U.S. companies interested in investing in Spain must first decide whether to incorporate a subsidiary (i.e. as a separate corporation) or establish a branch. Both have full legal status and their profits are taxable in Spain.
If the investor decides to incorporate a subsidiary, the next decision is whether to incorporate a corporation or public limited-liability company (Sociedad Anonima, SA) or a private limited company (Sociedad de Responsabilidad Limitada, SL or SRL). The structure of the SA is for larger operations and the SL for smaller.
Shareholders in corporations (S.A.) and limited liability companies (S.L.) are not liable for the company's debts, and limited to their contribution. The main differences between these entities are: capital (Euros 60,000 – USD 87,700 minimum versus Euros 3,000 – USD 4,385); the number of founding members (three versus two), flexibility permitted at general meetings, transfer of shares and management of an S.L.
Other kinds of mercantile entity can be formed, but they are not used very frequently. Major consulting groups and law firms are available to help firms incorporate. Companies interested in setting up operations in Spain should obtain legal advice.
To acquire legal status, a U.S. firm must follow the following steps:
1. Registration of company name: Applicants must certify that the name of the future company is not already registered. Applications must be presented at the Central Mercantile Registry. The certification is valid for two months.
2. Declaration of the investment to the Spanish Ministry of Economy
3. Execution of notarized public deed of incorporation
4. Payment of asset transfer tax and legal proceedings document tax: These taxes are for new incorporation (roughly one percent of capital stock).
5. Assignment of a tax identification number (locally called NIF – Número de Identificación Fiscal): This must be done within 30 working days of the signature of the public deed. The NIF must be used within six months of application.
6. Register the company in the Mercantile Registry: The company must be registered at the corporate registry corresponding to the company’s official address. On average, it takes two months to complete registration.
In an effort to simplify the process of setting up a business in Spain, the Spanish Government and local chambers of commerce have created the “Ventanilla Unica” (One Stop Shop). At the “One Stop Shop", businesspeople can count on the assistance of an expert who is familiar with the official channels and all the paperwork involved.