What kind of company is the best to invest in Spain?

109 2015 Advantages and disadvantages of the different legal formsIndividual Entrepreneurship

Advantages:

  • Ideal form for small companies,
  • Few formalities must be completed
  • Generally less administrative costs make it more attractive

Disadvantages:

  • Full entrepreneur’s liability
  • The entrepreneur is liable with his private property until he or she begins operations
  • Due to the taxation as a natural person, high profits eventually lead to higher taxes

S.L./S.R.L.

Advantages:

  • Liability is limited to the paid capital
  • Liberty in the choice of the company’s name
  • Low starting capital
  • No limit on the maximum amount of capital and number of shareholders
  • Possibility of cash or in kind investment in the company’s capital
  • No need for an independent expert evaluation for in kind contributions
  • Shareholders do not have a required minimum or maximum amount of shares
  • Shareholders enjoy freedom to sign contracts or agreements with each other

Disadvantages:

  • Duty of keeping formal accounting
  • Higher management costs than for individual entrepreneurships
  • No possibility of being listed in the Stock Exchange
  • Known identity of shareholders

S.A.

Advantages:

  • Possible listing in the Stock Exchange
  • Some business activities can only be exercised by companies who adopt this company type (ex. insurances)

Disadvantages:

  • Appointment of directors is limited to a maximum period of six years
  • High minimum amount of capital
  • In kind contributions must be evaluated by an independent expert
  • Administratively heavy and more expensive than an S.L.

S.N.L.E.

Advantages:

  • Fast formation process (possible in 48 hours)
  • Generic purpose
  • Simple corporate structure
  • The shareholder’s register book is not binding
  • Tax advantages (ex. tax deferral in the first two taxation periods)

Overall, the S.L.N.E. stands out for its simplification of the formalities and accounting as opposed to an S.A. and S.L.

Disadvantages:

  • No liberty in the choice of the company’s name
  • Legal entities cannot be shareholders. This makes the company type unattractive for many international investors.

This article is not considered as legal advice

Karl H. Lincke

As an Abogado & Rechtsanwalt, Karl H. Lincke is a Partner at Mariscal Abogados and specialises in M&A, Company law, TMT law and Real Estate law. Working languages: Spanish, German and English. For any further enquiries please Contact us