Spain lies at the extreme southwest of Europe on the Iberian Peninsula and has borders with France, Gibraltar, Portugal and across the Mediterranean with Morocco. It occupies approx. 504,782 square kilometers. The capital is Madrid and other important cities are Barcelona, Valencia, Sevilla, Zaragoza and Bilbao. There are 17 autonomous communities and 2 autonomous cities.


The population of Spain is approximately 46.7 million of which 94% are Roman Catholic.


The official language is Castilian Spanish; however other languages such as Catalan, Basque and Galician are spoken in the autonomous regions and officially recognised.

Political Structure

Spain is a parliamentary monarchy and the King, Juan Carlos I, is the Head of State. A new constitution was approved by the Parliament on October 31st 1978, subsequently ratified by a referendum, in which basic democratic rights and freedom of expression are recognised following the lines of most modern democratic constitutions.

The parliament (Cortes Generales) is made up of the "Congreso de los Diputados" (Lower House of Parliaments) and the "Senado" (Senate). The members are elected by universal suffrage every four years.

The country is divided into 17 autonomous regions, each of which enjoys a defined system of self-government. Spain is a member of the EU since 1986, NATO, WTO and a signatory to the GATT agreement.

Infrastructure and Economy

After 15 years of above average GDP growth the Spanish economy began to slow in late 2007 and entered into a recession in 2008 with the collapse of the building and real estate industry. Spain's tourism industry has also suffered due to the world economic crisis with many tourists now opting for destinations outside the Euro Zone.



Exchange Control

No exchange control for setting up a business in Spain or to invest into Spanish companies or Real Estate. Dividends, profits and proceeds from sale or liquidation may be repatriated without restriction. Certain transactions need to be reported to the Bank of Spain for statistical purposes.

Type of Law

Civil Law.

Principal Corporate Legislation

Companies Act, revised in 1989 and 1995 in order to comply with EU legislation. In 1996 new regulations for the Mercantile Register were approved.

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Type of company for international Trade and Investment

Stock company (Sociedad anónima, S.A.),

Limited Liability (Sociedad de responsabilidad limitada, S.L.)

Procedure to Incorporate

All shareholders or directors need to have a ‘D.N.I.” (Spanish Identification Document) or ‘N.I.E.’ (Foreign identification number) if not Spanish or resident in Spain. This can be applied for at your local Spanish Consulate or in the Chief Police Office in Spain. Thereafter the procedure is:

  • Open a bank account or building society account to hold the deposit of the Share Capital
  • Obtain a name clearance certificate from Mercantile Registry; this can take up to one week.
  • Draft the statutes and by-laws for the company's constitution. 'Escritura' which should include the personal details of the subscribers, the company name, registered office, share capital and shareholding. When finalised, t he formation document must be signed before a local Notary.
  • Register the Deed in the Spanish Corporate Registry.
  • Obtain a certificate from the Mercantile Registry that the constitution has been signed.
  • Obtain a temporary tax code 'CIF' from the Tax Office.
  • Pay Stamp Duty at 1% of the initial share capital.
  • Register the company trading activity in Spain at the Tax Office.
  • Obtain the permanent Corporate Tax Identification Number 'CIF' at the Tax Office after the completion of the incorporation process.

In addition trading companies are required to:

  • Register with the ‘Social Security’ agency.
  • Obtain the ‘matricula’ (license book, and the inspection visits book) and have legalised by a local Notary.
  • The company must record the opening of the office/ place of work and apply for an inscription in the ‘Registry of Activities and Commercial entrepreneurs’ in the records of the ‘Consejería de Trabajo’ or in the ‘Provincial Work Directorate’ (Dirección Provincial de Trabajo).
  • They must request a ‘Business Start-Up
  • License’ from the town council, and provide the following documents:
    • A detailed plan of the place of work
    • A map showing the location of the office
    • A valuation of the building and the equipment
    • A written description of the activities taking place
    • A receipt stating that the ‘Activity Tax Copies of all employee work contracts and proof of registration with the National Employment Service (INEM) within ten days of the start of the contract.

A Company can enter into legal agreements and contracts before its official registration, although the contracts must subsequently be ratified by the company or founders may be liable for taxation.

Restrictions on Trading

Yes, specified groups, which include for example, banking, insurance, financial services, consumer credit related services and employment agencies. Certain transactions may require consent from the Department of Foreign Investments (Dirección Inversiones Exteriores).

Powers of Company

A Company has the same powers as an individual.

Language of Legislation and Corporate Documents


Shelf Companies Available

Yes, but not commonly used.

Time to Incorporate

Usually 12 days to incorporate and 40 days to register the company. Note that the company may be active as from the date of incorporation.

Name Restrictions

A name that is similar to or identical to an existing company. A well-known name that is known to exist elsewhere. In partnerships the words "y Compañía" has to be pronounced.

Name Requiring Consent or a Licence

Bank, building society, savings, loans, insurance, assurance, reinsurance, fund management, investment fund, trust, trustees, Chamber of Commerce, co-operation, council, municipal or their foreign language equivalents or any name in English or a foreign language that may suggest association with the banking or Insurance industries.

Registered Office Required

Yes, must be in Spain.

Suffixes to Denote Limited Liability

S.L. or s.l. , S.A.

Disclosure of Beneficial Ownership to Authorities


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Authorised and Issued Share Capital
  • S.L.: € 3,006 - fully paid up.
  • S.A.: € 60,101 - one quarter paid up
Classes of Shares Permitted

Ordinary shares, preference shares, shares with or without voting rights.


S.L. – Minimum number of shareholders is one, maximum 50; they may be either individuals or bodies corporate.
S.A. – Minimum number of shareholders is one, no maximum.


Companies are taxed on worldwide income.
Spain's standard Corporation tax rate is 30%.
Companies with yearly sales of less than €8 million may qualify for certain tax incentives:

  • A tax rate of 25%, applicable on the first €120,202 of taxable income
  • Accelerated depreciation of certain fixed assets.
  • A 10% tax credit for investments and expenses in internet, information technology and communications.

Capital Gains Tax: Capital gains are ordinary income for corporate tax payers and thus subject to the general 30% rate (note that currently Spain allows for an exemption of capital gains from the sale of qualifying participation in foreign entities). For individual payers, short term capital gains are ordinary income (subject to progressive tax rates from 15% to 40%) and long term capital gains (for assets held for longer than 1 year) the rate is 19%. Capital gains arising from the sale of shares in a Spanish entity by a non-resident (both individual and corporate taxpayer) are subject to 30%. Some treaties offer protection against this tax.

Capital duty on increase of capital: 1%

Double Taxation Agreements

Spain has over 70 Double Tax Treaties which follow the OECD model convention, the following are the major treaties in place: Austria, Belgium, Brazil, Canada, Czech Republic, Denmark, Finland, France, Germany, Italy, Japan, Morocco, Netherlands, Norway, Poland, Portugal, Romania, Sweden, Switzerland, UK, US, Hungary and Ireland.

Financial Statements Required

An SL can apply in the first three years for “simplified accounting” whilst an SA requires an annual audit. The Audit limit is approximately €2.5 million turnover.

All companies must submit annual accounts to its shareholders for approval within six months from the end of the accounting period thereafter the accounts must be submitted to the Mercantile Registry (Registro Mercantil).

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