Starting a Company in Spain: SL Formation Guide

Starting a company in Spain is more accessible than many expats assume. The most common structure—the Sociedad Limitada (SL)—can be formed in a few weeks with modest capital. Here’s what you need to know about business structures, formation, and ongoing requirements.

Company types in Spain

Sociedad Limitada (SL)

The Spanish equivalent of an LLC. This is the standard choice for most small to medium businesses.

Key features:

• Minimum capital: €3,000
• Limited liability (personal assets protected)
• 1+ shareholders allowed
• Flexible management structure
• Most common structure for SMEs

Best for: Freelancers wanting liability protection, small businesses, startups, foreign entrepreneurs.

Sociedad Limitada Nueva Empresa (SLNE)

A simplified version of the SL for very small businesses.

Key features:

• Minimum capital: €3,000 (max €120,000)
• Maximum 5 shareholders (all must be individuals)
• Faster formation (48 hours possible)
• Simplified accounting for small operations

Best for: Solo founders or small partnerships wanting quick setup.

Sociedad Anónima (SA)

The Spanish public limited company, equivalent to a corporation.

Key features:

• Minimum capital: €60,000 (25% paid at formation)
• Shares can be freely transferred
• More complex governance requirements
• Board of directors required

Best for: Larger companies, those planning to seek investment, eventually going public.

Sociedad Civil (SC)

A partnership structure without separate legal personality.

Key features:

• No minimum capital
• Partners jointly liable
• Simple formation
• Pass-through taxation

Best for: Professional partnerships (lawyers, architects), low-risk collaborative ventures.

Branch of foreign company (Sucursal)

If you have an existing foreign company and want Spanish presence.

Key features:

• Not a separate legal entity
• Parent company remains liable
• Registration in Spanish commercial registry required
• May face higher scrutiny

Best for: Foreign companies testing the Spanish market, projects with limited duration.

Why most expats choose the SL

The Sociedad Limitada offers the best balance:

Factor	SL advantage
Liability	Limited to company assets
Capital	Only €3,000 minimum
Tax efficiency	Corporate tax rate (25% vs. up to 47% personal)
Credibility	Looks professional to clients and partners
Flexibility	One shareholder allowed, simple management
Scalability	Easy to add shareholders, raise capital later

For solo entrepreneurs, the choice is often between autónomo (simpler, lower cost) and SL (liability protection, tax planning options). If your business involves significant risk, contracts, or you want to optimize taxes at higher incomes, the SL makes sense.

SL formation: step by step

Step 1: Obtain negative name certificate

You must verify your proposed company name is available.

Process:

1. Submit name options (up to 5) to Registro Mercantil Central
2. Apply online or by mail
3. Receive certificate confirming name availability

Timeline: 1-5 business days

Cost: ~€15-20

Valid for: 6 months (2-month extension possible)

Step 2: Open a bank account and deposit capital

Process:

1. Open a corporate bank account (cuenta de sociedad en constitución)
2. Deposit minimum €3,000 share capital
3. Bank issues certificate of deposit

Required documents:

• Negative name certificate
• Founders’ NIE and passports
• Draft statutes (some banks require)

Timeline: 1-3 days (varies by bank)

Note: The capital is released once the company is registered. You can then use it for business purposes.

Step 3: Draft company statutes

The estatutos sociales define how your company operates:

Must include:

• Company name and registered address
• Corporate purpose (object of the company)
• Share capital and distribution
• Management structure
• Rules for shareholder meetings
• Transfer restrictions on shares

Options:

• Use standard templates (faster, cheaper)
• Custom statutes (for specific needs)
• Lawyer drafting recommended for anything complex

Step 4: Sign before notary (Escritura pública)

All founders must appear before a Spanish notary to execute the deed of incorporation.

Required:

• Negative name certificate
• Bank deposit certificate
• Approved statutes
• NIE and passports of all founders
• Founders physically present (or power of attorney)

What happens:

• Notary verifies identities and documents
• Founders sign the escritura de constitución
• Notary provides authenticated copy

Timeline: 1 day (appointment needed)

Cost: €300-600 depending on capital and complexity

Step 5: Obtain provisional NIF

The NIF (Número de Identificación Fiscal) is your company’s tax ID.

Process:

1. Submit Modelo 036 to Hacienda
2. Attach copy of notarized deed
3. Receive provisional NIF immediately

Required for: Opening operating bank account, issuing invoices, registering for taxes

Step 6: Register in Commercial Registry

The company officially exists upon registration.

Process:

1. Submit documents to Registro Mercantil of your province
2. Registry reviews and approves
3. Company inscribed in registry
4. Receive certified registration

Documents:

• Original notarized deed
• Proof of provisional NIF
• Payment of registration fees

Timeline: 15-30 days typically

Cost: €100-200 depending on capital

Step 7: Obtain definitive NIF

After commercial registry inscription:

Process:

1. Return to Hacienda with registration proof
2. Exchange provisional for definitive NIF
3. Activate for full tax operations

Step 8: Complete additional registrations

Depending on your business:

• IAE registration: Economic activity tax (though exempt if turnover under €1M)
• Social Security: Register company, register yourself as autónomo societario (managing partner)
• Local licenses: Activity license from municipality if physical premises
• Sector registrations: Industry-specific requirements

Timeline and costs summary

Realistic timeline

Step	Duration
Name certificate	1-5 days
Bank account and deposit	1-3 days
Statutes drafting	1-7 days
Notary appointment	1 day (plus wait for slot)
Commercial registry	15-30 days
Additional registrations	1-2 weeks
Total	5-8 weeks typical

Faster option: Using a gestoría or formation agent can compress this. Express formations possible in 1-2 weeks for additional fees.

Formation costs

Item	Cost
Name certificate	€15-20
Notary fees	€300-600
Commercial registry	€100-200
Gestoría/lawyer fees	€400-1,500
Bank account opening	€0-100
Total (excluding capital)	€800-2,500

Plus the €3,000 minimum share capital (which stays in the company).

Ongoing requirements

Annual accounts

Every SL must prepare and file annual accounts:

Contents:

• Balance sheet
• Profit and loss statement
• Annual report (memoria)

Filing:

• Must approve within 6 months of year-end
• Must file with Commercial Registry within 1 month of approval
• Late filing blocks ability to register other changes

Practical approach: Your gestor or accountant handles this annually.

Corporate tax

Rate: 25% standard (15% for first 2 years of new companies, on first €300,000)

Filing:

• Annual return (Modelo 200)
• Due July 25 for calendar year companies
• Quarterly advance payments if turnover exceeds thresholds

VAT

If your company charges VAT:

• Quarterly returns (Modelo 303)
• Annual summary (Modelo 390)
• Same obligations as autónomo

Bookkeeping

Legal requirement to maintain:

• Libro diario (daily journal)
• Libro de inventarios y cuentas anuales (inventory and annual accounts)
• Official books must be legalized at Commercial Registry

In practice, accounting software handles this; your accountant formalizes for compliance.

Social security for managing partners

If you’re an administrador (director/manager) of your SL:

• Must register as autónomo societario
• Higher contribution base than regular autónomo
• Minimum ~€400-500/month contribution
• Required even if you don’t take salary

Registered office requirements

Your company needs a physical address in Spain:

• Can be your home (check lease restrictions)
• Can be virtual office service
• Must be able to receive official correspondence

Tax planning with an SL

Salary vs. dividends

As owner-manager, you have flexibility:

Salary:

• Deductible expense for company
• Subject to IRPF (up to 47%)
• Builds Social Security contributions

Dividends:

• Paid from after-tax profits
• 19-28% tax on dividends received
• No Social Security implications

Optimal mix: Depends on your situation. Generally, take enough salary to cover living expenses and Social Security minimums, retain profits in company for reinvestment, distribute dividends strategically.

Corporate vs. personal tax rates

Income level	Personal IRPF	Corporate + dividend
Low (under €35k)	~30% effective	Less efficient (double taxation)
Medium (€35-60k)	~35% effective	Similar
High (€60k+)	37-47%	More efficient (25% + dividend tax)

At higher income levels, the SL structure can provide meaningful tax savings through income timing and retention.

Retained earnings

Profits left in the company:

• Only taxed at 25% corporate rate
• Can be reinvested in business
• Distributed as dividends when advantageous
• Build company value for eventual sale

Common questions

Can foreigners own Spanish companies?

Yes. No restrictions on foreign ownership of SLs. You’ll need:

• NIE (foreigner ID number)
• To comply with beneficial ownership reporting
• Potentially, appropriate visa if also working

Can I be sole director and shareholder?

Yes. A unipersonal SL (SLU) with one shareholder and director is common. Additional reporting requirements apply to declare single-shareholder status.

Do I need to live in Spain?

No residence requirement to own or even direct a Spanish company. However:

• You’ll need NIE
• Management presence may be needed for certain operations
• Tax residency issues may arise if you’re primarily managing from Spain

SL vs. autónomo: which should I choose?

Choose autónomo if:

• Starting out with uncertain income
• Low risk activity
• Income under ~€40,000
• Simplicity is priority

Choose SL if:

• Significant liability exposure
• Income above ~€40,000
• Multiple shareholders/partners
• Planning to hire employees
• Seeking investment
• Want tax planning flexibility

Can I convert autónomo to SL later?

Yes. Many entrepreneurs start as autónomo and incorporate later when the business justifies it. The process involves:

• Forming new SL
• Transferring business assets and contracts
• Closing autónomo registration

Not seamless, but manageable with professional guidance.

The formation process: key decisions

Choosing share capital

Minimum: €3,000

Considerations:

• Higher capital = more credibility with some partners/clients
• Higher capital = more notary and registry fees
• Capital can be increased later (at additional cost)

Practical approach: Most small businesses start with €3,000-10,000.

Defining corporate purpose

Your company’s object (objeto social) defines permitted activities.

Approach:

• Draft broadly enough to cover future activities
• Don’t be so broad it raises red flags
• Common to list primary activity plus “any other lawful commercial activity”

Example: “Provision of marketing and consulting services, development of software applications, and any other lawful commercial activity.”

Management structure

Options:

• Sole administrator (administrador único)
• Joint administrators (must act together)
• Several administrators (can act independently)
• Board of directors (for larger companies)

For small companies: Sole administrator is simplest.

Shareholder agreements

If multiple founders, consider a shareholders’ agreement (pacto de socios) covering:

• Decision-making procedures
• Exit mechanisms
• Non-compete obligations
• Dispute resolution

This is separate from statutes and remains private between parties.

Getting help

Who you’ll need

Gestoría: Handles formation paperwork, ongoing filings. Essential for most expats.

Lawyer: For complex structures, shareholder agreements, specific industries. Optional for simple formations.

Accountant: Ongoing bookkeeping, tax optimization, annual accounts. Essential.

Bank relationship manager: Helpful for smooth account opening and ongoing needs.

Costs for ongoing support

Service	Monthly cost
Gestoría/accountant	€150-400
Virtual office (if needed)	€50-150
Banking fees	€20-50
Minimum overhead	€220-600

Plus your autónomo societario social security (~€400-500/month).

Summary: SL formation checklist

• Obtain NIE (if not already held)
• Decide on company name options
• Apply for negative name certificate
• Open bank account and deposit capital
• Draft company statutes
• Schedule notary appointment
• Sign before notary
• Obtain provisional NIF from Hacienda
• Submit documents to Commercial Registry
• Wait for registration (15-30 days)
• Obtain definitive NIF
• Register for IAE (economic activity)
• Register with Social Security
• Set up ongoing accounting and compliance

Key takeaways

1. The SL is the standard choice: €3,000 minimum, limited liability, flexible structure
2. Timeline is 5-8 weeks: Can be faster with professional help
3. Budget €1,500-3,000 total: Formation costs plus capital deposit
4. Ongoing costs matter: €600-1,000/month minimum for compliance and social security
5. Tax advantages at higher income: Corporate structure offers planning flexibility
6. Professional help is worth it: Gestor plus accountant makes compliance manageable

Starting a Spanish company is a significant step, but it’s well-trodden ground. Thousands of expats operate successful SLs. With proper professional support, you can focus on building your business rather than navigating bureaucracy.