Set up a limited company in Spain Mercantile

To set up an S.L. you have to follow the steps below (remember to always bring all your papers and your identification (+ at least 5 copies) to all the meetings you have with different Spanish institutions):

1. First of all you need a certificate (Certificacion Negativa del Nombre (CNN)) stating that the company name you intent to use is not taken. This can be bought in the Registro Mercantil for about 10€.

2. The next step is to get a temporary CIF number (company identification number). To get this you have to fill in the model 037, bring 2 copies of you identification and the original CNN. This can be done in the 'Camara de Comercio' or the 'Ventanilla Unica' in your town.

3. Thereafter you need to deposit 3003€ in a bank account opened in the company's name. You need a certificate from the bank stating that you have made the deposit.

4. The next step is to prepare the official statement of the company (Escritura) and make a public notary sign it. The official statement of the company is saying who is the owners, the address of the company, what the company will be doing etc. Normally the elaboration of this statement is included in the public notary fee (which can range between 200 and 1000€).

5. The company now need to pay a tax of 1% of the initial capital, which is 1% of the bank deposit (minimum 30.03€). This should be done in the tax administration office using the form 600. Remember to bring a copy of and the original 'Escritura' and a copy of your temporary CIF number.

6. When you have paid the above tax you need a certificate from the Registro Mercantil (the same place where you got the CNN) of your Escritura.

7. Now you need to fill in the following forms 36 or 37 (a declaration of starting your activity) and the inscription of the company with social security (form TA6) at the 'Camara de Comercio' or the 'Ventanilla Unica'. You also need to acquire and bring a book called Libro de Visitas, which is an official book used by the government when they do official inspections of your company.

8. The next step (also at the Camara de 'Comercio' or the 'Ventanilla Unica') depends on the number of employees there is going to be in the company. If the only workers are the owners then you need to fill in the form TA 0521/B. If you need other employees you need to get a pre-contract for social security.

9. At this stage you also need to apply for licenses with the local government if it is needed. In generally all public places like bars and shops and also manufactures need a special license (In the 'Camara de Comercio' or the 'Ventanilla Unica' they can inform you about licenses needed to run your business. It is also a very good idea to also seek professional help for this issue).

10. If your company is going to have employees (apart from the owners) you need to register them with a local INEM office (unemployment office).

11. The company can start to operate as soon as you have received all your licenses. The last step is to get the final CIF number at the 'Camara de Comercio' or the 'Ventanilla Unica' by showing the original certificate from the Registro Mercantil of your Escritura.

 

Taxes in Spain.Corporate


In this section you can find a basic introduction to the Spanish tax system for corporations and information about the main indirect taxes in Spain.

Corporate Tax
Corporation Tax is paid by all companies with residence in Spain on the total income and on capital gains no matter if the income is obtained in Spain or abroad.

The corporate tax rate is between 30% and 35% where small companies are taxed 30% and larger corporations are taxed 35%. The definition of a small company in this case is a company with a profit below 100,000Eur and total earnings of less than 5million Eur.

The taxable profit is calculated on the total earning less costs for the entire financial year and reduced by losses brought forward the last 10 years. For new companies the period of 10 years starts when the company has made its first profit.

Income and expenses are nearly always billed in the financial year, which they occur no matter of the period in which the cash or other financial flow takes place.
For major expenses like buildings, machines or furniture it is possible to make a depreciation for up to 100 years. To be valid the depreciation has to be registered in the bookkeeping and either use the official rates for depreciation (between 1-3% per year for buildings and up to 10% for furniture and machines) or apply for another rate with the Spanish tax authorities.
Regarding to provisions it is also possible to take some types of provisions into account in the bookkeeping including provisions for bad and doubtful debts but in general a special permission is needed.

The income and expenses are supposed to show a true value of the financial situation of the company. If companies deliberately value transaction differently than the market price for tax reasons the tax authorities can change the valuation. This is especially the case with transactions between connected entities.

In Spain there is a relief for double taxation both within the country and abroad. If a Spanish company earns dividend from another Spanish company that have already been taxed a tax relief of between 50-100% is possible. The same is the case for those countries where Spain has a double taxation treaty.

Apart from the double taxation relieves there are some special tax incentives for Spanish companies who are exporting or spend resources on investigation and protection of the environment, professional education, things of cultural interest and employment for disabled persons.

Indirect Tax
In Spain there are a number of indirect taxes and duties that are payable both by companies and individuals and other where they can by deducted by corporations. Below you can find the most important indirect taxes in Spain.

VAT
The most important indirect tax for companies is the VAT (IVA). This is a tax on the final consumer on both goods and service and can therefore be deducted by companies.

When selling a product or offering a service (to an individual or company) the company is obligated to provide a receipt where it clearly states the VAT and total costs. Companies have to make a VAT declaration four times per year showing incoming and out going VAT.

The standard rate for VAT in Spain is 16% but there are a number of products with a reduced rate of 7% (water, some foodstuff, housing), a further reduced rate of 4% (basic food like bread and milk, medicine, books and news papers) and some services like education which are exempt from VAT at all.

Stamp Duty
The stamp duty in Spain is generally used in cases where VAT is not payable. This tax applies to both companies and individuals and is used for many types of official transfers of goods and rights and on all notarized documents. Companies have to pay stamp duty on official documents related to the formation or changes in a company like when setting up the business, changing the share capital or when buying another company. Apart from this both companies and individual have to pay to stamp duties when buying second hand real estate.