If you’re thinking of setting up a new company in Spain, you may be aware that you have two options for a limited company. You may choose the regular Sociedad Limitada (SL, similar to a limited company in most countries) or a Sociedad Limitada Nueva Empresa (a new limited company). While both are broadly similar, there are important differences between the two.
In this article, we look at how they differ and whether it’s worth setting up a Sociedad Limitada Nueva Empresa in Spain.
What is a Sociedad Limitada Nueva Empresa in Spain?
This type of company is a subsidiary of limited companies in Spain. However, it does have important differences in its denomination and the number of partners.
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What are the main differences between a Sociedad Limitada Nueva Empresa and a Sociedad Limitada in Spain?
Broadly speaking, there are three main differences:
- Number of partners – a Sociedad Limited Nueva Empresa may have a maximum of five partners. In contrast, a Sociedad Limited has no limit to the number of partners, although there must be at least one.
- Name of the company – a Sociedad Limited Nueva Empresa is initially made up of the surname and name of one of the partners and the words Sociedad Limited Nueva Empresa or SLNE. So, for example, it could be called Wright Emily SLNE. On the other hand, a Sociedad Limitada must have a unique name.
- Company capital – a SLNE must have a minimum start-up capital of €3,000 and a maximum of €120,000. A Sociedad Limitada has the same minimum but no maximum.
How to choose between a regular limited company or a new limited company in Spain
At Costaluz Lawyers, we always recommend that you take professional advice when setting up a company in Spain. This will ensure you establish the company type that best reflects your business and fiscal interests.
Among other considerations, you should think about:
- The number of partners your company will have.
- The financial responsibility for the partners. You have the option to limit this to the capital you set up with or to have unlimited responsibility. The latter affects company assets as well as those belonging to the partners.
- Tax rates because depending on which type of company you choose, it will be subject to different tax rates (see below).
Tax differences between limited companies in Spain.
A Sociedad Limitada Nueva Empresa offers several fiscal advantages over a regular Sociedad Limitada. They include:
Exemption from transfer tax and stamp duty
SLNEs are exempt from these taxes for setting up a company, increasing capital, partner contributions that do not increase capital and the transfer to Spain of the company or its directing body if either of them was not previously established in an EU country.
Corporation tax
The SLNE company may request the delay of corporation tax payments for the first two years of its existence. These payments must then be made within 12 and 6 months after the first two years respectively.
Income tax
An SLNE may also request the delay or part-payment of personal income tax during the first year of the company’s existence.
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Get professional advice
This article outlines the broad differences between two types of companies in Spain, but it is no substitute for professional advice. Get in touch with our expert team to ensure you should the right model for your company and as a result, save time and money.
Maria Luisa Castro
