COMPANY FORMATION FAQs

  • What are the requirements to set up a company in Spain?

    The very basic requirement to set up a company in Spain is to have an NIE number for an individual or a NIF number for a legal entity in place.

    A common practice for all Spanish companies, although not mandatory by law, is to have a founding capital for which it is necessary to have a bank account opened and a founding capital deposited to set up the company.

  • What is a NIE number and how do I obtain one?

    The word NIE stands for Número de Identificación de Extranjero, a number given to any foreign person who, for social, professional or economical reasons, must identify itself before the Spanish authorities.

    A NIE number can be obtained in Spain, in any of the Spanish consulates overseas (in both cases in person by the applicant), or represented by an attorney at law.

    The documents needed to obtain a NIE number are:

    • An official EX15 form;
    • A legalized copy of the applicant’s full passport or ID card, in case of a EU citizen, or a notarized and apostilled copy of the document if obtained via an attorney at law representation;
    • Proof of payment of the tax applicable to the service.

    This process, although being simple, can prove bureaucratic and time consuming due to the collapse of the NIE offices in the large cities. That is why it is recommended to have the documentation well organized, forms duly filled and the tax applicable to the service paid beforehand.

  • What is a NIF number and how do I obtain one?

    The word NIF stands for Número de Identificación Fiscal, and it is a number given to any foreign legal entity, which, for economical reasons, must identify before the Spanish authorities.

    It is the equivalent to a VAT number or a TIN number in foreign jurisdictions.

    In order to obtain a NIF number for a foreign entity it must be registered with the Spanish tax office providing the following information:

    • An official 036 form duly fulfilled including a Spanish address for notifications;
    • The documents proving the existence of the foreign entity in its country and the corresponding certificate of incorporation;
    • Passport/ID Card and NIE number of whoever is the natural person legally representing the foreign entity in its country of origin.

    The NIF number can be obtained in Spain before the tax office, in any of the Spanish consulates overseas by the company representative or by appointing a lawyer to represent the foreign entity before the Spanish authorities via a power of attorney.

    Note that in some cases too European VAT regulations require foreign entities to obtain a Spanish NIF when trading in Spain. See our this entrance in our posts for further information.

  • What is the minimum founding capital to set up a company?

    For a limited liability company Sociedad de Responsabilidad Limitada (SL) the minimum founding capital to deposit by the shareholders is 3.000.-€ euros which must be deposited in a bank account opened in Spain.

    See our guide on how to set up a company in Spain for further information on the subject.

  • How long does it take to form a company in Spain?

    Depends very much on the structure of the company and whether the shareholders and directors have their NIE/NIF numbers in place.

    If the NIE/NIF numbers are in place and the shareholders/directors are in Spain or duly represented by an attorney at law a companyA basic form of company can be formed in 48 to 72 hours.

  • What is the difference between a subsidiary company and a branch?

    Even though they sometimes are referred to as the same thing, branches and subsidiary companies are in essence two completely different things.

    Whereas a subsidiary company is an independent entity separate from the parent holding company, the branch company is not a separated legal entity but an extension to it.

    Subsidiary companies have their own legal capacity, its liability is limited to the capital and they are managed locally by their director/s, managers, CEO.

    Branches, on the contrary, have minimal local representation and limited legal capacity permanently subjected to the parent company where all decisions are taken.

  • Does a Spanish company need to have employees?

    Spanish companies are not required to have employees but a director registered with the social security system who will act as the company representative.

  • Do I need a working permit to set up a company in Spain?

    You do not, however in such case, the company will have to appoint a representative with a valid working permit in Spain who will act as a representative before the Spanish Social Security.

COMPANY MANAGEMENT FAQs

  • What is a digital certificate for a company and how can I obtain one?

    The digital certificate certificado digital is a software file containing all the information of an entity which allows it to interact with official organisms (tax offices, town halls, administrations, etc.) and identifying before them.

    Corporate and non-corporate entities, following the Law 39/2015 of 1 October on the Common Administrative Procedure of Public Administrations, must interact with official organisms via electronic means using an electronic certificate. Official organisms must as well communicate with them via electronic means.

    A digital certificate can be obtained in any of the registration offices available around the Spanish territory as well as in the Spanish consulates overseas.

    Additionally, since July 2020, due to the collapse in the registration offices caused by the Covid-19 pandemic, registration can be done before a Spanish post Correos office.

  • Who can be a company director?

    Any legal person or corporate entity (even foreign), can be a company director in a Spanish company as long as they fulfil the requirements set out in the Spanish Corporates Enterprises Act.

    These basic requirements are:

    • Having a NIE / NIF number in place; and
    • Expressly accepting the appointment (before a notary public or the Spanish Companies Registry Registro Mercantil).
  • What are the attributions of a company director?

    Any legal person or corporate entity (even foreign), can be a company director in a Spanish company as long as they fulfil the requirements set out in the Spanish Corporates Enterprises Act.

    These basic requirements are:

    • Having a NIE / NIF number in place; and
    • Expressly accepting the appointment (before a notary public or the Spanish Companies Registry Registro Mercantil).
  • Can a company be the director of another company?

    Yes, it does. Although the corporate body acting as a director of a third company must appoint a natural person to fulfil the duties of the position.

  • Do company directors in Spain have a salary?

    They do not, as a matter of fact, following the Spanish Corporate Enterprises Act, unless otherwise provided by the company by-laws, the director’s role in a Spanish company is unpaid.

  • What are my duties as a company director in Spain?

    Company directors are subjected to a general principle of performing their roles as loyal representatives, operating in good faith and the best interest of the company.

    Some of these basic obligations include:

    • Not exercising their powers for any purpose other than that for which they were granted;
    • Maintain confidentiality of any information, data or records which they might access in their role;
    • Make use of company assets for their personal interest;
    • Compete with the company;
    • Taking advantage of the company’s business opportunities.
  • Can I be liable as a director in a Spanish company? Even as a board member?

    Failing to comply with the directors’ obligations shall make them respond before the company, shareholders and third parties such as creditors. This, in certain cases, might apply to board of directors’ members as well.

    This applies to acts and omissions, being an example of an omission failing to apply for administration in cases of insolvency.

  • Does a Spanish company need a secretary?

    Having a company secretary is not mandatory to legal entities in Spain, although it is recommended to have one in companies with more than one interest represented.

    An experienced company secretary will assist the directors in their administrative duties and look after the legal compliance of the company obligations.

SHAREHOLDERS MEETINGS FAQs

  • What type of shareholders meetings exist?

    There are two types of meetings:

    • Ordinary general meetings which must take place at least once a year within the first six months of the financial year
    • Extraordinary general meetings which are any meetings that are not ordinary
  • Who is responsible for calling the shareholders meeting?

    Any general shareholders meeting must be convened by the company director/s.

    Only the universal shareholders’ meeting can be called without prior notice when all the company capital is present in the meeting.

  • What can be decided in a shareholders meeting?

    Except those decisions that only the company director can take, (i.e. change of address), any decision can be taken in a shareholders meeting with the needed majorities, for example: appointing a director, distributing dividends, dissolving the company, increasing/reducing capital, excluding a shareholder, etc.

  • Can a shareholders meeting be hosted through call/videocall?

    Yes, it can, although in such case the company by-laws will have to be adapted to allow the shareholders’ meetings to take place telematically.

  • Who can represent me in a shareholders meeting if I cannot attend?

    The only persons allowed to represent a shareholder in a shareholders meetings are:

    • His/her ascendants, descendats or spouse
    • Another shareholder
    • Anyone with a power of attorney allowing him/her to dispose of the donor’s estate
  • Can the shareholders call a meeting?

    Only the company director or the board of directors is authorised to call the shareholders meeting.

    Shareholders representing at least 5% of the voting rights in the company can force the company director to call the meeting, but they could never call the meeting themselves (unless in the case of a universal meeting).

  • How often need the shareholders meeting to take place?

    At least once a year within the first six months of each financial period, unless otherwise stated in the company by-laws.

BOARD OF DIRECTORS FAQs

  • In what cases having a board of directors is recommended?

    Only in the cases where the company government cannot be organized otherwise a board of directors should be implemented.

    A frequent misconception is thinking that because a company is managed by a board will be more efficient or better looking at the eyes of the third parties although this is far from reality.

    Boards act as an entity within the company adding further complexity to its management.

  • Does a company in Spain need a board of directors?

    It does not, only certain entities such as public limited companies are required to have a board in place.

    Most Spanish companies are managed by a sole director or jointly directors.

  • Being a member of the board directors allows me to act on behalf of a company?

    Never, board members are non-executive and only a managing director or CEO is entitled to represent and act on behalf of the company.

    On the following link we discuss in further detail about this subject, click on it for further information.

  • What do I need to buy a property in Spain?

    The only paperwork needed to purchase a property is a valid passport or ID card and an NIE number.

    Click on the general questions tab here in our FAQs section to find out what an NIE number is and how it can be obtained.

  • Do I need a lawyer to buy a real estate in Spain?

    You do not need a conveyancing solicitor to purchase a property in Spain, although it is highly advisable to hire an independent lawyer who specializes in real estate law and works independently from the estate agent or the seller.

    An experienced professional will walk you through the process and look after your best interests for your peace of mind.

  • What is a reservation document?

    A reservation document is used to confirm the buyer’s interest in the property and also to take the property out of the sale, at least for some time while the parties negotiate the next steps.

    You can find some useful information on the reservation document in our article on conveyancing in Spain by clicking on the following link.

  • What is a contrato de arras?

    The contrato de arras is a document in which the parties agree on the conditions of the transaction and by which the buyer delivers a down payment on account of the final price.

    It is a key element in a conveyancing process and must be drafted by an experienced solicitor focusing on the information laid down by the due diligence and that agreed between the parties.

    On the following link you will find detailed information on the contrato de arras and its importance within the conveyancing process.

  • What are the taxes due when buying a property in Spain?

    Real estate purchases are generally subject to transfer tax Impuesto de Transmisiones Patrimoniales (ITP) when the property is a second-hand or VAT tax Impuesto del Valor Añadido (IVA) and stamp duty tax Actos Jurídicos Documentados (AJD) in the case of a new constructed/off-plan property.

    See our article on conveyancing in Spain for further information on the subject by clicking on the following link.

  • What are the taxes due for owning a property in Spain?

    All real estate owners in Spain are liable for:

    • Real Estate Ownership Tax Impuesto sobre Bienes Inmuebles (IBI) a tax which is due annually paid to the town hall where the property is located; and
    • Local water and waste tax Tasa de Basuras y Agua, again paid annually to the town hall where the property is found.

    On top of that real estate owners should be looking at:

    • Income tax in case the property is available to the owner, not being its permanent residency or rent to a third party.
    • Wealth tax (rarely applicable due to high thresholds).

TAX FOR COMPANIES FAQs

  • What is an intra community VAT number and when do businesses need one?

    An intra community VAT number or sometimes called VIES VAT number is a code that identifies a taxable person or legal entity that is registered for VAT.

    Companies and businesses must register for an intra community VAT number when:

  • Are all Spanish companies registered in for intra community VAT?

    As opposed to other EU countries, Spanish businesses, although they have a VAT number granted by the Spanish tax office when they are created, they are not automatically granted with an intra community VAT number for which they must run an application to the Spanish tax office.

    Further information on intra community VAT number in Spain can be found in our article Understanding Intra Community VAT in Spain

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  • Where can I see if a business has an intra community VAT number in place?

    The European Comission has an intra community VAT number validation for numbers issued in any state member that can be verified in the following link:

    VIES VAT number validation website.

    Further information on intra community VAT number in Spain can be found in our article Understanding Intra Community VAT in Spain

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  • How can a Spanish company apply for an intra community VAT number?

    Application for an intra community VAT for a Spanish company or business is made through the Spanish tax office website Agencia Tributaria using a digital certificate.

    This application might trigger a visit from a tax officer to validate that the company has an actual activity, that is why it is advisable that the business has an actual location where the business activity is carried out.

    Virtual offices and businesses with no physical presence in Spain whatsoever are likely to get an application turndown.

    Further information on intra community VAT number in Spain can be found in our article Understanding Intra Community VAT in Spain

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  • I own assets in Spain, is it recommended to make a will?

    Having a Spanish will in place when owning assets in Spain is not mandatory although from a legal point of view it is much recommended.

    Inheritances with a cross-border component are very complex as there is no international regulation that unifies successions when the deceased has economic interests in more than one country.

    Regardless of one’s nationality, place of residence, estate in Spain (properties, company shares, bank accounts, pension funds, etc.), it is essential in order to avoid excessive hassle when legalizing one’s succession to have a Spanish will in place.

    Making a will is a fairly simple and economic thing to do. Our expert lawyers will be able to assist and answer any question arising from this process.

  • How much is the cost for making a will in Spain?

    A will in Spain should be made before a notary public and the cost for the service is relatively inexpensive (approximately 40.-€) regardless of the content of the will.

    Having a lawyer to supervise and draw the will is recommended to avoid unpleasant surprises in the future, plus will have a little cost in most cases.

    Reach out to our team for a free consultation.

  • Can I have different wills in different countries?

    The answer is yes, and not only that, it is recommended in the case of owning assets in more than one country.

    By doing so we:

    • Simplify the inheritance process by processing the same succession in two different countries independently;
    • Save costs and time by avoiding the recognition, translation, apostille, etc. of the foreign documentation;
    • Avoid conflicts in the application and recognition of figures that are commonly used in foreign countries but do not have a legal recognition in Spain (i.e. Trust).
  • How is application for probate done in Spain?

    Application for probate in Spain is not done before a court of justice but before a notary public.

    The notary public will authenticate the last will and testament and, together with an experienced solicitor, walk the heirs and throughout the process.

  • Dying without a will, what needs to be done?

    When a person dies without having a will is called intestate estate or ab intestato.

    In this case a procedure called Declaración de Herederos must be opened before a notary public in which heirs and witnesses must appear to initiate the process.

  • Is there an inheritance tax in Spain?

    Yes, the tax is called Impuesto de Sucesiones y Donaciones and it is due by each of the heirs within six months since the decease.

    In most of the cases an extension to that term can be obtained and avoid penalties for late filing.

  • How do I get an extension to the payment of the inheritance tax?

    The inheritance tax is due within 6 months since the date of death of the deceased person. The article 68 of the Royal Decree 1629/1991 allows an extension to the payment of the inheritance tax for another additional period of 6 months, the requirements to that extension are:

    • Filing the extension request during the first 5 months given to pay the tax, providing death certificate, address of the heirs, details on the estate and reason to the extension;

    The extension will be granted if no response to the request is given by the tax office within one month since the request.

  • Can I find out if a person left a will in Spain before passing away?

    Yes, there is a document issued by the Spanish Ministry of Justice called Certificado de Actos de Última Voluntad where it states whether a deceased person left a will in Spain and, in such case, before what notary public it was made.

  • Are foreign wills executable in Spain?

    Yes, they are, although the process, due to its complexity, will require the assistance of a probate expert.

  • What is a NIE number and how do I obtain one?

    The word NIE stands for Número de Identificación de Extranjero, a number given to any foreign person who, for social, professional or economical reasons, must identify itself before the Spanish authorities.

    A NIE number can be obtained in Spain, in any of the Spanish consulates overseas (in both cases in person by the applicant), or represented by an attorney at law.

    The documents needed to obtain a NIE number are:

    • An official EX15 form;
    • A legalized copy of the applicant’s full passport or ID card, in case of a EU citizen, or a notarized and apostilled copy of the document if obtained via an attorney at law representation;
    • Proof of payment of the tax applicable to the service.

    This process, although being simple, can prove bureaucratic and time consuming due to the collapse of the NIE offices in the large cities. That is why it is recommended to have the documentation well organized, forms duly filled and the tax applicable to the service paid beforehand.

  • Do I need and NIE number to open a bank account in Spain?

    This usually depends on the bank you are dealing with, but generally speaking, you should be able to open an account in almost every bank in Spain with your passport only.

  • What is a certificate of residence and how can I obtain one?

    Also named certificado de registro de ciudadano de la unión it is a certificate for citizens of the EU and the EEE residing in Spain for a period of over three (3) months.

    It is mandatory for employment, residence, retirement, and to the spouse and descendants of the main applicant.

    The residency card must be obtained personally (no POA representation is valid) by the applicant before the immigration authorities in Spain.

  • What is a power of attorney and how can I make one?

    A power of attorney (POA) is a legal document that allows a third person (attorney at law) to act on behalf of another person (the grantor). This document if frequently used to represent foreign persons or entities while carrying out legal transactions in Spain.

    A POA can be used in almost any situation (before the tax office, a court of justice, town halls, legal administrations, third parties, etc.) and it is certainly much recommended when choosing an expert lawyer represent anyone’s interests in Spain.

    There are different ways to make a POA:

    • Sign it before a notary public in Spain;
    • Sign it before the Spanish consulate in a foreign country;

    In the cases above the POA will be executable in Spain without further managements.

    • Sign it before a notary public in a foreign country and legalize the document with the Spanish consulate (double legalization process); or
    • Sign it before a notary public in a foreign country and apostille the document (in countries where the Hague Apostille is applicable*).

    In the above cases the POA must be drafted in two languages (including Spanish) or translated into Spanish to be executable in Spain.

    * Click here to access a list of signatory states of the Hague Convention.

  • What is a personal digital certificate and how can I obtain one?

    The digital certificate “certificado digital” is a software file containing all the information of a person which allows him/her to interact with official organisms (tax offices, town halls, administrations, etc.) and identifying before them.

    A digital certificate is much recommended for being a time and bureaucracy saver. It can be obtained in any of the registration offices available around the Spanish territory as well as in the Spanish consulates overseas.