Advantages and Benefits of a Sociedad Limitada

Company Type	Time to Incorporate	Cost
SL	2 weeks	€1800

principal benefits of a limited company

The single most important advantage of trading via a Sociedad Limitada company is the limited liability of the company's shareholders

Incorporating a private limited company is an indication that your business is serious and has a long term objective and is correctly structured

Company registration legally protects your company name against anyone else forming a similarly named SL company

Your company has a legal existence separate from management and its members/shareholders

sole trader v limited company

A Sociedad Limitada differs from a sole trader as companies tend to retain profits within the business to meet future financial commitments which is necessary for year on year growth and a more sustainable business.

It is easier in Spain to open a company bank account than that of a sole trader

A company has tax advantages, which are not available to sole traders

Company pension schemes usually provide better benefits than those paid under contracts with the self-employed

Business can be conducted internationally 

shareholder advantages

The shareholders/members liability is limited to the initial share capital

shareholders can have anonymity; in general, transfers of shares are often only recorded in the records of the notary public, so ownership can be confidential

The shareholders can receive dividends, which are not subject to social security

transfer wealth

If you need to transfer wealth within a family, it could be easier transferring company shares, rather than transferring assets.

The transfer of shares, can be done through signing documents, with a notary. This involves no physical movement of goods, which may, practically, be difficult

There may be taxes which crystallise on the transfer of goods, which do not crystallise on the transfer of shares

Tax reasons - There may be tax charges due on the transfer of real estate in its own right, through property transfer tax or capital gains taxes. These taxes can be deferred or even disappear should there simply be a transfer of shares in a company which holds real property. However, there is some anti-avoidance legislation in this area, so you really need to consult us first.

There may be a tax charge on the transfer of chattels, even among family members, which could be avoided through a transfer of company assets. You need to consult us on this area, as much of the legislation is put in place by Regional Governments, and depends on the relationship between the transferee and transferor, and their residencies

company property advantages

Holding property, with correct tax planning, you can defer capital gains tax

holding property, you may be able to avoid a tax on transfer of property or a VAT charge in some circumstances

real estate

There are significant reasons for using a company for holding property:

Anonimity, as shareholders are often not recorded in a public registry

Potential savings on transfer of property taxes- as the property can be transferred to the company, as a donation of assets in exchange for shares

Possible protection against long-term liabilities relating to the property as the company will usually be dissolved on the purchase

A structure can be created, so that a company can be owned by another company overseas: this can help deferring transfer taxes on future transfer of property

company vat and tax advantages

obtaining an intercommunity VAT number in Spain only takes 5 days with a SL

limited company – tax benefits

trading losses can be set off against future profits

double taxation treaties

Clients benefit from relief from a double tax treaty when establishing a sociedad limitada in Spain. This is essential for minimum withholding tax on dividend payments and royalties from contracting states, treaty jurisdictions also convey a non-offshore image.

banking with a sociedad limitada

It is easier in Spain to open a company bank account than that of a sole trader

Bank loans are more likely to be made to an incorporated company than a sole trader, as the company can produce financial statement

The company has flexible borrowing power

company financials

Level of profits can be decided, effectively by paying the directors more or less salary

Expenses can be set off against company profits, which are not available in many countries

Easy to open a company up to a new investor - increasing the shareholder funds, and incorporating an investor's capital into a structure that already exists

dividends recieved by shareholders, may be free of tax under certain circumstances

New shareholders and investors are easily assimilated

Dividends received could be free of tax, because of concessions available in Spain

company directors and management

Appointment, retirement or removal of directors is straightforward

The interests and obligations of the management and directors can be clearly defined 

Management and employees can acquire shares

Appointment, retirement or removal of directors is straightforward

company name protection

Company Registration legally protects your company name against anyone else forming a similarly named SL company in Spain

Details of a company can be verified by potential trading partners very easily, making it easier to start trading with someone

sales and marketing

When tendering for work, the prestige of an SL tends to be far greater than a sole trader

A company is useful to take over another company- through a merger, or buying the assets of another company

A company can invest outside Spain, through creating subsidiaries, which can be legalised in other countries.

The company can be used to keep a new business venture relatively anonymous, so that competitors cannot connect a new venture with an old venture

There are marketing advantages; with the launch of a new product, you can start a new company, disassociating the new product from previous products

A company can purchase or be assigned the right to use a copyright, patent, trademark, with a power to sub-license and subsequently exploit the intellectual property right in various countries.