Setting Up a Limited Company in Spain: A Step-by-Step Guide for Expats (By our Corporate Lawyer)

Setting Up a Limited Company in Spain: A Step-by-Step Guide for Expats (By our Corporate Lawyer)

Starting a business in Spain is an exciting venture for many expats, and one of the most popular business forms is the Sociedad Limitada (S.L.), equivalent to a private limited company. Establishing an S.L. can protect you with limited liability and lend credibility to your enterprise. However, the registration process can be complex if you’re unfamiliar with Spanish bureaucracy. In this guide, our corporate lawyer walks you through the key steps to set up a limited company in Spain, ensuring you know what to expect at each stage.

1. Choose a Company Name and Get a Certificate

The first step is selecting a unique name for your company. You must apply for a “negative certificate” (certificado negativo de nombre) from the Central Commercial Registry (Registro Mercantil Central) to ensure your desired company name isn’t already taken. This can be done online or via an agent. Once approved, you’ll receive a certificate reserving that name for your use (valid for a limited time, usually 3 months).

Tip: Have a few alternative names in mind in case your first choice is not available.

2. Obtain an NIE for All Founders

As an expat entrepreneur, you likely already have an NIE (Foreigner Identification Number). All foreign individuals involved as shareholders or directors of the new company will need NIEs as well. If any shareholder is another company, additional documentation for that company is required. Sorting out NIEs (through a police station or consulate) early on will smooth the process.

3. Open a Bank Account and Deposit Share Capital

Spanish limited companies require a minimum share capital of €3,000. You’ll need to:

• Open a special bank account in the company’s name (the bank can do this on the basis of your name reservation certificate).
• Deposit the share capital (at least €3,000) into this account. The bank will then issue a certificate of deposit.

This certificate is necessary to prove to the notary that the capital requirement has been met. (Note: once the company is incorporated, the funds can be used for business expenses or withdrawn by the company.)

4. Draft the Company Bylaws (Statutes)

Next, prepare the articles of association (estatutos sociales) – the governing bylaws of your company. These will include:

• Company name, purpose (activities), and registered address.
• Share capital amount and number of shares.
• Shareholder details and their contributions.
• Administration structure (whether the company will be managed by a sole director, multiple joint directors, or a board).
• Fiscal year dates and other operational rules.

Our corporate lawyers can draft custom bylaws to suit your needs while ensuring compliance with Spanish company law. Having bilingual (Spanish and English) versions can be helpful for expat understanding, but the official version to register must be in Spanish.

5. Sign the Deed of Incorporation at a Notary

All founding shareholders (or their legal representatives via power of attorney) must sign a public deed of incorporation before a Spanish Notary Public. This is a formal act where:

• The notary verifies the identity of founders (passport/NIE) and the name certificate, capital deposit certificate, and bylaws.
• The deed includes the company details and notarizes the formation of the company.

If any founder cannot attend in person, they can grant a power of attorney to someone else (for example, one of our lawyers) to represent them at the notary.

6. Obtain the CIF (Tax ID) and Register the Company

After the notary deed is signed, the notary will forward it to the Mercantile Registry for registration. In parallel:

• You must obtain a CIF (Certificado de Identificación Fiscal), which is the company’s tax identification number (also known as NIF for companies). Initially, a provisional CIF is requested from the Tax Agency and after registration a final CIF is confirmed.
• Pay the Asset Transfer Tax (ITP) for corporate formation – currently this is typically exempt for new companies, but a zero declaration might still be filed.
• The Mercantile Registry will officially register the company, which may take a couple of weeks. Once registered, you receive the company’s registration details and can request an official extract (certificado del Registro Mercantil).

7. Post-Incorporation Steps

Congratulations, your company is now legally formed! A few more steps remain:

• Social Security and Labor Registration: If you plan to hire employees or if the director will register as an employee, you need to register the company with Spanish Social Security and obtain a company social security number.
• Opening Licenses: Depending on your business activities and location, apply for any local opening licenses or sector-specific permits.
• Accounting and Books: Legalise your official company books (minutes book, shareholder register) at the Mercantile Registry and set up proper accounting. Spanish companies must file annual accounts and tax returns, so having an accountant or advisor is crucial.
• Bank and Operations: Convert the initial bank account to a regular business account for daily operations, using your new CIF.

Conclusion

Setting up a company in Spain involves several administrative steps, but with the right guidance it can be a straightforward process. Each step, from name reservation to notary signing and registration, has its nuances – especially for expats dealing with documents in Spanish. At Expat & Legal Spain, our corporate law team can assist you through every stage of establishing your business, making sure all legal requirements are met efficiently. If you’re ready to launch your venture in Spain, contact us for professional support to get your company off the ground smoothly.

Sandra Márquez

CEO & Lawyer, Expat & Legal Spain