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How to create a limited liability company

First of all, we must know that the Sociedad Limitada or S.L. is the most common type of company. In fact, there are more than one million S.L. in Spain, while there are only about 91,000 Corporations.

The Sociedad Limitada (S.L.) is a type of mercantile society in which the responsibility is limited to the contributed capital, that is to say that the capital will be integrated by the contributions of all the partners, divided in social participations, indivisible and cumulative. In Spain the minimum capital contribution is €3,000, and these can be contributed in cash or in kind (assets/equity).

The constitution of the company is constituted following the following steps:

1)- REGISTER THE NAME OF THE COMPANY- The constitution of a mercantile society or of an entity inscribed in a Mercantile Registry, requires the previous obtaining in the CENTRAL COMMERCIAL REGISTRY of a favorable certification that collects the denominative expression with which the society is going to be identified as subject of rights and obligations in all its juridical relations. Issued certification that the requested denomination is not registered, it will be registered in the name of the interested party or beneficiary of the same during the period of SIX MONTHS, counted from the date of issue.

2)- TO MAKE A MONETARY CONTRIBUTION OR IN KIND OF CAPITAL, WITH A MINIMUM OF 3000 €. With this contribution the bank will provide a certificate of income so that it can be presented before a notary for the creation of the Limited Company.

3)-CONSTITUTE ARTICLES OF ASSOCIATION. It will have to be drafted with the agreement of all the partners that will form the Limited Company. These statutes are a kind of rules with sums of wills that govern the rules of the company as well as the relations between the partners. The Statutes will be added later to the deed of constitution of the Company.

4)- DEED OF INCORPORATION OF THE LIMITED COMPANY. It is an obligatory procedure and this must be done before a Notary Public.

Once the deed has been granted, the notary will inform the Registry of this fact, leaving the name of the company registered in it. The validity of the name certification is 6 months from the issuance of the negative certification of the company name.

In order to make this procedure effective, the following documentation must be provided: Articles of Association, negative certification of the name of the company in the Mercantile Registry, certification of the bank with the contribution justifying the capital contributed, DNI of the founding partners and in the case that the founding partner is a foreigner must provide declaration of investments abroad.

The notary can also obtain the NIF of the company, in case the interested party wants to do it on his own, it is enough to fill in form 036 and submit it either in person or online to the AEAT (Treasury).

5)- REGISTRATION IN THE TAX ON ECONOMIC ACTIVITIES. The company must register with the AEAT. Even so, all companies are exempt from this tax, with the exception of those whose turnover is greater than one million euros. Therefore, the vast majority of companies will be exempt from this tax.

6)- TAX RETURN. To start the activity, it is obligatory to present to the AEAT form 036 and the previous IAE document if the company is not exempt from the Economic Activities Tax.

7)- REGISTRATION OF THE COMPANY IN THE PROVINCIAL MERCANTILE REGISTRY. The registration must be carried out in the province where the activity is to be carried out and within two months of the execution of the deed of constitution of the company made before a Notary Public.

Once the registration has been carried out, the Registry will deliver the deed in which the volume, folio and sheet where the company has been registered will be recorded. These data must be compulsorily reflected in all commercial documentation issued by the company such as letters, invoices, delivery notes, etc..

After these formalities, the only thing missing is to have the definitive NIF, exchanging the provisional NIF that was given at the beginning in the Treasury, so that the Company will definitively acquire a NIF.

If you need to solve any doubt, do it here.