The foreign investor can invest in Spain through:
Opening a local Branch, Subsidiary or Representative Office. Foreign companies can set up a branch structure in the country. These can be set up as different entities from the parent company (for instance, a company in Spain which has a foreign company as shareholder) or extensions of that parent-company in Spain.
Incorporating a spanish company, the most traditional being, limited liability company also known as S.L. (Sociedad Limitada)
Partnering with other companies already established in Spain: Joint ventures are a common form of start-ups in Spain, allowing members to share risks, pool resources and expertise. Spanish law regulates the different types of joint venture.
Nonetheless, the creation of a new entity or partner with existing establishments, is not the only way to invest in the country. You can enter the spanish market without having to physically set up an operations hub in Spain, this can be done by signing distribution agreements, operating through an agent, a broker or by establishing a franchise.
Spanish companies are excellent to reduce Wealth and Income Tax as well as Inheritance tax.
LEGAL SERVICE OF COMPANY INCORPORATION
Our service includes tax and legal advise regarding the most suitable legal structure for your business, considering details such as size of the company, the amount of shareholders, the business objective, as well as other matters that might impact on the associated taxes.
Our Law firm will handle all the necessary steps for the company formation, such as:
Request of Certification stating that the company name you have selected is not being used.
Application for C.I.F. number or Fiscal Company Identification Number with the Tax Agency.
Draft of the company statutes and bilingual power of attorney if needed.
A lawyer will assist to the Notary Public when the deeds of incorporation are signed or he/she will sign on the client´s behalf through a power of attorney.
Company Registration at the Mercantile Registry.
Obtention of the Company´s Digital Certificate (optional).
LIMITED LIABILITY COMPANY
S.L. – SOCIEDAD LIMITADA
The most important advantage of a S.L is the limited liability of the company´s shareholders. Therefore, only the assets of the company are liable. It is impossible to execute debt against the shareholder´s personal capital.
Spanish S.L. Key Points:
– Only 2 weeks to be incorporated
– Directors can be of any nationality
– Just requires 1 director
– Only 1 shareholder required
– VAT registration in 2 days
– Only €3,000 share capital requirement
– Directors and shareholders will need a spanish taxl identity number
Incorporating a limited liability company is a sign that your business is serious with a long-term goal and properly organized. This company will have a legal existence separated from management and its shareholders.
A company has more tax advantages that sole traders also called in Spain Autónomos.
The company structure allows the business to be conducted internationally.
Advantages for the Shareholders
The S.L. shareholders liability is restricted to the initial share capital.
It keeps anonymity, as the transition of shares are often recorded only in the Notary Public´s records, thus maintaining confidentiality about its ownership.
The dividends which shareholders receive are not subject to social security.
It is easier to transfer company shares than transferring assets. Therefore, if you need to transfer wealth within a family, this is the most convenient option.
The transfer of shares, can be done with a notary by signing documents.
Some taxes which are applied on the transfer of goods, do not apply on the transfer of shares.
When you transfer a property, a transfer tax or capital gains needs to be paid. These taxes can be delayed or even vanish with the transfer of shares in a company that owns real property. However, there might be a tax charge on the transfer of company assets, the legislation will vary between Regional Governments (Comunidad Autonoma) and will depend on the relationship between the transferee and transferor as well as their place of residence.
The losses resulting of trading can be compensated against future profits.
In some cases, time is of the essence, and a shelf company can be the best answer to your needs.
A company formation takes its time and there are certain procedures that cannot be avoided. In Spain, company incorporation usually takes up to a month. Sometimes this process needs to be expedited.
With the current rapid-growth markets and business opportunities cannot wait, we need to move fast and efficiently.
Our mercantile system is not the most agile one, neither our Public Administration. Therefore, to incorporate a company, you have to submit various paperwork, in several public entities, which are not coordinated amongst them, and they lack of a collaborative disposition. May be due to the lack of personnel, because they do not have enough knowledge of the matter or due to workload.
Through these already incorporated companies we have artificially but effectively achieved to expedite the incorporation process thus providing a solution to the final consumer.
Why should you wait when there is the option to buy an already set up company?
All you need to do is change its ownership.
These companies are debt free and they come with a certificate of inactivity as a guarantee of problem-free company.
Prices vary depending on the date when the company was formed. The older the company, the higher the price.
Depending on the type of business you wish to carry out, either the S.L or the S.A will be more suitable for your business objectives.
DEBT RECOVERY IN SPAIN
If you are in a situation where you or your company are owed money and negotiations have failed, there are certain actions that you can take to recover outstanding payments.
1)Letter of Demand
It is important to always keep a record of all the documents and contracts which originated the debt. If you have been organized and you have those documents, our law firm will draft a letter of demand against your debtor. This is a formal request to be paid within a certain date, clearly stating the details of the debt and the legal action which will take place if payment is not attended. It will serve as proof in court if the debt is not paid.
Usually, a letter from a Law firm, will demonstrate how serious you are, about wanting the payment and it will also indicate that if legal actions are taken against the debtor, legal fees and interests will also be included to the final amount owed. A letter from a Law firm tends to be more convincing and intimidatory.
Even if you want to draft the letter of demand by yourself, it is better to consult a solicitor, even if you are sure that the other party will ignore the letter. A lawyer will ensure that all important details are included in the letter, particularly if it will be used later in Court.
2) Negotiating with the Debtor
It is always advisable before going into a long and complicated trial in the Spanish Courts, an attempt to negotiate with the debtor, by analyzing the alternative ways of payments or the most beneficial solution for both parties.
Our law firm´s objective is to recover the debt minimizing the cost to our clients. We will go to court only if the debtor´s intention of not paying is beyond question.
3) Filing a case in the Court
Taking legal proceedings is the only way to recover the debt if all your demands of payment have been ignored.
In Spain you will find different proceedings for debt recovery:
a) Proceso Monitorio
This is a fast process in the Spanish Courts..This procedure applies to monetary debts, which are overdue, claimable, its amount determined and not exceeding 250,000€, when the debt of that amount is credited by documents . Once filed the paperwork to back up the debt, the court gives the debtor 20 days to pay the debt or challenge it. If the debtor does not respond, the judge will issue the execution of the debt, the enforcement order will have a validity of 5 years.
If the debtor opposes to the debt claim, the process will follow the usual court procedures to recognize debts (the judge will rule about the existence of such debt) , which in accordance to the amount of the debt will be followed by the Juicio Verbal ( debts up to 6,000€) or Juicio Ordinario ( debts over 6,000€ or unable to be determined in advance).
b) Juicio Verbal & Juicio Ordinario
Juicio Verbal is for debts up to 6,000€. They are faster than the Juicio Ordinario, and the process is more oral, in which both parties attend the hearing (called Vista), and the judge makes his decision based on the oral declarations of the parties
Both proceedings, have similar steps and development. The proceedings are initiated with a lawsuit, which will be served on the defendant, who must present a defense to the court. Then a hearing (Audiencia Preliminar) will take place, with the aim to reach an agreement, rectify material errors, make complementary pleadings, or report any infraction of procedural rules.
If as a result of the hearing, no agreement is reached, the proceeding continues to the evidence phase. After it, the court can order specific measures to clarify matters or facts that continue to be uncertain and then will pass judgement. This ruling can be enforced if the plaintiff applies for the enforcement order.
The judgement can be appealed in the court of Appeals.
c) Juicio Cambiario
This kind of proceedings are presented when there are debts for unpaid bills or drafts of Exchange, cheques or promissory notes. After the lawsuit is presented, the court gives the defendant 10 days to pay the debt, if the debt is not attended, the court orders the preventive embargo or seizure of the debtor´s assets, this measure should be requested in the initial lawsuit. If the defendant does not prove he paid the debt or he fails on his defense, the order of embargo becomes definitive and enforceable.
d) Bankruptcy process or Proceso Concursal
In this process the debtor has gone into bankruptcy, and there are many creditors with credits over the defendant´s assets. In these procedures it is the debtor who proposes the judge to arrange an agreement with his/her creditors and to organize the debt´s payments.
The rulings of all the before mentioned processes can be appealed to a higher Court, nevertheless the appeals will not affect the enforcement of the judgement, this will mean that you are still entitled to be recover the owed amount decided in the court sentence.
If you wish to recover a debt or need assistance regarding which steps to follow, please do not hesitate to contact us.