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Incorporation of a company in Spain. Practical guidelines

The object of this article is to comment several general and basic practical aspects that may be of interest for entrepreneurs willing to set up a company in Spain. In this sense, we shall review certain aspects that seem especially interesting to us, such as the election of the appropriate corporate form, the importance of the shareholders’ agreement, certain tax and labor law aspects to be taken into consideration, as well as various practical questions related to financing. It is worth to note that this article does not pretend to be exhaustive


The incorporation of a company allows to put in common material and human means in an organized manner, through the setting up of an entity with its own legal personality, that has its own separate estate and the capacity to intervene in the market. The incorporation of a legal entity presents various advantages, in particular from the liability’s limitation perspective, to a greater or lesser degree depending of the corporate form adopted. In this sense, the traditional corporate forms available in Spain are detailed under article 122 of the Commercial Code, even though they are not the only ones available (e.g. cooperative societies):

Collective company (sociedad colectiva): company with a deep personalistic nature, principally based on the trust existing among the shareholders. Even though its incorporation will imply the setting up of a separate estate that will be preferentially responsible for the corporate debts, all shareholders will be responsible as well for such debts in a personal, joint and several and subsidiary manner. It is a corporate form specially fitted for small businesses where the activity, the experience and the commercial credit of the shareholders are important assets.

Limited partnership (sociedad comanditaria): company that has a personalistic nature as well. It gathers collective partners, alike a collective company, but also limited shareholders who are not liable for the corporate debts and do not interfere with the corporate management.

Limited partnership with a share capital (sociedad comanditaria por acciones): capital company where, unlike a regular limited partnership, the capital contributed by the shareholders is represented by shares.

Limited partnerships are specially fitted for entrepreneurs willing to develop a commercial activity but who do not avail of the sufficient resources for that end, provided that this corporate form allows them to turn to capital shareholders who are ready to not interfere in the corporate management in exchange of a limited risk.

Limited liability company (sociedad de responsabilidad limitada): company whose capital is divided into shares (participaciones sociales) and where the shareholders are not personally responsible for corporate debts. This corporate form is specially adapted for SMEs of a certain size, where the shareholders are looking for a limited risk from the beginning and where the personal condition of the shareholders is more important than in a corporation (sociedad anónima). This translates into a more restrictive shares’ transfer regime.

Corporation (sociedad anónima): capital company par excellence, with an especially unrestrictive shares’ transfer regime. Its capital is represented by shares (acciones) and its shareholders are not personally responsible for corporate debts. Corporate form specially fitted for the management of large businesses with high capital needs.

In practice, the most common corporate form is the limited liability company, provided that (a) the liability of all shareholders is limited, (b) its functioning is regulated thoroughly, and (iii) its minimum capital stock is substantially inferior to that of a corporation (€3,000 instead of €60,000).

As for what regards the formalities required for the incorporation of the different type of companies, in general the granting of a public deed before a Notary and its filing with the corresponding Commercial Registry will be necessary.

Also, and for foreign shareholders, it is worth to note that they will also need to avail of a Spanish Foreign Identification Number (N.I.E.). This will be the case as well for foreign administrators. Also, and should a power of attorney need to be granted for the incorporation of the company, it will need to be translated into Spanish and apostilled for being valid in Spain (concerning countries that are not member of the Hague Convention on apostille, the power of attorney will need to be legalized through a slightly more complicated path).

Finally, it is worth to note that the more relevant legislation regulating the commented corporate forms would be (a) the Commercial Code, (b) the Commercial Registry Regulations, (iii) the Capital Companies’ Act, and (d) the Structural Modifications’ Act.


When several individuals are willing to partnership for the joint development of a commercial activity, the setting up of clear rules of the game from the beginning is essential. Indeed, even though Spanish legislation thoroughly regulates corporate matters, and is complemented by the shareholders’ will expressed through the company’s by-laws, in certain cases the establishment of additional covenants in connection with especially sensitive issues turns out to be vital. In this sense, and even though it is highly convenient to introduce most of the corporate agreements reached within the by-laws in order to grant them with a higher efficacity, it is worth to note, on the one hand, that all matters are not susceptible of being regulated in the by-laws and, on the other hand, that it might be eventually convenient to keep certain matters out of the by-laws for confidentiality reasons. This is especially relevant in scenarios where there are no majority shareholders, but also in the frame of the minority shareholders’ rights protection.

As for what regards matters that are usually regulated in the frame of a shareholders’ agreement, we may mention in a non-exhaustive manner the following: (a) regulation of the management body, (b) regulation of the shares’ transfer regime, (c) reserved matters, (d) economic matters (dividends’ distribution policy, obligations to contribute additional funding…), (e) liquidation rules, among others.

A shareholders’ agreement shall not be seen as the reflection of a lack of trust among the shareholders, rather on the contrary it represents an essential tool for preserving said trust. Indeed, the setting forth of clear rules of the game from the beginning will contribute to avoid, or at least limit, the appearance of future divergencies regarding the functioning of the company.


The more relevant difference between taxation of benefits derived from commercial activities carried out by individuals and that of commercial activities undertaken by companies is that the first ones will be subject to the Personal Income Tax (IRPF) at a progressive rate (the maximum national rate for 2020 is of 45% and for 2021 it shall be of 47%), while the second ones will be subject to the Corporate Income Tax (IS), in general at a fix rate of 25%.

Once the above said, the more relevant aspects from the tax perspective would be the following:

Obtention of the Tax Identification Number (NIF)

Legal entities shall request the assignment of a NIF through the presentation of the 036 model form declaring the start of the activity (declaración censal de alta en el Censo de Empresarios, Profesionales y Retenedores). Said request shall be done upon the granting of the incorporation public deed and before the carrying out of any operation (payments, hiring of staff…). Notwithstanding, the NIF will be provisional until the incorporation public deed duly filed with the relevant Commercial Registry is presented before the competent Tax Authorities. Thus, for the obtention of a final NIF a new model form 036 will be need to be presented, detailing as well the taxable activities to be undertaken and any modifications arisen as from the presentation of the initial 036 form, presenting as well the incorporation public deed duly filed, as indicated.

Settlement of the Transfer and Stamp Tax (Impuesto sobre las Transmisiones Patrimoniales y los Actos Jurídicos Documentados – ITPAJD)

Incorporation of companies are subject to this tax under the category of corporate operations, even though Royal-Decree 13/2010 has introduced an exemption concerning this kind of operations that would still be in place, and therefore no taxes shall be paid. Notwithstanding, the corresponding model form 600 will still need to be presented before the competent Tax Authorities of the corresponding Autonomous Community.

Electronic signature certificate

Once the NIF has been obtained, it will be convenient to carry out the necessary formalities for the obtention of the electronic signature certificate required to present the recurrent tax returns before the competent Tax Authorities in a telematic manner. In this sense, the procedure is initiated before the National Money and Stamp Factory (FNMT) and is completed through the presentation of additional documents before the Tax Authorities.


Here are the main labor law aspects to be taken into consideration upon the incorporation of a company:

  • In order to be entitled to hire personnel, companies shall request their filing with the Social Security by presenting a request through model form TA.6 and hence obtaining the Code of the principal Contribution Account (CCC), which is a number assigned to each company by the General Treasury of the Social Security. Also, a secondary CCC shall be obtained (through model form TA.7) as well for each Province in which the company will carry out its activities.
  • Once the company avails of one (or several) CCC, it will be entitled to file employed workers before the Social Security, using for that end model form TA.2.
  • If a company opens a work center, it will be required to communicate it to the competent Labor Authorities within the corresponding Autonomous Community, by presenting the activities’ initiation form.
  • The company shall select the management system to be put in place for labor risks’ prevention (among the possibilities foreseen by the Law) and, eventually, it shall be required to hire an external Prevention Service in order to ensure compliance with prevention regulations.
  • Before the signature of any work contract, the company should analyze the bargaining agreement applicable to its activities. In case of doubts, it is possible to make a consultation, both a national level (Comisión Consultiva Nacional de Convenios Colectivos) or at the level of the corresponding Autonomous Community (in Catalonia, Consell de Relacions Laborals de Catalunya).
  • Finally, it would be convenient to verify the Social Security regime that would apply to the directors of the company, as well as that applicable to the management in general.


In first place, it is worth to note that this will depend on many factors, mainly linked to the shareholders’ credit worthiness and the material means contributed to the company. Notwithstanding, we shall focus on companies starting their projects with limited resources, or start-ups.

In this sense, the financing needs of this sort of companies are sensitively different than those of a company already established and with a track record, and in addition their nature will depend on the degree of maturity of the relevant commercial project. Traditional financial instruments, such as banking financing, are uncommon options since the uncertainty linked to the company’s future cash flows represents a too high risk for financial entities, which opens the door to alternative funding sources.

In the start-up initial phase, the most common funding source would be that known as the 3F’s (Family, Friends and Fools), where the closest persons to the entrepreneurs contribute to finance the project. In this phase, the investors’ participation in the management of the start-up will be usually limited, provided that it is the entrepreneur who masters its project, strategy and model.

When the project reaches a certain degree of maturity, and additional funds turn out to be necessary, the figure of the Business Angels appears. Hence, Business Angels are experienced investors who, in a private manner and with their own resources, decide to invest in a start-up, assuming normally certain management functions. It is worth to note that there are various Business Angels’ circles linked to the main business schools (Esade Ban, for instance).

Another alternative would be to turn to 2.0 funding or crowdfunding, which allows to call for funding from a high variety of small investors (whether loans or equity), through an online platform (such as Crowdcube for instance).

When the size reached by the start-up allows to significantly reduce the risks linked to the project’s capacity to generate cash flows, the Private Equity funds may enter into play. These entities always take an active part in the management of the company (specially from the financial perspective) and their aim is to obtain the maximum economic return, in particular upon disinvestment (approximate cycle of 5-7 years).

Finally, it is worth to note that “money” is normally the most expensive good. Therefore, the access to external funding will be usually accompanied by important restrictions that will affect the entrepreneur’s freedom with the aim of ensuring the investment’s economic return, whether at an external level (for instance, in case the funding is granted by a bank, through the setting forth of different covenants, prohibitions, limitations to the distribution of dividends…), or at an internal level (for instance and for what regards Private Equity funds holding a stake in the company, through the setting forth of reserved matters, access to the administration bodies, right to appoint the financial director…), the length of such restrictions depending on the investment’s amount.

Daniel Paes Julian. Barcelona, September 17, 2021

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