Creating a public limited company (S.A.) in Spain is a fundamental step for those looking to scale their business from a certain point and build a solid and professional structure. But, as with any business venture, there are certain legal requirements that cannot be ignored.
So, to make the process easier for you, here are all the legal requirements you need to know in order to start up your S.A. without losing your head in the process.
Minimum share capital requirement
Let’s start with the most important thing: money. To create an S.A. in Spain, you need to have a minimum share capital of 60,000 euros. Yes, you read that right, sixty thousand euros! But don’t panic, there’s a catch.
The good news is that you don’t need to pay in all that money at once. The law allows you to initially contribute only 25% of the share capital, i.e. 15,000 euros. You can pay in the rest little by little, like someone who pays for a new car in instalments. However, you will have to state in the articles of association when and how you are going to contribute the rest of the capital.
Minimum number of shareholders and partners
Now, how many people do you need to set up this business? The answer is… One! You can set up an S.A. on your own if you want. It’s called a Sociedad Anónima Unipersonal, and it’s as valid as any other.
But if you prefer to surround yourself with people (and share the risk), there is no maximum number of partners. You can have two, ten, or a thousand if you feel like it. The essential thing is that everyone is willing to join you in this adventure.
Company name and registration in the Commercial Register
Then it’s time for the fun part: naming your creature. The name of your S.A. must be unique, so be prepared to let your creativity run wild. Just remember that it must end with the acronym ‘S.A.’ or ‘Sociedad Anónima’. And once you have the perfect name, you will have to register it at the Central Mercantile Register. There they will check that there is no other company with the same name.
Drawing up the articles of association
The articles of association are like the rules of the game of your S.A. Here you will have to detail how the company will operate, who will make the decisions, how the profits will be distributed… In short, everything you need for your S.A. to function.
Don’t worry if you don’t know where to start. There are standard models that you can use as a basis and adapt to your needs. But, if you want to make sure that everything is in order, the best thing to do is to have the help of a lawyer specialised in commercial law.
Public deed of incorporation
When you have all the papers ready, it is time to make your S.A. official. To do this, you will have to go to a notary with all the documents (articles of association, certificate of company name, etc.) and sign the public deed of incorporation.
This is a solemn moment, so put on your best suit and get ready to sign like there is no tomorrow. The notary will attest that everything is in order and voilà! Your S.A. is officially born.
Obtaining the tax identification code (CIF)
Last but not least, you need to obtain the CIF for your S.A. This number will be your company’s identification number, and you will need it for practically everything: opening bank accounts, invoicing, hiring employees…
To obtain it, you will have to submit an application to the tax office (Agencia Tributaria) together with a copy of the deed of incorporation. Initially you will be given a provisional CIF, which will become the definitive one once you have registered the company in the Mercantile Register.
Tax and accounting aspects of a limited company in Spain
With your S.A. now incorporated and registered, it is time to talk about money. And no, we are not referring to profits (which hopefully will be a lot), but to tax and accounting obligations. We know it is not the most exciting topic, but it is key to keep your S.A. within the law.
Tax regime applicable to S.A.’s
S.A.’s in Spain are subject to corporate income tax (IS). This tax is levied on the company’s profits, at a general rate of 25%. However, there are exceptions and allowances that can reduce this percentage.
Accounting obligations and audits
As an S.A., you are obliged to keep orderly accounts in line with your activity. This means keeping accounting books, filing annual accounts with the commercial register and, in certain cases, submitting to an external audit.
This audit is compulsory if your S.A. meets two of these three requirements for two years in a row:
- Assets in excess of 2.85 million euros.
- Turnover of more than 5.7 million euros.
- More than 50 employees.
Therefore, if your S.A. grows a lot (and we hope this is the case), be prepared to have an annual appointment with the auditors.
Corporate Income Tax Return
The corporate tax return works like the income tax return, but, in the case of your S.A., you must file it every year, within 25 calendar days after the six months following the end of the tax period.
So, is an S.A. the best option for your business?
After all we’ve seen, your head is probably spinning. But don’t worry, let’s put it all down in a more digestible way.
Look, the limited company is like that fancy dress suit you have in your wardrobe. It’s smart, it’s impressive and it makes you feel important. But would you wear it to the grocery store or to a barbecue with friends? Probably not, right?
In the same way, an S.A. can be great if you’re thinking big. If your dream is to create the next tech giant, go public or if you need to attract heavyweight investors, then yes, an S.A. could be your best ally.
But if you are taking your first steps into the entrepreneurial world, if your business is more modest or if you prefer to keep things simple, perhaps a Limited Liability Company (LLC) or even starting out as a freelancer are more suitable options.
Ultimately, the answer to this question will depend on your long-term goals and the characteristics of your business. So, take your time, take a good look at your situation and your future plans before making a decision.
