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How create a new company in Spain ? and What do you need to form one Sociedad Limitada (SL) ?

· The responsibility is limited to the capital invested by the shareholder(s). The main advantage of limited liability companies is that shareholders and directors are not liable for the debts and obligations of the corporation.

· A start-up capital of 3,006 Euros is required for the incorporation of an SL. If the contribution of social capital is in cash, a certificate from the bank showing the investment of the money and its origin, the deposit must be made into a current account in the name of the company, the minimum being 3.005,06 €, for a limited liability company and 60.101,21 € for a public limited company. A declaration of foreign investments in Spain must be provided at the notary if there share holders are non residents in Spain.

· The number of shareholders is a minimum of one individual and the law does not specify a limit to the number of shareholders.

· When the company has a single shareholder is described as a SLU “Sociedad Limitada Unipersonal”.

· The company must be constituted in front of a public notary and entered in the Spanish Companies Register “Registro Mercantil”.

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10 Steps to Create a Company in Spain 1. Tax Identification Number for Foreigners (NIE)

Getting a NIE (Tax Identification Number for Foreigners) is the first step to create a company. The NIE is a tax identification number assigned to any individual non-Spanish citizen. A NIE number is required to open a bank account, buy or sell a property, pay taxes, be paid for employment, apply for a business permit and start a business in Spain. In order to request a NIE, you have to go to the Spanish administration and several documents must be completed. You should come with a formal proof proving the requirement of a NIE. Indeed, Spanish administrative procedures can be complex.

2. Obtain a certification of uniqueness of proposed company name (certificación negativa de la denominación social) from the Mercantile Register In order to choose the name of your firm, firstly you need to write a list of 3 names. Then, you must submit this list to the Spanish Companies Register which will check if those names are available. It will take three or four days for the Spanish administration to give you an answer. In case none of those names are available, you will have to change the names you have previously selected or write a new list that you will submit back to the Spanish Companies Register. At the end of this step you will receive a certificate name. The certification of uniqueness of the corporate name can be obtained directly from the Central Mercantile Registry by filing the corresponding form. Alternatively, it can be requested by mail or via the Internet. The Central Mercantile Registry must mail the certification C.O.D. to the address indicated in the request. Once the Registry issues the certification, the requested corporate name will be reserved for a maximum of 6 months from the certification’s date of issuance. Each certification of uniqueness of the corporate name is valid for 3 months from its date of issuance. Should the company not be incorporated within this term, a certificate renewal must be requested. The certification must be attached to the public deed of incorporation

You can do this by yourself through www.rmc.es. This step takes about 3 days before you receive the answer form the RMC by courier.

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3. Drafting Company’s Statute The statute of a company sets the legal and tax rules which manage the company and the responsibilities of the chief executive officer. This document includes some mandatory information such as:

Company name or corporate name Company's field of activity Registered address of the head office Amount of the capital of the company Conditions of assignment or transfer of shares Name of the chief executive officer and his responsibilities Name of the partners and their respective number of shares The signatures of the partners (if several partners)

It is recommended to surround yourself with experts to draft the statute of your company in order to avoid inconsistency or omission which could have serious consequences 4. Bank Account Open a bank account for the company; deposit capital in the bank and obtain a deposit certificate The contributions can also be directly given to the notary public before whom the deed of incorporation is going to be granted, at the time of the granting, so that the notary can deposit them in the Company's bank account. Once the company is created before a notary, you must go to the bank to open a personal and a professional bank account in Spain. The four major banks in Spain are Santander which is also one of the largest banks in Europe, Caixa which is a mutual fund, BBVA which essentially works with Latin América, and Sabadell which is a merchant bank for business leaders and it is the most suitable for foreign investors. 5. The Notary

Now, with the three previous documents, you can visit a Notary to apply to be appointed the company founding Director (Administrator), as well as prepare the company constitution. You can arrange a local Notary appointment to sign the deed of incorporation. You can find the nearest one to your area at www.notariado.org. This step lasts about 1-3 days depending on the Notary. You must supply the Notary original documents and photocopy of: Tax form 036, Certificate from Registro Mercantil, NIE and the evidence of payment in the bank.

The deed has to be taken to the Registro Mercantil where it will be registered in the Spanish Register of limited companies. This step lasts no less than 15 days until it is registered and original documents are returned. When you collect the original deed it will bear a certificate from the Mercantile Registry that the company is already registered.

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6. TAX OFFICE AGENCIA ESTATAL DE LA ADMININISTRACION TRIBUTARIA The next step to register your trading company involves another visit to the Tax Office. This time it is to obtain the permanent Corporate Tax Identification Number (CIF) at the Hacienda after the completion of the incorporation process. Newly incorporated companies must use the 036 form used to request a tax identification number, to describe their business activity, and other circumstances of your business. Do not forget the original and photocopy of the deed and NIE. The corporate domicile of your company may be different from the tax domicile. As a general rule, the statement on commencement of business activities (Declaración Censal de Inicio de Actividad) must be filed and the tax identification number must be obtained before the company starts business activities. A copy of the public deed of incorporation must be filed with the Delegación Provincial de la Agencia Estatal de la Administración Tributaria with the corresponding form. Through the same procedure, the company must also register for VAT. The tax identification number is a prerequisite for registering the public deed of incorporation with the Mercantile Registry . Form 036 may be filed in person with the Delegación Provincial de la Agencia Estatal de la Administración Tributaria or by registered mail, along with the following documents: (a) the original and a copy of the public deed of incorporation; (b) original or copy of identity documents (such as DNI or NIE for a foreign individual or legal entity) of the shareholders; and (c) original of an identity document (such as DNI or NIE. for a foreign individual or legal entity) of the representative of the company.

Obtaining an intra-Community VAT number is required by European law. The intra-Community VAT number allows to charge from Europe and to be exempt from VAT when billing for certain products and services. In this case, must be included on the invoice you intra-Community VAT number as well as the one of your client. Remind you it is essential that your business, but also your clients’ business, must be located in the European Union. In order to obtain an intra-Community VAT number in Spain, it is important to prove to the Spanish tax administration that the service is performed from Spain. Indeed, the company must have a physical presence in Spain. It is possible to justify the physical presence with the renting of premises in Spain and, if necessary, an employee working there. The deadline for obtaining intra-Community VAT number is more or less three months and will be subject to inspection by a representative from the Spanish tax administration.

7. Notify the Delegación Provincial de la Consejería de Trabajo e Industria The corresponding autonomous community must be notified within the first 30 days of the start of activities and the opening of the workplace. Every autonomous community has its own form. Some require that work injury and safety documentation (corresponding to the specific business or workplace in question) be filed along with the forms. Other forms and documents might be needed depending on the workplace activities. Pursuant to Spanish Labour Inspection's resolution of November 25, 2008, the company can now register through the Labour Inspection's visits book's electronic system

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The next step of the registration process as the company's director is for social security and occupational accident insurance purposes. You will have to comply with certain procedural formalities at the local office of the Ministry of Labour and Social Affairs. Although there are different options, usually the director is the person registered as autónomo. The monthly payments for autónomos are about EUR 235. You will need to do this step using original and photocopy of deed of incorporation, NIE, 036 form and form TA 0521.You can obtain this last form at www.seg-social.es. Upon registration of the company with Social Security, a state supervisory number is issued and assigned to the company. The required documents are (a) the corresponding form; (b) a copy of the public deed of incorporation; (c) a photocopy of the applicant’s national identity document or power of attorney; and (d) the company tax identification number. Registration of the company and affiliation of all the workers must be made before starting any business activities. In addition to the registration of the company, registration of each employee with the Spanish Social Security System is required by submitting the following documentation upon hire: (a) corresponding form (signed by both the company and the employee); (b) powers of attorney of the company representative; (c) a copy of the employee's national identity document (such as DNI, NIE, or passport); and (c) a copy of the company representative's national identity card. The Decree 68/2010 of March 26th, 2010 has led to the use of electronic means to start up any type of company. Consequently, the documents that are required in order to register employees with the Spanish Social Security System may be submitted using new electronic procedures. Alternatively, the documents that are required in order to register employees with the Spanish Social Security System may be submitted using these new electronic procedures (Real Decreto 368/2010, de 26 de marzo por el que se regulan las especificaciones y condiciones para el empleo del Documento Único Electrónico (DUE))

8. Submit a notification of start of operations (declaración responsable) to the municipality. Law 2/2011 of March 04, 2011 of Sustainable Economy substituted the requirement of obtaining a municipal license with a simple notification, for general companies that do not have a hazardous impact on the environment, public health, security, or the preservation of national and artistic heritage. A general company is now able to start operations with a simple notification. The municipality will conduct an ex-post inspection to ensure compliance

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9. Legalize company books Legalizing the Company Books is a formal obligation but it is not a prerequisite to begin the company´s business (articles 329 to 337 of Commercial Registry Regulation "Reglamento del Registro Mercantil"). Only the Company Book that registers the Minutes of the shareholders, and the Board of Directors meetings precise to be legalized before use (Art 116 Mercatile Register Reglament). The other books can be legalized later (within 4 months after the closing of the economic year of the company), and can be legalized by electronic means or presented as physical books (Arts 329 and following Mercantile Register Reglament, and Instruction Ministry of Justice 31 dec 1999)

10. Corporation Tax The corporate tax rate in Spain is quite advantageous. There are different rates for the corporation tax in Spain:

First rate: for new creation companies, that is to say, created from 1 January 2013, the corporation tax will rise to 15% for the first 300,000 Euros of profit and 20% for the rest.

Second rate: this rate is applied to a smaller company whose the turnover does not exceed 5 million Euros and the actual workforce is less than 25 employees. This company will pay, in the case, lower taxes. It will be applied the reduced rate of 20% for the first 120,202 Euros of profit; the rest will be taxed at 25%.

Third rate: it concerns companies whose the turnover does not exceed 10.000,000 Euros. The company will pay 25% for the first 120,202 Euros of profit; the rest will be taxed at 30%.

Fourth rate: it is applied to all other companies. For them, the full rate of 32.5% will be applied to their profit.