Invest in The Basque Country

Basic guide to labour, commercial, accounting and tax regulations

Sayma SPRI
Different ways of setting up2019-05-17T12:11:15+02:00

DIFFERENT WAYS OF SETTING UP

At the time of investment/starting an activity in the Basque Country, there are various alternatives:

01. Purely contractual link

Distribution, Dealership, Franchise, Engineering, Licence, etc.)

02. Opening a branch office

Opening a branch office has no legal personality of its own and it is dependent on its parent company, although its registration is required in the Mercantile Register, being considered a permanent establishment for tax purposes.

03. Taking a shareholding

Taking a shareholding in a company or acquiring it (subsidiarisation).

04. Joint venture agreement

Establishment of a joint venture (JV. – for specific work with no legal personality of its own), economic interest grouping (EIG. – for an ancillary activity with its own legal personality); equity loan / joint venture agreements (involves a share in the profits from a contribution to the capital of a mercantile company).

05. Trading company

Establishment of a trading company. The most common forms are the limited liability company and public limited company.

LIMITED LIABILITY COMPANY

Requirements

  • The minimum number of shareholders is 1 and there is no maximum limit.
  • The liability of the shareholders is limited to the capital contributed to the company and they are not liable for the company’s debts with personal assets.
  • The minimum capital is €3,000 fully paid up and divided into shares.
  • The shareholders’ contributions can be monetary (money) or in kind.
  • Non-monetary contributions do not have to be valued by an independent expert.
  • The position of administrator / director may be indefinite.
  • It may not be listed on the stock market or issue shares or bonds.

Advantages

  • The procedures for creating and maintaining the company are relatively simple, as are the costs of setting it up.
  • The liability of the shareholders is limited to the capital and assets held by the company and does not relate to their private assets.
  • The minimum share capital is very low in comparison to other trading companies.
  • The number of shareholders may be one and the company may be a sole proprietorship.

Potential disadvantages

  • The shares into which a limited company is divided are not easily transferable.
  • Risk of “under-capitalisation” when requesting funding, with the possible requirement of personal guarantees from shareholders.

PUBLIC LIMITED COMPANY

Requirements

  • The minimum number of shareholders is 1.
  • The liability is joint and several between the shareholders and is limited to the capital contributed.
  • The minimum capital is €60,000 and 25% must be paid up.
  • Non-monetary contributions must be valued by an independent expert, with the exception of specific assets (transferable securities subject to quotation or a recent report).
  • The position of administrator / director is for a maximum of 6 years.
  • They can be listed on the stock market and are supervised by the Spanish National Securities Commission (CNMV).

Advantages

  • The shares into which a company is divided are easily transferable.
  • As many investment partners as the company wishes can be incorporated.
  • The liability of the shareholders is limited to the capital and assets held by the company and does not relate to their personal assets.

Potential disadvantages

  • The procedures for establishing and maintaining a company are more complex and costly than those for a limited liability company.
  • The minimum share capital is higher than for a limited liability company, as €60,000 is required instead of only €15,000 when a company is created.

06. Individual Entrepreneur / Self-employed person

Individual Entrepreneur / Self-employed person or a stakeholder in a civil society organisation or joint ownership arrangement. Their liability for debts is not limited and they handle debts with personal assets.

Limited Liability Entrepreneur: A new individual entrepreneur figure included in the law on entrepreneurs that is registered in the commercial register can limit their liability.

07. Other types of entities

Other types of entities such as the social economy (Cooperative Societies and Employee-Owned Companies), or non-profit entities such as Associations and Foundations.