One Euro of Share Capital – and the Bill That Follows Each Year

Setting up an S.L. company in Spain costs 106 euros and change in state charges, the share capital can be one euro, and through the CIRCE portal the company exists within a few working days. At 106 euros, getting in is cheap. Staying in costs 3,768 euros a year in contributions.

One euro of capital and the two strings attached

Most guides still quote 3,000 euros of share capital. That figure left the statute book on 19 October 2022. The Crea y Crece act cut the floor to one euro, and it attached two conditions that stay in force until the old threshold is reached again. Both conditions still apply.

Article 4 of the Spanish companies act (Spanish: Ley de Sociedades de Capital) puts it in one line: the capital of a Sociedad Limitada may not fall below one euro. Compare the public limited company: 60,000 euros. The change came with Ley 18/2022, published in the Spanish official gazette on 28 September 2022.

The first condition bites on profit. While subscribed capital sits below 3,000 euros, at least 20 per cent of the annual profit has to go into the legal reserve (Spanish: reserva legal), until reserve and capital together reach 3,000 euros. A fifth of your profit is therefore locked for the first few years. Budget your drawings accordingly.

The second condition bites at the end. If the company is wound up and its assets do not cover its debts, the shareholders are jointly and severally liable for the difference between 3,000 euros and the subscribed capital. Incorporate with one euro and you carry a 2,999 euro promise around with you. Most founders can live with that, once they know it exists.

Few founders stop at one euro. Banks, landlords and suppliers can read the subscribed capital straight off the commercial register. If you can put 3,000 euros in anyway, the reserve duty and the residual liability both disappear in one move. The money goes into a Spanish bank account, and the bank certifies the deposit for the notary.

Setting up an S.L. company in Spain: the eight steps

Through CIRCE the whole thing takes a few working days; outside that route, expect weeks. From month one: 314 euros of social security, plus bookkeeping. You need an N.I.E. for every shareholder, a Spanish bank account and a digital certificate. Form Modelo 036 closes the sequence.

Eight steps to incorporate an S.L. in Spain

1. N.I.E. for every shareholder
2. Name clearance at the Registro Mercantil Central
3. Bank account and capital certificate
4. Escritura de constitución before the notary
5. CIF from the AEAT via Modelo 036
6. Entry in the Registro Mercantil
7. Social security as autónomo societario
8. Final NIF and start of trading

The eight steps in the order the authorities expect them

That order is not a suggestion. No notary signs without the name certificate, no registry files without the deed, and the tax office only issues the permanent company tax number once the entry exists. Skip ahead and you queue twice.

1. Get the N.I.E.: every shareholder and the director needs a Spanish tax identity. The route is in our guide to the N.I.E. number.
2. Clear the name: the certificate that no identical name exists (Spanish: certificación negativa de denominación social) from the Registro Mercantil Central, up to five names in order of preference.
3. Account and certificate: pay the capital into a Spanish account and take the bank certificate to the notary.
4. Escritura de constitución: the notarial deed with articles, shareholders, registered office, business purpose and director.
5. Apply for the CIF: the company tax number through Modelo 036 at the Hacienda, issued first as a provisional NIF.
6. Registro Mercantil: registration at the provincial commercial registry. Only then does the company exist as a legal person.
7. Social security: register the director as an autónomo societario before trading begins.
8. Permanent NIF: a second Modelo 036 after registration, together with the declaration of activity and tax obligations.

If you hold a non-EU passport

Owning shares and running the company are two different questions, and for British, Irish-resident-abroad, American or Canadian founders the second one is where it gets expensive. An N.I.E. identifies you for tax and for the deed, and every shareholder needs one regardless of nationality. It is a number, not a permit.

If you intend to sit in Spain and manage the company yourself, you need a residence authorisation that covers self-employed activity. You need it before step seven. Non-EU founders who stay outside Spain can hold shares and appoint a resident director instead. Clarify this first, because the deed names the director and changing it later means another notary appointment.

What CIRCE and the PAE offices change

CIRCE is the state incorporation system, and PAE offices are the desks that fill in the single electronic form (Spanish: Documento Único Electrónico) for you. The law counts in working hours. With model articles the central registry clears the name within 6 horas hábiles, the notary signs no later than 12 horas hábiles after the start, and the registry files within the same 6 working hours.

Without model articles the entry comes in two stages: provisionally within those same 6 working hours, finally within 5 days. Either way you need a Certificado Digital, or the PAE office signs on your behalf. Publication of the entry in the official register gazette BORME carries no fee. Both stages run electronically.

What the incorporation actually costs

Your route decides the bill. Go through CIRCE with the model articles issued by the Ministry of Justice and both the notary and the registry are capped. Step outside that route and the notary charges by tariff, which means by capital and by the length of the deed. More worked examples sit in our finance section.

The name certificate costs 6.010121 euros plus IVA under the fee schedule of the Registro Mercantil Central. Keep the capital at 3,100 euros or below and use model articles, and Real Decreto-ley 13/2010 caps the notary at 60 euros and the registry at 40 euros. Together: a little over 106 euros.

Drop the model articles and a second cap applies on the electronic route: 150 euros for the notary, 100 euros for the registry. The incorporation itself triggers no transfer tax, because forming a company is expressly exempt from the corporate transactions charge (Spanish: operaciones societarias). Gestoría fees follow no official tariff, so this article quotes no figure for them. Ask for a quote.

Incorporation costs and running costs of a Spanish S.L.

The running costs that decide the case

Against 106 euros of official fees sit the running costs. Social security starts in month one, VAT returns start in quarter one, and corporate tax plus the annual filing at the registry start with the first financial year. Put those against the revenue of your first twelve months and the line becomes visible. The fees are a one-off.

Corporate tax (Spanish: Impuesto sobre Sociedades) runs at 25 per cent as a general rate, according to the Agencia Tributaria. Newly formed companies pay 15 per cent, in the first tax period with a positive tax base and in the one that follows. The relief hangs on your first profitable year, not on the date of incorporation. The gap is 10 percentage points.

Modelo 200 carries the declaration. The window runs for 25 calendar days after the six months following the end of the tax period, which for a calendar financial year means the first 25 days of July. VAT goes on Modelo 303 every quarter, from the 1st to the 20th of the following month, and from 1 to 30 January for the fourth quarter.

Then comes the part no sole trader deals with: proper accounts with a balance sheet. The books are legalised electronically at the Registro Mercantil within four months of the year end. The annual accounts have to be drawn up within three months, approved by the shareholders within six months, and filed at the registry within one month of that approval. Miss it and the registry page closes.

The biggest fixed item is the director. As an autónomo societario he or she falls under a minimum contribution base of 1,000 euros a month according to the Seguridad Social guide, at a contribution rate of 31.40 per cent. That is 314 euros a month and 3,768 euros a year, earned or not. How it stacks up against personal tax is in our piece on income tax in Spain.

Autónomo or S.L.: where the maths turns

No authority publishes an answer here. Every rule of thumb rests on assumptions its author rarely spells out. So here is the arithmetic in the open, built from two documented tables: the income tax scale for Andalusia and the corporate rate. What an autónomo pays in contributions alongside it sits under costs of self-employment.

Three assumptions carry the calculation. One, a single shareholder who runs the business and lives in Andalusia; two, a profit that stays inside the company rather than being paid out. Three, social security is left out, because it falls due either way. What remains comparable is one thing only: the tax rate on the next euro earned.

For an autónomo it meets income tax. The state and Andalusia each run their own scale, and added together they give 19 per cent up to 12,450 euros, 24 per cent from 13,000 euros, 27 per cent from 20,200 euros, 30 per cent from 21,100 euros and 37 per cent from 35,200 euros of taxable income. Inside the company the same euro meets 25 per cent, or 15 per cent in the first two profitable years.

So the line sits at 20,200 euros. Above it the autónomo hands over 27 per cent of every further euro while the company hands over 25 per cent, and the gap of 2 percentage points widens to 5 percentage points from 21,100 euros. During the first two profitable years at 15 per cent the company is ahead from the very first band. That is the whole advantage, and it is narrower than most people expect.

Because 2 percentage points do not pay the fixed costs. The 3,768 euros of social security fall due whether or not the company earns anything, and bookkeeping, Modelo 200 and the annual filing sit on top. The moment you want the money personally, a second layer arrives: salary or dividend is taxed again in your own hands. The advantage covers retained profit only.

So who should stay an autónomo? Anyone below 20,200 euros of profit, anyone who needs the whole profit personally, and anyone working alone without real liability exposure. How registering as an autónomo works is covered separately. For many that is enough.

One step in the sequence catches people out: the share capital has to sit in a Spanish bank account, and the bank has to certify it. If that money starts life in pounds or dollars, the rate your high street bank applies is part of the cost, whether or not it shows on the statement. On 3,000 euros that is noise. On 30,000 euros it is not.

Frequently asked questions

The legal form is one piece. Residence, healthcare, schooling and the annual Spanish tax return all hang off it. Plan only the company and you have planned the smaller half.

Verdict

Month one starts the meter. A little over 106 euros in official fees, one euro of capital, a few working days, and the S.L. exists. What comes after decides the case: 3,768 euros of social security a year, 25 per cent corporate tax, and whether profit stays in the company.

Take the whole profit out personally and the income tax bill matches the autónomo’s, with 3,768 euros of contributions, a balance sheet and two extra filings on top. Deferral is not saving. Above 20,200 euros of retained profit the advantage begins, at 2 percentage points, and not before.