Company Formation Spain 2026: SL Setup for Foreigners

CIRCE vs the traditional route

This guide covers forming a Spanish SL, the standard route for a foreign-owned trading company. If you are not yet sure you need your own entity, see our EOR vs Entity guide for when an Employer of Record is the better first step, and our Subsidiary vs Branch guide if a branch office might suit your parent company better than a full SL.

Spain gives you two ways to form a limited company, a sociedad limitada or SL, and the choice shapes your cost, your timeline, and how much control you have over the founding document. CIRCE, the Centro de Informacion y Red de Creacion de Empresas, is the government’s digital one-stop system: it bundles the name reservation certificate, the notarised deed using standard bylaws, tax registration, and Social Security registration into a single online workflow, either directly or through a Punto de Atencion al Emprendedor. It is built for simple, single-purpose SLs with plain-vanilla governance, and it is measurably faster and cheaper than going the traditional way.

The traditional route means approaching a notary directly with custom-drafted bylaws. You lose the CIRCE discount and the streamlined digital handoffs, but you gain full control: bespoke share classes, transfer restrictions between shareholders, tailored voting thresholds, drag-along and tag-along clauses, and anything else a standard CIRCE template simply does not support. Most solo founders and small partnerships with a straightforward structure are well served by CIRCE. Multi-founder companies raising outside investment, companies with unusual shareholder agreements, or anyone anticipating a future funding round almost always need the traditional route from day one, because retrofitting custom governance onto a CIRCE-formed company later is more expensive than doing it right the first time.

We assess this in the first call: if your business is a single-owner consultancy or a simple two-founder venture with equal shares, CIRCE is usually the sensible default. If you are building something that will raise capital or bring in outside shareholders with different rights, we steer you toward the traditional route before you spend money on a structure you will need to unwind.

Capital requirements and the 1-euro SL

Since the 2022 reform of Spain’s Capital Companies Law, an SL can legally be formed with as little as 1 EUR in share capital, replacing the old flat 3,000 EUR minimum. That change was designed to lower the barrier to starting a business, and it genuinely works for that purpose. It comes with two conditions attached for any SL capitalised below 3,000 EUR: the company must set aside 20 percent of annual profits into a legal reserve every year until that reserve, together with capital, reaches 3,000 EUR, and if the company is wound up owing debts, the shareholders become jointly liable for the shortfall between what was actually paid in and 3,000 EUR.

In practice, most foreign founders we work with still choose to capitalise at or above 3,000 EUR, even though the law does not require it. Three reasons come up repeatedly: banks assessing a business account and a future line of credit read a properly capitalised company as more serious; landlords and larger commercial clients doing basic due diligence sometimes flag a 1 EUR capital figure as a red flag on a lease or a contract; and avoiding the mandatory legal reserve and joint liability rule simplifies the first few years of bookkeeping. The 1 EUR minimum is a genuine option worth knowing about, particularly for a true bootstrap test of an idea, but it is rarely the final answer for a company that plans to trade seriously from month one.

Capital level	Legal reserve rule	Typical use case
€1-€2,999	20% of annual profit to legal reserve until capital + reserve reach €3,000; joint shareholder liability for the shortfall on winding up	Bootstrap test of an idea, minimal upfront cash
€3,000+	None of the above safeguards apply	Trading companies, anyone opening a bank account or signing commercial leases soon

Your NIE has to come first

Every foreign founder, director, and shareholder with significant control needs a Spanish NIE before the incorporation can proceed. It appears on the notarised deed of incorporation, on the tax registration with the Agencia Tributaria, and on the Mercantile Registry filing itself; there is no way around it for individuals. If a foreign company rather than an individual will hold shares, that entity does not need an NIE itself, but whoever signs on its behalf under a power of attorney typically does.

If you do not already hold an NIE, see our NIE Number Spain guide for the three ways to get one. Because Malaga’s cita previa system is genuinely one of the tightest appointment bottlenecks in the country, we sequence the NIE application and the company formation together rather than treating them as separate projects, so your incorporation is not sitting idle waiting on an appointment slot that could have been booked weeks earlier.

The non-resident director banking reality

Spanish company law does not require directors or shareholders to be Spanish residents, so a non-resident founder running an SL entirely from abroad is completely legal. The friction is not legal, it is commercial: opening the corporate bank account, which most banks require before a notary will execute the deed for anything beyond a token capital deposit, is measurably harder and slower for non-resident-only ownership structures. Some banks ask for an in-person visit or a video call with additional compliance questions; a few decline non-resident-only structures outright, particularly for very low-capital companies with no clear Spanish trading footprint.

We treat bank selection as a first-week task, not a final-step surprise. That usually means identifying which banks in practice accept your specific ownership profile, preparing the compliance documentation they will ask for in advance, and, where useful, pairing the bank conversation with our non-resident bank account guide. Founders who leave banking until after the notary appointment are consistently the ones who see their launch slip by weeks.

Step-by-step timeline, start to finish

A straightforward CIRCE-route SL, with founders who already hold their NIE, typically runs 3 to 4 weeks end to end: name reservation certificate (a few days), bank capital deposit or certificate, notary appointment to execute the deed, and Mercantile Registry filing to obtain the definitive tax ID and registration. The traditional route with custom bylaws commonly runs 5 to 8 weeks, since the bylaws themselves need drafting and negotiation before the notary appointment can even be booked, and registry review of non-standard clauses can take longer.

• NIE for every founder, director, and controlling shareholder (skip if already held)
• Name reservation certificate from the Central Mercantile Registry
• Capital deposit, bank certificate or notarised alternative
• Drafting: standard CIRCE bylaws, or custom bylaws for the traditional route
• Notary appointment to execute the deed of incorporation
• Mercantile Registry filing and definitive tax ID (CIF)
• VAT and economic activity registration, plus Social Security if hiring from day one

Bank account opening rarely appears as its own line item on generic timelines, but for non-resident founders it is frequently the true bottleneck, sometimes running in parallel with the steps above and sometimes trailing behind them by weeks. We flag the realistic end date, including banking, rather than quoting only the registry timeline.

What happens after incorporation

Standard Spanish corporate tax is 25 percent, with a reduced 15 percent rate available on the first taxable profits in the company’s first profitable year and the year after, subject to conditions. From the point the company starts trading, quarterly VAT and withholding filings, annual accounts deposited at the Mercantile Registry, and proper bookkeeping become mandatory, even for a company with minimal activity. Many founders pair formation with an ongoing accounting arrangement from month one specifically to avoid missing the first quarterly deadline, which tends to arrive faster than new founders expect.

If you are weighing a company against simpler self-employed status, see our Autonomo Spain guide and the comparison table below; a good number of our clients start as autonomo and convert to an SL once revenue and liability exposure justify the extra formality. And if part of your reason for moving to Spain to run this company is tax planning, our Beckham Law guide and tax residency guide cover the personal tax side that sits alongside your corporate structure.