16 legal forms you can adopt depending on your type of company in Spain

All posts Leave a comment   Published on par Jonatan Carbonell

There are many people who want to start a business in Spain, but few know the types of companies that exist in the country and the legal forms that need to be controlled. One of the most complicated steps in this process is the selection of the model you want to create according to the business to be carried out.

So, to help you choose the one that suits you best, we have compiled a list of the types of company that you can find in Spanish law. Are you ready to get to know them? Below, we explain what the types of companies are about, their legal forms, as well as the main characteristics you should know.

 

1. Individual Entrepreneurs

Sole proprietors are better known as self-employed. It refers to people who carry out a profit-making activity on a regular, personal, direct and self-employed basis. The main characteristics of these types of companies are:

  • Can only be created with one partner

  • Liabilities are unlimited (i.e. all parties are liable for any debts the company may incur).

  • The capital does not have a legal minimum

  • Taxation is by means of Personal Income Tax in Spain (IRPF).

2. Limited liability entrepreneur

This business modality is relatively new and was included in the Entrepreneurs Law. Basically, it represents the same as a self-employed, but the only difference is that the liability is limited.

What does this mean? Any debts that partners may incur are limited to the investment they have made in the business. Therefore, they cannot be held personally liable for the debts of all parties. The characteristics of these types of companies are:

  • Can only be created with one partner

  • Responsibilities are unlimited with some exceptions.

  • The capital does not have a legal minimum

  • The taxation is by means of the IRPF.

 

You may also be interested in: Investing in Spain: A great opportunity for foreigners

 

3. Community of property

For many people the idea of a company is when two self-employed people join together. This usually happens if the properties belong to several people and, in addition, are part of a business activity that is carried out in a common way.  Its main characteristics are:

  • They can only be created with a minimum of two partners.

  • Responsibilities are unlimited.

  • The capital does not have a legal minimum

  • The taxation is by means of the IRPF.

4. Civil Society

In this type of company the different people who compose it share the capital in order to share the profits; generally, the partners are capitalists or industrialists. Its main characteristics are:

  • They can only be created with a minimum of two partners.

  • Responsibilities are unlimited

  • The capital does not have a legal minimum

  • Taxation is by means of personal income tax or corporation tax.

5. Partnership

When we talk about a partnership, its members are grouped together with the purpose of having the same name and corporate name. In addition, they are committed to participate in the proportion that they decide of the obligations and rights that may exist.

As in the previous type of company, they can be formed by capitalist or industrial partners. Their main characteristics are:

  • They can only be created with a minimum of two partners.

  • Responsibilities are unlimited

  • The capital does not have a legal minimum

  • Taxation is by means of corporation tax

 

You may also be interested in: 5 sources of financing for SMEs in Spain and Europe

 

6. Limited partnership

It has many similar features to the partnership, but in this case the types of partners have different responsibilities.

General partners tend to put up the capital, work and respond to all debts. On the other hand, limited partners only contribute the capital and the liability is limited by that contribution. Their characteristics are:

  • They can only be created with a minimum of two partners.

  • The liabilities of general partners are unlimited, while those of limited partners are limited.

  • The capital does not have a legal minimum

  • Taxation is by means of corporation tax. In addition, this type of company is regulated by the Commercial Code.

7. Limited Liability Company

This type of company is usually the favorite of small business owners. Do you want to know why?

The capital is divided into social participations that are indivisible, accumulable and are integrated by the different contributions of the partners, who have nothing to respond with their patrimony. Its main characteristics are:

  • Can only be created with one partner

  • Liabilities are limited to the capital contributed.

  • The capital must be 3.000 €.

  • Taxation is by means of corporation tax. In addition, this type of company can be created as a sole proprietorship.

8. Successive formation limited partnership

It shares the same regime as the previous type of company, except for the obligations it has to guarantee adequate protection to third parties.

The main idea of this company is to reduce the formation processes at the beginning, because there is no disbursement. Its main characteristics are:

  • The number of partners for its creation is at least one.

  • Responsibilities are unlimited.

  • The capital has no legal minimum.

  • Taxation is through corporate income tax.

 

You may also be interested in: Entrepreneurship in Spain’s 4 most competitive regions

 

9. New company limited by shares

Since 2003, it is another type of company that can be found in the Spanish territory, whose creation process stands out for being as agile as possible. Even, in a telematic way from beginning to end. Its main characteristics are:

  • They can only be created with a maximum of 5 members.

  • Liabilities are limited to the capital contributed.

  • The capital has to be between 3.000 € and 120.000 €.

  • Taxation is through corporate income tax.

10. Public limited company

In this type of company, the capital is divided into shares and is made up of the contributions made by the partners. It is focused on those who wish to open large companies. Its main characteristics are:

  • They can only be created with a partner.

  • Liabilities are limited to the capital contributed.

  • The capital must be a minimum of 60.000 €.

  • Taxation is by means of corporation tax

11. Limited partnership by shares

It is almost similar to the joint-stock company, but its capital is formed by the contributions of the partners. In this type of case, at least one of the partners is in charge of managing the company and is personally liable for the debts. Its main characteristics are:

  • It can only be created with a minimum of two partners.

  • The liabilities of general partners are unlimited, while those of limited partners are limited.

  • The minimum capital is €60,000.

  • Taxation is through corporate income tax.

 

You may also be interested in: ETVE investments or Spanish holding companies: The ideal tax mechanism to invest as a foreigner in Spain.

 

12. Worker-owned limited liability company

One of the most relevant aspects of this type of company is that its permanent employees own the majority of the shares. It is very interesting for cooperative projects, but little used by Spanish entrepreneurs. Its main characteristics are:

  • They can only be created with a minimum of two partners.

  • Liabilities are limited to the capital contributed

  • The capital must be a minimum of 3.000 €.

  • Taxation is through corporate income tax.

13. Workforce owned company

It is almost similar to the worker-owned limited liability company, where the workers are the majority shareholders. The only difference is that the labor limited liability company is more oriented to projects that foresee strong growth.

Also, if you are thinking about starting a business, this is one of the options that could work best for you. Its main features are:

  • They can only be created with a minimum of two partners.

  • Liabilities are limited to the capital contributed

  • The minimum capital is €60,000.

  • Taxation is through corporate income tax.

14. Cooperative Society

This type of company is usually more common in Spain than in other surrounding countries. But, you may ask, why is that?

It offers many more benefits as it tends to be formed by several people freely and voluntarily, in order to carry out any business activity. In addition, the operation and structure is based on democracy. Its characteristics are:

  • The number of members depends on the grades of the co-operatives, such as 1st grade minimum 3 members and 2nd grade minimum 2 members.

  • Liabilities are limited to the capital contributed.

  • The capital is fixed as stipulated in the articles of association.

  • Taxation is by means of corporation tax, but under a special regime.

 

You may also be interested in: Taxes in Spain: What you need to know about Spanish taxation

 

15. Professional societies

It is another type of company that is used in Spain by professionals, with the purpose of exercising an activity that is registered in the professional associations of the country. Its main characteristics are:

  • The number of partners for its creation is only one.

  • The responsibilities will be distinguished by the disciplines and patrimonial

  • The capital will depend on the form they take.

  • Taxation will depend on the form they take.

16. Mutual guarantee company

They focus on promoting and generating credit to SMEs with more favourable conditions. All this through financial institutions, public administrations and credit cooperatives. Their main characteristics are:

  • The minimum number of members for the creation is 150 members.

  • Responsibilities are limited.

  • The minimum capital required is 10.000.000 €.

  • Taxation is by way of corporation tax.

 

Now that you’ve learned more about the different types of companies in Spain, which one do you think would be the best fit for you?

If you are thinking of starting your own business in Spain and you don’t know how to do it, TAS Consulting offers you the ideal advice to take your first steps. In addition, we offer you customized plans according to your business needs.

We have experts in the legal, fiscal and accounting areas to promote that project you want so much and achieve each of your goals. Do you want to start a business? Contact us today!

Published on par Jonatan Carbonell

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