Setting up a Limited Company in Spain (S.L.)

As Spain becomes an increasingly attractive destination for businesses worldwide, incorporating a limited company here opens the doors to a wealth of opportunities. If you’re an international business owner considering Spain for your next venture, understanding the process is key.

In this article, we’ll walk you through the essentials of setting up a Limited Company in Spain, highlighting the benefits, legal steps and practical insights.

What is a Limited Company in Spain?

An “SL” typically refers to a “Sociedad Limitada” in Spanish, which translates to “Limited Company” or “Limited Liability Company” in English. It is a common legal business structure in Spain and other Spanish speaking countries.

The S.L. is the most common and suitable company for SMEs, companies with very few partners and for family-run businesses. It offers limited liability to its owners, which means that their personal assets are protected from the company’s debts and liabilities.

Features of a Limited Company

  • The Entrepreneurial Limited Liability company can be formed with less than 3,000 euros of share capital.
  • An S.L. can consist of one person.
  • Partner liability is limited to the capital contributed.
  • Set-up is faster. To streamline the establishment of of new companies, the process can generally be done online.
  • An S.L. is essentially a close company
    • Share capital divided into shares, which cannot be incorporated into negotiable securities.
    • The shares cannot be freely transferred.
  • More flexible management and legal system than an S.A.
  • Must file with the Mercantile Registry.
  • Liable for Corporate Tax (25% general rate) although the average effective rate is lower (22%).

Setting up a limited company in Spain

If you decide to create a company, there are two ways to incorporate a company, the normal procedure that can take up to 30 days and has a quite important cost, or do it telematically that will take you one or two days and with a relatively small cost.

The process is very simple, you just have to go to a PAE point, explain how you want your company to be, how many people are going to participate in your project, what is the necessary capital to start up, what level of risk you want to assume in this business initiative, and from there you will be advised on which business form you would fit best.

Through the PAE point it is possible to set up a new limited company, a normal limited liability company and a sole proprietorship. Not all types of companies can be created in a PAE point.

First, you must obtain your Tax Identification Number. More information about NIF

Open a bank account in the company’s name at a credit institution that operates legally in Spain

At Legal Advisory, we are a PAE point and we will be able to help you to create your Limited Company (S.L.) in Spain. Contact us for more information.

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