF).

Foreign nationals can act as directors (Administrador) of an SL or SA. Residency is not mandatory, but a local business address is required.

Taxation and Withholding Taxes

Spanish companies are subject to corporate income tax (Impuesto sobre Sociedades) at a standard rate of 25%.

Regarding dividends:

Dividends paid to foreign shareholders are subject to a withholding tax of 19%, which may be reduced under tax treaties.
Spain has an extensive double taxation treaty network to avoid double taxation and reduce withholding tax rates for foreign investors.

Service Providers for Company Incorporation

These firms assist foreign businesses with legal, administrative, and tax-related processes to ensure a smooth incorporation experience.

Are you ready to convince foreign distributors?