Sociedad Limitada by non-residents in Spain
The “sociedad limitada” or private limited company (S.L.) is a Spanish mercantile entity with legal personality whose capital is divided into equal, cumulative and indivisible shares, in which the shareholders do not respond personally for the company debts. The “sociedad limitada” in Spain is commonly known by its initials “S.L.”, which must always join the company’s name. Therefore if our name is NEW COMPANY, the full name will be NEW COMPANY S.L.
What are the advantages of setting up an S.L.?
- It is the appropriate figure for small and medium enterprises, with partners perfectly identified and involved in the project with permanence spirit.
- Very low minimum capital and no maximum capital.
- Freedom of the company denomination.
- Great freedom of pacts and agreements between partners.
- There is no minimum percentage or maximum capital per partner.
- Possibility of contributing the capital in assets or money.
- It is not necessary to evaluate non-monetary contributions by an independent expert, neither his intervention nor that of an auditor in share capital increases.
- No minimum or maximum limit in the number of partners.
- Ability to appoint an Administrator with an indefinite
- Possibility of organizing the board of directors in different ways without amending the bylaws.
- Control the entry of strangers into the company.
- No minimum number of working members.
- Interesting taxes when the profit reaches certain volume.
- Possibility of fixing a salary to the partners that work in the company, besides their participation in profits.
What is the procedure for setting up an S.L. by a non-resident or foreign partner/s?
It is a relatively simple process that normally lasts around 3 weeks. We advise to carry out the whole process by an authorized representative. It saves time and some inherent costs to the personal constitution by the non-resident partner (as travel expenses, accommodation, daily allowance, etc.).
Granting of a power of representation
The founder or founders shall grant an special power of representation in favor of the person who will be in charge of the incorporation proceedings, such as the obtaining of the identification number (NIE of NIF).
Obtaining the NIE or NIF
Application for tax identification numbers (“NIF”), in the case of a legal entity, or the identification numbers of foreigners (“NIE”), in the case of a natural person, of the foreign partners and administrators of the company to be formed.
These identification numbers are absolutely essential for a legal or natural person to constitute a company in Spain and/or carry on any economical activity.
For that purpose, and besides the mentioned power of attorney, it will need a legalized photocopy of the passport of each partner and administrator. This process entails the payment of a small fee.
Obtaining of a negative company name certificate
With this procedure we will obtain the social denomination, the name of the society (it will be accompanied by the acronyms S.L.)
This is carried out in the Central Mercantile Register. It is necessary to facilitate, in order of preference, three possible denominations and pay a small fee.
Articles of Association (by laws)
Document which contains all the governing rules for the internal operation of a company. It is essential for the constitution of a company.
Obtaining the bank certification
It is necessary to open a bank account in the name of the company under constitution. The partner or partners will have to transfer into that bank account the amount of the shared capital (for limited companies the minimum capital is 3,006 €). The bank will issue the certification of the contribution.
Signing before a notary public
The articles of incorporation or constitution instrument shall be formalized before a notary, with the incorporation of the previously mentioned documents and certifications.
Liquidation of taxes
After these mein steps and for the final registration of the company in the Mercantile Registry other steps, as the obtaining of the Provisional Tax Identification Number of the company or the liquidation of the Transfer Tax, would have to be completed.
The final step is to register the correctly constituted company in the corresponding Mercantile Registry (this depends on the place where the company will be domiciled).