If you are thinking about establishing a business in Spain, one of the most important decisions to make is selecting the appropriate legal corporate entity. This decision holds significant legal and fiscal implications, so careful consideration is essential.
In this blog post, we will explore the different legal corporate entities and business structures available in Spain and which is the most adequate to your business.
Sole Trader (Empresario individual o Autónomo)
The simplest entity and at the same time one of the most common structures in the Spanish territory. It’s a natural person who operates and owns a business as an individual entity. In this structure, there is no legal distinction between the business and the owner.
It is an ideal business form for the operation of very small companies, but it must be taken into account that there is no legal distinction between the business and the owner, which means that the owner’s personal assets are at risk in case of any legal disputes or financial obligations.
Jointly owned company (Comunidad de Bienes)
A Jointly owned company is constituted when the ownership of a good or right belongs jointly to several people and is part of a business activity carried out in common. It could be said that it is the simplest form of association between sole traders.
Limited liability company or SL (Sociedad Limitada)
Is a popular choice for small and medium-sized businesses in Spain. It offers limited liability to its owners, which means that their personal assets are protected from the company’s debts and liabilities.
Private partnership (Sociedad Civil Privada)
A partnership is a legal entity formed by two or more individuals who contribute resources, share profits and losses, and jointly manage the business.
Stock corporation (Sociedad Anónima)
A stock corporation or public limited company, known as SA, is a more complex legal entity that is commonly used by larger businesses in Spain. In this, the social capital, divided into shares, is made up of the contributions of the partners, who are not personally responsible for the company’s debts.
What about business structure?
The business structure has also its importance when opening a business in Spain. You may choose between:
Opening a branch office in Spain
It is an extension of a foreign company that operates in Spain. It is subject to the laws and regulations of the country of origin, and the parent company is fully responsible for its debts and liabilities in Spain.
Opening a representative office (oficina de representación)
A representative office is an organizational setup established by a company or organization in a foreign country to carry out limited activities on its behalf. It serves as a local presence for the parent company and acts as a communication and coordination channel between the parent company and the foreign market.
Opening a subsidiary in the country
A subsidiary is a company that is controlled by another company, known as the parent company or holding company. The parent company typically owns more than 50% of the subsidiary’s voting stock, which gives it the ability to control the subsidiary’s operations and make key decisions.
These are only some of the types of legal corporate entities and business structure in Spain. You can find more official information here.
If you need help choosing the ideal type of company for your business, we are here to help you. Simply send us an e-mail with your expectations, and our team of business lawyers will advise you.
