Choosing the right type of company is one of the most important steps when starting a business in Spain. This decision determines key aspects such as partner liability, minimum required capital, applicable taxes, and how your company can grow and operate. In this inclusive and accessible guide, we’ll explore the main types of companies in Spain, their characteristics, and how to select the most suitable one for your needs.
Summary
What is a company and why is choosing the right one important?
A company is a legal entity that enables one or more entrepreneurs to join forces and carry out an economic activity. Each type of company has specific rules that define:
Selecting the correct structure directly affects the long-term sustainability and success of your business. Let’s break down the key legal structures available in Spain.
Most common types of companies in Spain
Limited liability company (S.R.L. or S.L.)
Limited liability company is the most popular type of company among small and medium-sized enterprises (SMEs). Its key advantage is limited liability, meaning partners are only liable up to the capital they contribute.
Minimum capital: €1 (though €3,000 is commonly recommended)
Partners: At least 1 (can be a single-member company – S.L.U.)
Taxation: Corporate tax
Advantages:
Disadvantages:
Example: Many Spanish tech startups start as S.L. for its flexibility and low entry barrier.
Public limited company (S.A.)
Public limited company best suited for larger businesses or those intending to raise significant capital and operate nationally or internationally.
Minimum capital: €60,000 (25% must be paid at registration)
Partners: At least 1 (can be S.A.U.)
Taxation: Corporate tax
Advantages:
Disadvantages:
Example: Large corporates like Telefónica use this structure.
Cooperative society (S. Coop.)
Cooperative society is ideal for collaborative projects where all members participate equally.
Minimum capital: Defined in bylaws
Partners: At least 3
Taxation: Subject to special regime
Advantages:
Disadvantages:
Example: Agricultural cooperatives in La Rioja use this model.
General partnership (S.C.)
General partnership is a traditional business structure based on close personal collaboration.
Minimum capital: Not required
Partners: At least 2
Taxation: Corporate tax
Advantages:
Disadvantages:
Labour public limited company (S.A.L.)
A variant of S.A. that encourages long-term employment.
Minimum capital: €60,000
Partners: At least 2 initially, 3 after 36 months
Taxation: Corporate tax
Advantages:
Disadvantages:
Limited partnership (S. Com.)
Limited partnership has both general and limited partners.
Minimum capital: Not required (unless it's a partnership by shares)
Taxation: Corporate tax
Advantages:
Disadvantages:
Economic interest grouping (A.I.E.)
Not-for-profit structure designed to support shared economic goals.
Minimum capital: None required
Taxation: Income flows to partners
Advantages:
Disadvantages:
How to choose the right type of company
Start-up capital
Risk tolerance
Team size
Purpose
Sole trader vs limited company – key differences
| Aspect | Sole Trader | Limited Company |
|---|---|---|
| Liability | Unlimited (personal assets at risk) | Limited (only company capital) |
| Taxation | Personal income tax (IRPF) | Corporate tax (IS) |
| Start-up cost | Very low | Varies depending on type |
| Growth potential | Limited | Higher, investor-ready |
