In recent years, consumers’ privacy and identity has become at risk partly due to the fast up-dating of technologies and, more specifically, due to the massive use of online personal information. As acquiring a property is a very personal decision, it is comprehensible that a buyer might want to protect his privacy. Thus, according to Spanish law, there is the possibility of creating a private Limited Company (Sociedad Limitada or S.L) or Limited Liability Company (Sociedad de Responsabilidad Limitada or S.R.L.) to carry out the transaction.
When it comes to setting up a company, there are plenty of legal forms you can choose from, but the characteristics of a Limited Company make the process faster and more practical. Here are some basic steps any potential business owner must follow to create a Limited Company:
1. Register the company name at the Central Company Register (Registro Mercantil Central). You should apply for the Negative Certificate to protect the name of your company, so that your chosen name does not coincide with any other previously existing one. Once you have the certificate, you will have three months to register the company name at the notary.
2. Open a bank account in the name of the company and deposit the minimum initial capital entirely, which is 3000€.
3. Write the Company’s statutes, that is, a set of rules that will govern the company. It is advisable that a lawyer or the notary do so, as it is a difficult task.
4. The public deed concerning the establishment of the company is done before notary and it may be the most expensive procedure, but it is compulsory. You will need to bring the following documents with you:
– Company’s Statutes.
– Negative Certificate to protect the name of your company (original).
– Bank certificate of the deposit.
– I.D of every member of the company.
– Declaration of international investments, if any of the owners is a foreigner.
5. Payment of the Transfer and Docummented Legal Acts Tax.
6. Procedures related to Treasury: getting the Tax ID Number (NIF), registration in the Tax on Economic Activities (IAE) and Census Declaration.
7. Regist at the Mercantile Registry of the province where your company is and get your final NIF.
After all this bureaucracy and if you luckily do not get stuck in the process, your Limited Company will be effective and you will be able to enjoy all the advantages this implies when buying or selling a property if you are a non-resident in Spain. When a Limited Company sells within the first year of purchase, it must pay 40% of the profit obtained, but if it sells after the first year of purchase, it will have to pay only 15% of the profit, as if it were a resident, besides having the advantage that it will not be retained 5% of the price on the payment of the capital gain.
It is worth creating a Limited Company whether the property has a value higher than 600,000€ or the buyer does not intend to become a resident in Spain.