Spain Offshore Company Incorporation and Registration
Spain company registration is popular because it offers many attractive legal vehicles for incorporation. These vehicles can be particularly advantageous for those in the intellectual property or research and development sectors. Additionally, Spain is a beneficial jurisdiction for those looking to do business with other European markets.
Corporate Entities in Spain
Sole-proprietor (Empresario individual / Autónomo)
Sole-proprietorships in Spain require only one shareholder. This shareholder is fully liable for all of the debts and obligations incurred by their business. There is no minimum capital requirement. The process for forming the a sole-proprietorship in Spain is simple. It can often be completed in one business day.
Partnerships (Sociedad Civil)
Under Spanish law, partnerships are business agreements which are made between at least two individuals. All partners in a Spanish partnership are fully liable for the debts and obligations of the partnership. The sole action required to form a partnership is the execution of a partnership agreement. There is no minimum capital requirement for a partnership. Partnerships in Spain are not required to be entered with the Spanish Commercial Registry. As a result, partnerships are quick and easy to incorporate.
It is possible for partnerships in Spain to be considered separate legal entities. This must be done through the creation of an agreement which must be notarized and filed on record with the Spanish Commercial Registry.
General Partnership (Sociedad Colectiva)
General partnerships require at least two partners. The partners in a general partnership have unlimited liability for the partnership’s debts and obligations. There is no minimum share capital requirement for establishing a general partnership in Spain. A contract must be drawn up between the partners and registered on file with the Spanish Commercial Registry.
Limited Partnership (Sociedad Comanditaria Simple)
Limited partnerships consist of two or more partners. Limited partnerships are required to have at least one general partner. The general partner has unlimited liability for the debts and obligations of the partnership. The liability of limited partners is limited to the value of their contribution to the partnership. There is no minimum capital requirement for partnerships in Spain. To establish a limited partnership, a deed must be signed and registered with the Spanish Commercial Registry. Limited partnerships are considered to be their own legal entities in Spain.
Public Limited Company (Sociedad Anónima)
Public limited companies in Spain are highly structured and regulated stock companies. Decisions are made for public limited companies by majority vote. Annual financial audits are required. Public limited companies in Spain act as their own legal entities. Shareholders are not responsible for the debts incurred by the company. All Spanish public limited companies are required to pay some form of corporate income tax.
Incorporating a public limited company in Spain requires drafting and notarizing Articles of Incorporation. A minimum capital investment of EUR 60,000 is required. The public limited company must be registered with the Commercial Registry. It must also request a tax identification number, register to pay IAE tax, and register with Social Security. Spanish public limited companies are complex legal entities and are best established with the care of a trusted advisor.
Limited Liability Company (Sociedad de Responsabilidad Limitada)
Spanish limited liability companies are autonomous legal entities. Shareholders are not responsible for the debts and obligations incurred by the company. All limited liability corporations in Spain are required to pay corporate income tax. Limited liability companies in Spain have a minimum capital requirement of EUR 3,000. This is considerably lower than the minimum capital requirement of public limited companies. However, limited liability companies are not permitted to sell their shares on a stock market.
Limited liability companies must be registered with the commercial registry in Spain. They must also request a tax identification number, register to pay IAE tax, and register with Social Security. This is in addition to other requirements. It is best to set up a limited liability company in Spain with the aid of a trusted advisor.
New Enterprise Limited Company (Sociedad Limitada Nueva Empresa)
Spanish new enterprise limited companies are simplified forms of limited liability companies (LLC). They act as their own separate legal entity. There are specific sets of requirements for new enterprise limited companies. The company name must include a registration number. Additionally, the company name must include the name of one of the founders. It must also include the words Sociedad Limitada Nueva Empresa. There may only be between one and five shareholders at the time of incorporation. After incorporation, new shareholders are allowed provided that they are actual living people. Corporate entities may not become shareholders in a new enterprise limited company after it has been incorporated. Companies incorporated as Sociedad Limitada Nueva Empresa are required to pay corporate income tax.
Worker-Owned Company (Sociedad Laboral)
Worker-owned companies in Spain are special types of public limited companies or limited liability companies. These types of companies are owned by one of two groups. The first group are workers employed by the company, known as the clase laboral. The second group is comprised of individuals who do not work for the company. They are known as the clase general.
It is required by Spanish law that workers own at least 51% of a worker-owned company. Workers who do not own shares are limited to working less than 15% of the total hours worked each year. The number of hours is extended to 25% if less than 25% of the company’s workers own shares. Worker-owned companies can be created in the form of Public Limited companies or Limited Liability Companies. There are a few exceptions to this rule.
Worker-owned companies must register with Spain’s Commercial Registry. Prior to registering with the Commercial Registry, they must register with the Registro de Sociedades Laborales del Ministerio de Trabajo y Asuntos Sociales. The name of the company must include Sociedad Anónima Laboral or Sociedad de Responsabilidad Limitada Laboral, depending on the type of entity incorporated.
Taxation in Spain
Capitalization reserves are available in Spain. A company may reduce its taxation base by 10% of the increase in the company’s net equity for a specific year. This is provided that the company reports a non-disposable reserve in the same amount.
Investments in cinema, music, art, and livelihood initiatives for youth or disabled persons are eligible for tax credits under Spanish law.
There is also a tax credit for research and development (R&D). The tax credit awarded is equal to 25% of the company’s R&D expenses during a given fiscal year. In certain cases, the credit may be up to 42% of qualifying expenses. Advanced software activities are included under the scope of R&D for the purposes of this tax credit. It is also possible for some companies to receive a tax rebate of up to EUR 5 million in certain situations.
Spain has a patent box regime designed to encourage investment into intellectual property. Up to 60% of the net qualifying income from the licensing of qualifying tangible assets may be exempt from corporate income tax. 60% of the net qualifying income from the transfer of qualifying tangible assets may also be exempted. Qualifying tangible assets include patents, technological intellectual property, secret formulas or processes, designs. They also include models, plans or research regarding industrial, commercial, or scientific equipment.
There are certain requirements which must be met in order for the exemptions to be granted. These rules were designed to bring Spanish requirements in line with the “nexus approach”. The “nexus approach” is a guideline developed by the Organization for Economic Cooperation and Development (OECD). This approach eliminates or limits the benefits available under this regime when the taxpayer did not create the relevant intangible assets themselves. For this purpose, work created using the resources of the taxpayer or work subcontracted by the taxpayer to a third party counts as work created by the taxpayer. This rule applies as of July 1, 2016.
Spain: Country Profile
Spain has been known as a world power since its empire during the 16th and 17th centuries before Britain took over as the global hegemon. Spain fell behind England, France, and Germany in terms of political and economic power. This was because Spain was slower to embrace the mercantile and industrial revolutions. Spain remained neutral in World War I and II. However, it was embroiled in a bloody civil war from 1936-1939. After the death of dictator Francisco Franco in 1975, Spain transitioned peacefully to democracy.
Rapid modernization in Spain contributed to a rapidly growing economy. Spain joined the European Union in 1986. Since then, Spain has become a global leader in terms of freedom and human rights. Spain has recently recovered from the global economic crisis. The nation has seen four straight years of growth above the EU average. Additionally, unemployment has fallen across the country. However, unemployment of youth still remains high.
Spain has the Eurozone’s fourth largest economy. Economic activity in Spain has exceeded its pre-crisis peak. This can largely be contributed to increased private consumption. In 2017, the ability of the Spanish government to implement education, tax, healthcare, labor, and pension plans was limited by its minority status. Many of these plans were controversial. The European Commission expects that economic growth in Spain will allow the country to meet its 2018 budget deficit target.
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