Setting Up an SL in Spain as a Foreigner: Costs, Timeline and Taxes

A Sociedad Limitada (SL) is Spain’s most common company form, roughly equivalent to a private limited company or an LLC. Its owners’ liability is limited to what they contribute, and non-residents can set one up without living in Spain. The process is predictable once you know the order of the steps, and the tax obligations start earlier than most newcomers expect.

Before anything else: the NIE and the basics

Every foreign director and shareholder needs an NIE (Número de Identidad de Extranjero), the tax identification number Spain gives to non-nationals. You can apply at a Spanish consulate in your home country, or at the immigration office or police station in Spain. Do this first: everything else depends on it, and it is often the step that sets your overall timeline.

You will also need to:

• Open a Spanish bank account in the company’s name to deposit the share capital.
• Request a certificate from the Registro Mercantil Central (the national register of company names) confirming that your chosen name is not already taken.
• If you cannot attend in person, grant a power of attorney. This usually needs to be notarised and, depending on the country, apostilled and accompanied by a sworn translation.

Capital: €1 or €3,000, and the notary and registry

Spanish law has traditionally required a minimum share capital of €3,000 for an SL. Since the “Crea y Crece” start-up reform, an SL can be formed with as little as €1. But it is not a free lunch. While the capital stays below €3,000, the company must set aside part of its profits as a legal reserve until capital plus reserves reach that threshold. Its partners can also be held liable if the company is wound up with insufficient assets. Contributions at that stage must be made in cash. Many advisers therefore recommend €3,000 for a business that will deal with banks, landlords or larger clients, since a tiny capital figure looks fragile on paper.

The incorporation follows this sequence:

• Draft the articles of association (estatutos), setting out the corporate purpose, the administrators and the registered address.
• Sign the public deed before a Spanish notary, either in person or through a representative holding a power of attorney.
• Obtain a provisional company tax number, the NIF, from the tax authority (AEAT, Agencia Estatal de Administración Tributaria).
• Handle the transfer tax formalities, which for company formation are generally exempt but must still be filed.
• Register the company in the Registro Mercantil (Mercantile Registry) of its province. The company only acquires legal personality on registration.
• Exchange the provisional NIF for the definitive one.

Total costs depend on the notary, the registry, any gestoría (administrative adviser) fees and the legal support you choose, so ask for a written quote rather than trusting a headline figure. As a rough guide, once the NIEs are in hand, incorporation itself usually takes anywhere from a few days to a few weeks. Foreign paperwork, bank onboarding and registry backlogs are the usual causes of delay.

Obligations from day one, even with no activity

A company with no income and no staff still has duties. Registering with the tax authority through the census forms (modelos 036/037) declares the activity, the VAT status and whether you will have employees. After that, the main filings are:

• Corporate income tax (Impuesto sobre Sociedades, modelo 200): filed annually, even if the company is inactive or made a loss. The general rate is 25%, but newly created companies can benefit from a reduced rate in their first profitable years, subject to conditions.
• VAT (IVA, modelo 303): due quarterly once you are registered for VAT and carrying out taxable activity. The general VAT rate is 21%.
• Withholdings (modelo 111) if you pay employees or professionals.
• Annual accounts: approved by the partners and filed with the Mercantile Registry every year, plus bookkeeping from day one.

Other points deserve early attention. A director who also holds a controlling stake and works for the company normally has to register as self-employed in RETA (Régimen Especial de Trabajadores Autónomos, Spain’s self-employed social security scheme). Dividends paid to non-resident shareholders are subject to withholding, which tax treaties may reduce. Even a missed nil filing can bring penalties, which is why inactive companies need a calendar too.

At Zythos Business we guide freelancers, SMEs and international founders through this sequence every day, from the NIE and incorporation to the first quarterly filings and the annual accounts. If you are planning a Spanish company, a short initial consultation can save weeks and help you avoid costly mistakes.