Setting up a company

Key facts

The €1 company: what the law actually says

The €1 minimum comes from Ley 18/2022, the "Crea y Crece" law, which rewrote art. 4 of the Ley de Sociedades de Capital. Older guides — and a surprising number of current ones — attribute it to Spain’s startup law (Ley 28/2022); that is a different law passed the same year, and it has nothing to do with minimum capital.

While an S.L.’s capital sits below €3,000, two rules apply:

• The reserve rule. At least 20% of each year’s profit must be set aside in a legal reserve until the reserve plus the capital together reach €3,000.
• The liquidation rule. If the company is wound up and its assets do not cover its obligations, the founders answer jointly and severally for the difference between €3,000 and the capital they actually subscribed.

In other words: €1 gets you through the door, but the law still treats €3,000 as the floor the company must grow into. A founder who puts in €1,500 is personally exposed for the remaining €1,500 if the company fails owing money. Many founders simply subscribe €3,000 from the start and skip both rules.

Autónomo or S.L.?

If you are a solo freelancer testing a market, becoming autónomo is faster and cheaper — no notary, no registry, no annual accounts to deposit. The S.L. earns its overhead when there are partners to bind, liability to contain, investors to admit or profits large enough that corporate taxation beats personal rates. The two structures are not exclusive: plenty of founders start as autónomo and incorporate once the numbers justify it.

The incorporation process, step by step

1. Clear the name. You request a certificación negativa de denominación from the Registro Mercantil Central — a certificate confirming that no existing company holds the name you want. You can propose several names in order of preference; the certificate then reserves the granted name for the incorporation.
2. Open the capital deposit. The share capital — from €1, in practice often €3,000 — is deposited in a bank account opened in the name of the company in formation, or declared before the notary.
3. File the DUE through CIRCE. The Documento Único Electrónico is the single electronic form of the CIRCE system: it replaces more than twenty separate filings and is dispatched automatically to the tax agency, Social Security, the registry and the rest of the authorities involved. You can file it yourself online or through a PAE service point.
4. Sign the escritura at the notary. The deed of incorporation (escritura de constitución) is the one step that happens in person. With the standardised model statutes, the downstream registration at the Registro Mercantil can be completed in as little as about six working hours after the notary; bespoke statutes take the slower, conventional track.
5. Registration and the company NIF. Once registered, the company holds its definitive CIF-style NIF, and can contract, invoice and hire in its own name.

Every founder and director needs a Spanish tax identity before any of this starts — for a foreigner, that means a NIE. If you would rather have the whole chain handled — name certificate, DUE, notary coordination, registration — a specialised Spanish S.L. incorporation service runs the process end to end, including for founders who are not yet in Spain.

After incorporation

Registration is the beginning of the company’s administrative life, not the end. The S.L. files corporate tax and IVA on its own NIF, deposits annual accounts at the registry, and — the moment it takes on staff — steps into Spanish employment law: registered contracts, payslips and Social Security contributions, covered in Spanish employment contracts and payslips. An administrator who actively runs the company will generally also have their own Social Security position to resolve.

⚠ Scams to avoid

• ✗ "A company for €1 — with no obligations." Offers that sell the €1 S.L. without mentioning the 20% reserve rule or the founders’ joint liability up to €3,000 are hiding the two clauses that define the product. The law gives you cheap entry, not a liability-free shell.
• ✗ Paid "official incorporation fees" that do not exist. The DUE through CIRCE and the PAE service points are free public infrastructure. Notary and registry charge regulated fees — anyone invoicing you for a separate "government filing licence" is inventing it.
• ✗ Shelf companies "with a bank account included". Buying a pre-made company with an open account and an unclear history transfers that history to you. Incorporating clean through CIRCE is fast enough that the shortcut buys mostly risk.