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Welcome to our Castillo - González & Kollegen law firm blog

Here we will inform you regularly about news and news from German-Spanish law as well as from Germany, Austria, Switzerland and Spain.


1 Introduction:

According to the Spanish National Statistics Institute, the Spanish economy will continue to grow in the future. For foreign companies there are still interesting business opportunities on the Spanish market. What counts here, as with any other economic enterprise, is that you get competent advice before making your decision, especially when choosing the right legal form for society, thereby setting the course for economic success. The following information is therefore intended to help you make a decision about which legal form is suitable for your economic activity in Spain.

2. Which form of company is appropriate?

Spanish company law, like German law, provides several legal forms that you can use for your business venture. In addition to the sole proprietorship, which is not advisable from the point of view of liability law, the legal forms of the Spanish GmbH (Sociedad Limitada, SL) or the Spanish public limited company (Sociedad Anonima, SA) are recommended.

a) General characteristics of an SL

The spanish GmbH (SL) is the youngest legal form of company, but one of the most flexible legal forms that can be designed according to the specific needs of the partner (s). It should be emphasized that liability towards creditors is limited to the company's assets. Since the reformed Spanish GmbH law, one-man GmbHs have also been permitted. However, special provisions apply to this, which must be expressed in the charter. The minimum share capital of an SL is EUR 3006 and must be paid in full when the company is founded. This must be proven by bank confirmation. The share capital is to be divided into business shares, whereby these do not have to be divided equally among several shareholders. The core contribution can also be made in kind,in comparison to the SA, no assessment report by an expert is required. The shareholders' meeting is the highest decision-making body in society, quasi its parliament. It determines the managing director (s) of the company, who in Spain are called administradores. These are the executive body of society and represent it externally. You do not have to be a partner or have Spanish citizenship. Furthermore, it is also permissible to install a board of directors. However, this is only recommended for larger companies with several partners (at least 10). Basically, a smaller company has one or two administrators, depending on the charter,according to the will of the partners, they are authorized to represent the company individually or collectively. The foundation takes place through notarial deed of foundation (Escritura de Constitución de Sociedad). The charter must contain a statute, either as part of the actual charter or enclosed as a separate charter.

All essential details of society are to be regulated here, the basic law of society. The following points should not be missing:

the company name of the company, its name
the purpose of the foundation, its business activity
the financial year
the seat of the company
the share capital and its division
the management

With the registration of the company in the commercial register, the company acquires its final legal capacity. Nonetheless, the company will start operating beforehand, but without the protection of the liability limitation on the company's capital.

c) Labor law aspects and obligations of the entrepreneur.

The minimum share capital is 60,102 euros. This must be fully subscribed and 25% of the nominal share value must be paid up when the company is founded. There is no minimum number of shareholders to set up an SA. The shareholders' meeting is the highest decision-making body and is authorized to designate the board (s) (administradores in Spanish). They represent the SA externally and do not have to be shareholders and do not have Spanish citizenship. Otherwise, what has been said about the SL applies.

c) Arbeitsrechtliche Aspekte und Pflichten des Unternehmers.

Every entrepreneur has to observe the care of a prudent businessman in his work, this also applies in Spain. The bookkeeping is to be kept properly, the entrepreneur has to keep business books (among other things, decision book, registered share book, contract register, register of partners), as well as an inventory book with annual accounts and a diary. The annual accounts must be prepared within three months of the end of the financial year. The company must contractually employ at least one person and register with social security, which may also be the administrator, the shareholder or a member of the board, as long as there is a real employment relationship. However, they are not entitled to unemployment benefits.

d) Tax aspects

Spanish corporations, which include the SL and the SA, are subject to Spanish corporate tax insofar as they are located in Spain. A company based in Spain is established in Spain and is based in Spain. Corporate income tax applies to all income earned by the company, including those generated abroad. The tax base is always the fiscal year. The general tax rate for corporation tax is 35%. The tax rate for non-residents is between 25% and 35% depending on the type of income tax. According to the German-Spanish double taxation agreement, the exemption method is applied. Ie, from the perspective of the state of residence (place of residence,habitual residence) the income earned abroad is exempt, but is subject to the progression reservation in Germany. In this case, the taxation right belongs to the non-resident state (abroad). In terms of the situation of a German entrepreneur who operates a Spanish SL, this means that the German entrepreneur has his habitual residence in Germany, but the SL is based in Spain, this has the following effects on the individual tax types:Your seat in Spain has the following effects on the individual tax types:Your seat in Spain has the following effects on the individual tax types:

Corporate tax:

Taxation is based on residence. Resident corporations are subject to corporation tax with worldwide income and capital gains. The general tax rate for income and capital gains is currently 35%. For companies with sales of less than 8 million euros and profits of less than 120,000 euros, the revised tax rate is currently 30%. The withholding tax rate on dividends and other profit distributions, on interest and on licenses is currently 18%. However, this only applies if no business premises are maintained in Spain.

Income tax:

German entrepreneurs who spend less than 183 days a year in Spain are subject to taxation for non-residents on income and capital gains from Spanish sources. For income that a German shareholder receives from the activity as managing director of the SL, the principle applies that income from dependent work is taxed in the state in which the dependent work is carried out. If the German entrepreneur employed as managing director has his habitual residence in Germany and is subject to the unlimited German income tax liability, the income from non-self-employed work (in Spain) within the meaning of § 19 dtEStG must be exempted for the area of ??wages and salaries.

Trade tax:

This tax is intended to tax the exercise of entrepreneurial, freelance or artistic activities by legal entities. The tax does not apply during the first two taxation periods in which the activity is carried out, and for net sales of less than EUR 1 million.

3. Foundation process
a) Negative name query at the central commercial register in Madrid
b) Application for a tax number (NIE) for the shareholders
c) Opening and setting up a bank account with a bank based in Spain and paying in the share capital
d) Drafting a founding document together with the articles of association
e) Notarial certification
f) Application for a tax number for the company (CIF) At this stage you will receive a provisional CIF for the company in formation
g) Payment of the so-called stamp tax, the tax on capital transfers and documented legal acts (ITP AJD) in the amount of 1% of the company's capital (deadline: 1 Month)
h) entry in the commercial register
i) Obtain the Company's Final Tax Number (CIF)

4. Foundation costs
Cost items:
Amount: Stamp duty 1% of
Amount: Stamp duty 1% of the share capital Notary fees (fee rate) 90 euros for the first 6,010 € Between 0.45% and 0.03% between 6,010 € and 6,010,121 € Over 6,010,121: what the parties agree on the fee for Entry in the commercial register 6.01 euros for the first 3,050 € between 0.10% and 0.005% for company capital over 3,050 € maximum fee 2,181 € opening license, other permits Different municipal tax, low. Other costs (lawyer, gestor, etc.) vary.

5. Digression one-man GmbH

The one-man company has been legally permitted in Spain since 1995. However, it is subject to special formal requirements to protect creditors. The one-man status must be made public by adding a Sociedad Unipersonal addition to all company documents. All contracts between the company and its partners are to be drawn up in writing or in a notarized form and to be noted in a company register provided for this purpose. Furthermore, the commercial register must be informed and registered there that all company shares are held by a single partner in order to exclude unlimited liability. For these reasons, a foundation with at least two partners is advisable.

6. Excursion special zone Canary Islands

Due to its remote location, the Canary Islands receive special tax treatment. Corporate tax from 1 to 5%. Sales tax of approximately 4.5%. In order to benefit from these tax advantages, you can register the new company as a so-called ZEC company. The prerequisites for this are: It must be a newly founded company At least one person authorized to manage must be resident in the Canary Islands At least € 100,000 investment in fixed assets At least 5 jobs must be created within 6 months. Registration in the register by 31.12.2006 at the latest.