According to the Association of Property and Commercial Registrars, 119,467 new companies were created in Spain in 2024, an increase of 9.6% compared with the previous year. 98.6% were limited liability companies (SL), which suggests that this is the preferred legal form for most people deciding to set up a company in Spain.

If you’re planning to create a startup or a small and medium-sized enterprise (SME) structured as an SL, you need to be aware that the process is more complex than registering as a self-employed person using Form 036. To simplify the procedure, this article explains the steps to follow and key points about setting up limited liability companies in Spain.

What’s in this article?

• What is an SL?
  
• What are the advantages and disadvantages of an SL?
  
• Are there any prerequisites for incorporating an SL?
  
• Steps to creating an SL in Spain
  
• How Stripe Payments can help your SL
  
• FAQs about setting up an SL in Spain
  

What is an SL?

A sociedad limitada (SL)—which could be translated into “limited company,” or “limited liability company”—is a corporate form where shareholders do not risk their personal assets. In other words, debts draw directly on the funds contributed, but not on the owner’s assets.

All members of an SL are entitled to receive a proportional share of the profits, access information related to the business accounts, participate in decision-making, and acquire a stake if another shareholder decides to sell.

What are the advantages and disadvantages of an SL?

Advantages of SLs

Limited liability is only one of many advantages of SLs:

• They don’t require additional shareholders
  SLs can have a sole shareholder and be single-member companies. Per the Spanish Central Companies Directory, the total number of single-member entities in Spain reached nearly 2 million in 2024 and made up 56.5 % of companies.

• Lower tax burden
  SLs are subject to the Spanish corporate income tax (IS), which is calculated (with some exceptions, such as micro SMEs with low revenue) at 25% of the company’s profits. Self-employed workers (autónomos) are subject to the Personal Income Tax (IRPF), a progressive schedule by bracket of net income. After a certain threshold, an SL could end up paying less tax than a self-employed worker. Specifically, after approximately €60,000 of annual net profit, the tax liability of an SL is usually less: a company would pay 25% of this net income for the IS (€15,000). Meanwhile, a self-employed individual would pay bracket rates, up to the 37% applied to net income over €35,200.

• Reduced administrative burden
  SLs are easier to incorporate and manage than other firms. For example, sociedades anónimas (SA) or public companies are a much more complex structure, reserved almost entirely for large entities, and the Association of Property and Commercial Registrars reports that they account for only 0.4% of all incorporations in Spain.

• Increased access to financing
  SLs make it easier to secure financing because certain financial institutions view them as lower-risk than self-employed individuals.

• Enhanced privacy
  Although customers can check who manages an SL via online portals, in general, this legal structure offers enhanced privacy, as you don’t need to include your full name on the invoices generated. Similarly, a website’s privacy policy can list company data only, as established by Article 10 of the Law on Information Society Services and Electronic Commerce (LSSI).

Disadvantages of SLs

Before creating an SL, it is also important to assess the potential drawbacks of opting for this legal structure:

• Complicated dissolution
  If dissolution becomes necessary, the process is far more complicated and expensive than ending self-employment. Few plan for it at the start, but understanding the steps helps make informed choices. According to the National Institute of Statistics (INE) in Spain, in December 2024, dissolutions rose 20.7 % year-on-year.

• Less flexible management
  While a self-employed individual can easily make decisions without having to consult others, with an SL, you must adhere to the bylaws signed by the shareholders when the company was incorporated. Normally, corporate bylaws are quite restrictive in this sense, requiring significant changes to go through a general meeting.

• Increased accounting requirements
  Unlike self-employed individuals, SLs follow regulations for yearly reports set out in the General Accounting Plan. Submitting the required documents, complying with an established formal structure, and ensuring that all the numbers balance exactly involves a much heavier administrative burden that, in many cases, leads to SLs seeking advice from accounting firms.

Are there any prerequisites for incorporating an SL?

Before incorporation, ensure compliance with the requirements for an SL in Spain. There are three key criteria:

• Gather the necessary documentation: Forming an SL involves presenting items such as the National Identity Document (DNI) or Foreigner Identification Number (NIE), along with the healthcare card of the person managing it, and, if applicable, documents for additional shareholders.

• Establish the company information: State, among other details, the relevant category under the economic activities tax (IAE), the registered address, and the percentage held in the SL equity.

• Write the bylaws: Draft internal rules for SL governance, e.g., the organizational model and distribution of net income.

Steps to creating an SL in Spain

Entrepreneur support centers (PAE), introduced by the Spanish Government under Law 14/2013, are physical and online hubs that explain how to establish an SL from scratch and assist entrepreneurs through many of the procedures described below. That said, below is a step-by-step guide on how to set up an SL yourself online without using the Business Creation Network and Information Center (CIRCE):

• Reserve the company name
  To prove that no existing trading entity exists using the same name designation sought for your SL, reserve it by requesting a negative name certificate from the Commercial Registry.

• Open a company bank account
  Once authorities grant a designation to the future SL, you must open a business bank account in its name.

• Provide share capital
  Once the bank account exists, deposit the initial funding. Though the traditional minimum stood at €3,012, the Create and Grow Law in Spain lowered the amount needed to establish an SL to just €1 if specific conditions apply.

• Fill in a Unique Electronic Document
  Fill in a Unique Electronic Document (DUE) and attach a copy of the negative company name certificate. Complete it independently or via a PAE. If you don’t fill in this form, you will have to complete a lot of the following steps manually.

• Obtain the articles of incorporation
  The system automatically schedules a notary appointment. To receive the articles of incorporation, you must attend your appointment in person, show the DNI for identity verification, submit the negative company name certificate, and furnish proof of its share capital.

• Obtain a temporary tax identification number
  The notary submits the details to the Tax Agency, which issues a temporary tax identification number (NIF). If handling the procedure yourself, tick the relevant box when filling in Form 036.

• Obtain proof of ITPAJD
  While incorporation is exempt from the ITPAJD (Transfer Tax and Stamp Duty), one of the steps entails submitting a self-assessment—although the total payable will be €0—and securing proof of exemption issued by the autonomous community where the SL has its registered office.

• Register in the Commercial Registry
  Enroll in the Commercial Registry in the province where the SL’s registered address sits to acquire legal personality.

• Register with Social Security
  To actively work in an SL, register with Social Security. It then generates a contribution account code, needed later if hiring staff.

• Obtain a permanent NIF
  Once documents are approved, you can apply for a permanent NIF from the Tax Agency, identifying the SL for fiscal purposes in all activities. For this, you must check box 120 in Form 036.

How Stripe Payments can help your SL

After formally setting up your limited liability company, you can now legally start your business and start to accept payments.

Stripe Payments is a global, integrated payments solution that allows businesses of all sizes—from startups to large multinational corporations—to accept online and in-person payments from customers around the world.

Here’s what you can achieve with Stripe Payments:

• Optimize the checkout experience: With Payments, you can offer a streamlined and intuitive shopping experience. You will also save thousands of hours of development work thanks to its pre-designed payment interfaces, which give you access to more than 125 payment methods and Link, the digital wallet developed by Stripe.

• Expand to new markets faster: Reach customers around the world and simplify exchange rate management, thanks to international payment options that support 195 countries and more than 135 currencies.

• Integrate online and in-person payments: Create a unified commerce experience between your online and in-person channels to personalize your relationships with customers, build customer loyalty, and increase your revenues.

• Improve your payment performance: Increase your net sales with configurable and easy-to-deploy payment tools, including no-code fraud protection solutions and advanced features to improve authorization rates.

• Grow your business with a reliable platform: Build your business on an infrastructure that is ready to grow with you. Stripe has achieved 99.999% uptime and guarantees industry-leading reliability.

Check out all the details on how Stripe Payments can help you accept payments from anywhere or create a free account.

FAQs about setting up an SL in Spain

Do you have to be registered as self-employed to establish an SL in Spain?

Although you don’t need to be registered as self-employed to form an SL, after incorporation, it might be compulsory to sign up as such and pay the corporate self-employed contribution (cuota de autónomo societario) if the conditions outlined in Article 305 of the General Social Security Law are met. This rule applies, among other cases, to those holding 50% or more of the equity (or 25% for those with director or management roles). Ultimately, establishing an SL without prior sole-trader registration is possible, but in many situations it is compulsory to enroll as self-employed after creating the company.

Is it better to register as self-employed or create an SL?

Many factors matter, but often it hinges on the predicted annual profit. If you anticipate your income to be below €30,000 and do not plan to hire additional employees, it would be advisable to operate your business as a self-employed individual because the procedure is more straightforward and the taxes on self-employed people in Spain are not as high. By contrast, creating an SL is bureaucratically heavier. However, it might suit situations expecting higher levels of net income, aiming for a more professional image, or involving partners.

How long does it take to form an SL?

If a notary records the articles of incorporation, the SL uses standard bylaws, the DUE is submitted, and the CIRCE completes the incorporation. The articles gain authorization within a maximum of 12 working hours, and the Commercial Registry finalizes registration within 6 hours, under the provisions of Royal Decree 421/2015. Online, the timeline is up to 10 days, while some in-person steps lack fixed durations, so incorporating an SL could take longer.

How much does it cost to create an SL?

There are several costs to consider, such as the amount payable to the notary—set by Royal Decree 1426/1989—and the Negative Name Certificate, with a price ranging from €16.36 and €30. Creating an SL without funds isn’t possible. In addition to the initial capital you must provide, in most cases you must assume the bureaucratic costs, which usually total €380. Note that certain caps are statutory. For instance, Article 5 of Royal Decree-Law 13/2010 sets the maximum notary figures at €150 and the registrar amount at €100, which in some cases might be reduced to €60 and €40, respectively.

Is there any support available for creating an SL in Spain?

Yes, there are grants that vary by factors, e.g., the demographic profile of the entrepreneur or their company address. For example, women entrepreneurs can access unsecured microloans of up to  €30,000, while in Castilla y León, nonrepayable grants of up to €300,000 are offered. To find help, use the public assistance and incentives search tool on Plataforma PYME, an initiative from the Spanish Ministry of Industry and Tourism. Remember that there are support programs including PAEs, which supply valuable resources on establishing entities. These explain how to create an SL and how they assist in securing other grants, such as the Digital Kit.