Contents
What is the Difference?
Key Differences
If you wish to start a business in Spain, one of the primary considerations before registering your company will be choosing the right legal form. In Spain, there are two main types of companies: Sociedad Limitada (Limited Liability Company, where partners’ liability is limited) and Sociedad Anónima (Public Limited Company, the legal form for large corporations). In our understanding, these correspond to the standard Limited Liability Company (LLC/Ltd) and Public Limited Company (PLC/Corp).
In this article, we will examine both forms, their advantages and disadvantages, as well as the key differences, so that you can make the right choice.
What is the Difference?
Sociedad Limitada (Limited Liability Company) is a private company capable of carrying out any commercial or industrial activity. An exception is the financial sector, where prior administrative authorization (official consent from a government body to begin activities) is required.
Sociedad Anónima (Public Limited Company) is a corporate form primarily intended for large companies and businesses with significant capital.
Key Differences
Liability
In the case of a Sociedad Limitada, the liability of each partner is limited solely to the capital they have contributed (the amount of money invested in the business). Consequently, if you wish to reduce risk and protect your personal assets, an S.L. is the safer choice.
In the case of a Sociedad Anónima, the partners’ liability is also limited to the amount invested; however, in the event of financial difficulties, additional obligations may arise (the responsibility to cover outstanding debts under certain conditions).
Shareholders
In a Sociedad Limitada, the maximum number of partners is 50 (individuals who hold a stake in the company).
In a Sociedad Anónima, the number of shareholders (owners of company shares) is unlimited.
Capital
According to the legislation, it is possible to establish a company with a small initial capital; however, to fully limit liability, it is necessary to accumulate capital up to €3,000 (share capital — the officially registered financial foundation of the company).
For a Sociedad Anónima, the minimum share capital is €60,000, of which at least 25% must be paid at the time of registration.
Taxes
Corporate tax (the tax imposed on company profits) in Spain is 25% and applies to both S.L. and S.A. Special rates may range from 15% to 30%.
There is also an additional tax of 19% in certain cases where the company’s activities or office are registered outside of Spain.
Management
Sociedad Limitada is managed by one or more individuals, who may or may not be partners (co-owners of the company). This form is characterized by a flexible management structure.
Sociedad Anónima is managed by a Board of Directors (a governing body that makes strategic decisions), which is elected by the shareholders.
Overall, an S.L. is more suitable for small and medium-sized businesses, while an S.A. is intended for large companies planning to raise significant capital or make a public offering of shares.
Experience from crisis periods has shown that Public Limited Companies (SA) have often proven to be more resilient to financial shocks than Limited Liability Companies (SL).
If you still have questions regarding the selection of a company type, it is advisable to consult professional advisors who will help you choose the correct form and manage the registration process.