Why Set Up a Joint Stock Company in Spain

Spain SA

The Kingdom of Spain is located in the Iberian Peninsula in southwestern Europe and is a sovereign country. Its political system is a unitary parliamentary constitutional monarchy with a Monarch, a two-house Legislature and a Prime Minister.

Spain’s mainland is bordered to the south and east by the Mediterranean Sea except for a small land boundary with Gibraltar, to the north and northeast by France, Andorra, and the Bay of Biscay, and to the west and northwest by Portugal and the Atlantic Ocean.

Spain offers numerous advantages for foreign businesses including its geographic location and climate, stable economy and attractive development opportunities.

Spain is the second largest country in Europe and the 9th largest economy in the world.  Of all 47 countries in the European Union (EU), Spain has one of the strongest and most active economies.

There are a number of different types of legal business that you can set up in Spain, however, if you are looking to do something on a fairly large scale you should choose a joint stock company, also known as a Sociedad Anónima (SA)

You should also choose a joint stock company

  • If you want to be able to sell stock or company bonds or go public (IPO)
  • It will be a part of international estate planning

The minimum investment required to form a Spanish joint stock company is € 60,101 and at least 25 percent of that amount has to b paid before incorporation. There can be any number of shareholders in this type of company and they can be of any nationality and the liability of the partners is limited to the number of shares subscribed.

One of the main advantages of an SA is the option to float the company, as shares in an SA may be quoted on the Spanish Stock Exchange ( Bolsas de Valores).

Main features of a Spanish Sociedad Anónima (“S.A.”)
1) Minimum capital stock: 60,102 Eur.
2) The capital must be fully subscribed and at least 25% of the par value of the shares must be paid in.
3) Five years is the maximum for full payment of contributions in kind.
4) No minimum number of shareholders required.
5) Shareholders may be individuals/companies of any nationality or residence.
6) A certain level of formality required: board of directors, meetings, voting procedures, bylaws, etc.
7) The minimum number of board members: 3.

Spain has a broad network of Tax Treaties, more than 90, which makes this country an interesting choice for tax planning.

The Corporate Tax Rate in Spain stands at 25 percent. For newly formed companies the tax rate of the first 300,000 is only 15% and then 20% for anything generated over that amount. This reduced rate applies for the first two years in which the company obtains a profit.

In addition, those companies that feature a revenue below 5 million a year are only taxed 20% on the first 300,000 Euros and 25% for anything that goes over this amount.

The Spanish Government offers various incentives and flexible policies for starting and doing business in Spain.