Understanding Business Legal Forms in Spain

When establishing a business in Spain, selecting the appropriate legal form is a critical decision. This choice impacts various aspects, including capital requirements, liability, taxation, and social security obligations. Below is a comparative overview of common Spanish business structures.

Sole Trader (Autónomo)

• Minimum Members: 1 (the individual entrepreneur)
• Capital Requirement: No minimum initial capital required
• Liability: Unlimited (personal assets are not protected)
• Taxation: Personal Income Tax (IRPF)
• Social Security Regime: Special Regime for Self-Employed (RETA)
• Key Characteristics:
  • Simplest form to establish.
  • Direct management by the individual.

Community of Property (Comunidad de Bienes - CB)

• Minimum Members: 2 or more partners
• Capital Requirement: No minimum initial capital required
• Liability: Unlimited (partners' personal assets are not protected)
• Taxation: Personal Income Tax (IRPF) for partners
• Social Security Regime: Special Regime for Self-Employed (RETA) for partners
• Key Characteristics:
  • Formed by two or more individuals who own an undivided asset or right.
  • Common for shared professional activities.

Civil Partnership (Sociedad Civil - SC)

• Minimum Members: 2 or more partners
• Capital Requirement: No minimum initial capital required
• Liability: Unlimited (partners' personal assets are not protected)
• Taxation: Personal Income Tax (IRPF) for partners (can opt for Corporate Tax)
• Social Security Regime: Special Regime for Self-Employed (RETA) for partners
• Key Characteristics:
  • Formed by individuals who agree to contribute assets, industry, or services to a common fund.
  • Often used for professional services.

Limited Company (Sociedad Limitada - SL)

• Minimum Members: 1 or more (can be a Single-Member Limited Company - SLU)
• Capital Requirement: Minimum €3,005.06 contributed capital
• Liability: Limited (partners' liability is limited to their capital contribution)
• Taxation: Corporate Tax (Impuesto de Sociedades)
• Social Security Regime: Special Regime for Self-Employed (RETA) for managing partners with effective control; General Social Security Scheme for others.
• Key Characteristics:
  • Most common legal form for small and medium-sized enterprises (SMEs).
  • Capital is divided into participations (shares), which are not publicly traded.

New Company Limited (Sociedad Limitada Nueva Empresa - SLNE)

• Minimum Members: 1 to 5 partners
• Capital Requirement: Minimum €3,000.00 contributed capital
• Liability: Limited (partners' liability is limited to their capital contribution)
• Taxation: Corporate Tax (Impuesto de Sociedades)
• Social Security Regime: Special Regime for Self-Employed (RETA) for managing partners with effective control; General Social Security Scheme for others.
• Key Characteristics:
  • Designed for faster and simpler incorporation.
  • Specific rules regarding company name and corporate purpose.

Public Limited Company (Sociedad Anónima - SA)

• Minimum Members: 1 or more
• Capital Requirement: Minimum €60,101.21 contributed capital (at least 25% paid up at incorporation)
• Liability: Limited (shareholders' liability is limited to their capital contribution)
• Taxation: Corporate Tax (Impuesto de Sociedades)
• Social Security Regime: Special Regime for Self-Employed (RETA) for managing partners with effective control; General Social Security Scheme if partners are employees.
• Key Characteristics:
  • Suitable for large companies or those seeking significant capital investment.
  • Capital is divided into acciones (shares), which can be publicly traded on the stock exchange.

Worker-Owned Limited Company (Sociedad Limitada Laboral - SLL)

• Minimum Members: Minimum 3 partners
• Capital Requirement: Minimum €3,005.06 contributed capital
• Liability: Limited (partners' liability is limited to their capital contribution)
• Taxation: Corporate Tax (Impuesto de Sociedades)
• Social Security Regime: General Social Security Scheme for worker-partners.
• Key Characteristics:
  • At least 2 worker-partners must hold an employment contract for an indefinite period.
  • Worker-partners must collectively hold at least 51% of the capital.
  • Non-worker partners cannot hold more than 15% of the capital.
  • If the company has fewer than 25 workers, non-worker partners can hold up to 25% of the total capital.

Worker-Owned Public Limited Company (Sociedad Anónima Laboral - SAL)

• Minimum Members: Minimum 3 partners
• Capital Requirement: Minimum €60,101.21 contributed capital
• Liability: Limited (partners' liability is limited to their capital contribution)
• Taxation: Corporate Tax (Impuesto de Sociedades)
• Social Security Regime: Special Regime for Self-Employed (RETA) for managing partners with effective control; General Social Security Scheme if partners are employees.
• Key Characteristics:
  • Similar to SLL but structured as a Public Limited Company.
  • At least 2 worker-partners must hold an employment contract for an indefinite period.
  • Worker-partners must collectively hold at least 51% of the capital.
  • Non-worker partners cannot hold more than 15% of the capital.
  • If the company has fewer than 25 workers, non-worker partners can hold up to 25% of the total capital.

General Partnership (Sociedad Colectiva)

• Minimum Members: Minimum 2 partners
• Capital Requirement: No minimum initial capital required
• Liability: Unlimited (partners' personal assets are not protected)
• Taxation: Corporate Tax (Impuesto de Sociedades) or Personal Income Tax (IRPF) for partners, depending on election.
• Key Characteristics:
  • All partners are jointly and severally liable for the company's debts.
  • Partners can be 'general partners' (contributing capital and labor) or 'industrial partners' (contributing only labor).

Key Differences: SL vs. SA Capital & Shares

• Limited Company (SL):
  • Capital is divided into participations (shares).
  • Partners hold these participations, which are generally not freely transferable.
  • SL participations cannot be listed or traded on the stock exchange.
  • Partners participate in the company's profits through dividends.
• Public Limited Company (SA):
  • Capital is divided into acciones (shares).
  • Shares are freely transferable and can be listed and traded on the stock exchange.
  • A shareholder holding 51% or more of the shares can typically make decisions for the company.
  • Shareholders participate in profits through dividends.