Ecovis Global > How to invest in Spain: New law makes it easier and more economic
How to invest in Spain: New law makes it easier and more economic
2. December 2022
There are several possibilities for companies wanting to invest in Spain. They can simply register in Spain for tax and employment purposes, open a branch office (without its own legal personality) or incorporate a company. Thanks to a new law, this is now possible with just EUR 1 of capital.
A company makes sense for investors who need a permanent structure, want to limit the liability of the parent company and fully close the economic cycle, meaning it contracts directly with clients, issues invoices, etc.
Until recently, the options were either a public company (Sociedad Anónima) with a minimum capital of EUR 60,000 or a limited liability company (Sociedad Limitada) with a minimum capital of EUR 3,000.
What the corporate law reform will mean for investors
The reform now allows the incorporation of a limited liability company with a capital of only EUR 1. It also establishes a procedure which makes company incorporation easier, as long as standard procedures and models (for example for company articles) are followed. These models are now being prepared by the corresponding authorities, which does mean it may be some time before this easier procedure is actually available.
Discuss with us the alternatives for an office in Spain to suit your company. Christian Koch, Lawyer, Partner, ECOVIS Legal Spain , Madrid, Spain
However, there are also some limitations. If the initial capital is below EUR 3,000, the company must set aside 20% of its yearly benefits to establish a legal reserve until this reserve reaches EUR 3,000. Until this sum is reached, the partners will be personally liable up to this amount for the debts of the company in the case of insolvency, explain the members of the Ecovis Madrid Hub.
In all other aspects, a EUR 1 limited liability company is fully equivalent to any other limited liability company. As a result, investors now have a new instrument for investing in Spain when they are just testing the market and want to limit the cost of their investment.