If you want to set up a company in Spain, this article will educate you on the tax laws for a LLC (SL) which is the most common company structure in Spain.
Spain taxes resident companies on their worldwide income. Therefore, from our research, and these things do change, offshore income is subject to Income Tax. The country doesn't have major incentives to transfer in offshore income accrued abroad. Corporate Income Tax standard rate is 25% in Spain. This ranks Spain as 102th overall in terms of corp. taxation rate internationally.
The valued added tax rate in Spain is 21.00%, that ranks Spain as 155th overall with regards to value added tax rate worldwide. In terms of other taxation, an employer will contribute 29.90% to the equivalent of a social security fund and an employee will contribute 6.35%. The overall complexity of the tax system is medium. This is measured by average time to comply with a country's labor tax requirements is as it is 90 hours. Contributing to this is the number of yearly labor tax payments, which is 1 in ES.
Thin capitalisation mandates aren't in play. Thin capitalisation refers to any type of requirements on companies' debt-to-asset ratios.
Dividends received are subject to Corporate Income Tax. However, a participation exemption may apply if parent company holds at least 5% of the payer shares for at least 1 year, and subsidiary is subject to CIT of at least 10%, or holding exceeds €20m and is resident of a country where Spain has concluded a tax treaty with. Dividends are distributions of company earnings, passed by the board, to a class of its shareholders. Dividends can be either cash payments, shares of stock, or other property.
Capital Gains are treated as ordinary income and subject to Corporate Income Tax. However, Capital Gains may be tax-exempt if the aforementioned participation exemption apply. A capital gains tax is levied on the profits that a corporation or natural person realizes when he or she sells sells a capital asset for a price that is higher than the purchase price.
The interest withholding tax rate is estimated at 19%. This means that the taxman expects LLC's to withhold 19% of payments abroad on interests, unless tax is reduced under a tax treaty or exempted under the EU interest directive. The dividends withholding tax rate is 19%. This means that the relevant tax authorities expects relevant legal entities to pay tax on at least 19% of dividends remitted abroad, unless the participation exemption applies or is tax-exempt under the EU parent-subsidary directive or tax is reduced under a tax treaty. The royalties withholding tax rate is 19%. This means that the relevant tax authorities expects LLC's to withhold 19% on royalty payments to non-residents, unless the EU royalties directive applies or tax is reduced under a tax treaty.
There is a tax on individual's net wealth in Spain. There are gift, inheritance, real estate and transfer taxes. We are aware of frequently implemented research and development breaks on taxation in ES.
The above is not tax or legal advice for your individual circumstances. We are able to point you to a lawyer in Spain who can answer all your questions. Contact us today. Click the free consultation button above or press Incorporate now if you are in a hurry.
It takes approximately 33 hours to file and prepare documents for a Spain Civil Law (French).
The corporate tax is approximately 25% which is 103 in the world.
Owners of a company in Spain are not allowed to carry back a loss and may be allowed to carry forward a loss for 100 years.
The vat rate in Spain is 21% which ranks 155 in the world.
When examining a jurisdiction in which to incorporate, the first thing to look at is the legal code. The underlying law in Spain is civil law (french) law. You will want to get some local advice as to how to best structure a company in Spain. One is permitted to electronically sign documents.
The letters ES is for Spain and the most common company type structure in Spain is a LLC.
When setting up, budget about 5 weeks to incorporate a LLC in ES. The types of currencies you can use to capitalize your legal entity is most commonly USD and Euro legal currency.
. One is typically not permitted to change the jurisdiction.
There must be at least 1 shareholder. This makes it possible for you to own a LLC in ES by yourself. Corporate Shareholders are allowed, meaning you could have a company as a shareholder. Foreign ownership is permitted, up to 100% of the total equity of the company.
A LLC is only required to have 1 director on the board. Consequently, corporate directors are permitted. Directors should not expect to be private, as they are disclosed. There is a body of law which requires companies to hold an annual meetings of shareholders.
A registered agent is normally required, which means the company will have to pay a fee on a yearly basis, for an agent which can receive a service of process on behalf of the business. However, a company secretary is another cost you will need to incur.
There is a requirement to file accounts to relevant authorities. However, there is not typically a requirement to have these accounts audited.
Thin capitalization rules are in effect. A company is thinly capitalised when there is a greater proportion of debt than equity. The minimum capitalization for a Spain Civil Law (French) is 3,000.
A corporate director is permitted, meaning this country is a good option if you are setting up a structure where you want to protect director liability.
The directors are disclosed in the public registry of Spain, Central Mercantile Register (RMC). Shareholders are disclosed in the Central Mercantile Register (RMC).
Typically companies take 5 weeks to setup and there are 1 director(s) required and 1 shareholder(s) required at the time of incorporation.
Overall we think Spain is a ok option and have given it a score of 52 as an IO score, using the Incorporations.IO proprietary formula.
We can help you form a company in Spain. Click the button above for a no-obligation quote. We will provide you with all the necessary documents to open a bank account as well as a registered office in Spain, which is required by law.
We can help you with your incorporations needs for an initial payment of just $1000.
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The standard process typically takes between two (2) to three (3) weeks depending on when we receive all the required information from you. Once we receive your information, we will email you a complete set of documents for your review within 3 working days upon confirmation of payment. After executing the documents, you will need to mail them to us and we will formally submit your application for filing with the Registry. The Registry will then take about 3-8 working days to process the incorporation and produce certificates necessary for opening your bank account.
Applying for Your Bank Accounts:
Incorporations.IO maintains close working relationship within our extensive network of partner banks to help you apply for and receive banking services that are most appropriate to your specific situation. From the time of verification of incorporation it can take (1) one week to (2) two weeks to apply for and receive a bank account. We work primarily with banks that allow for remotely opened accounts to ensure you are ready to do business as soon as possible.
Applying for Payment Processing:
We include introductions to payment processors or merchant accounts with all of our incorporation services. Whether you just need standard credit card processing or specialized services for high risk processing, we have partners that can assist you and are happy to help you with introductions that can empower your business.
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