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Companies

Tenerife Businesses and Tenerife Business

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Tips on the formation of Spanish limited companies and forming companies in Tenerife, Canary Islands, Spain

S.L. Companies are equivalent to Limited Liability companies, (in other countries, Ltd, Inc, Gmbh, etc). To be worthwhile, your mandate for forming a limited liability company should be very clear. Companies cannot be bought 'off the shelf' in Spain, the company formation is made from scratch and the structure defined at a notary office in the form of an 'Escritura', the same as the title deeds for a property.

Generally, we advise our clients to avoid such company formations unless absolutely necessary, because

  1. The Tax rates are not favourable compared with 'Sole Proprietor' status (34% as opposed to 25%)
  2. The costs of formation are comparatively high, and annual audited accounts are necessary.
  3. The statutory obligations of a limited liability company must then be maintained.
  4. Appointment of an 'Administrator' is mandatory. This person must administratively and financially responsible.
Where it is appropriate to continue, the costs of forming the company will vary, depending on the required company structure, and number of staff, but probably finish up in the order of 1,500 Euro's.

At the time of formation, 3,000 Euro's must be deposited in a bank as the working capital, but this can be released within a few days of the notarising of the company.

If you are sure that a company will be required for your purposes, please email me for further information so I can ensure you lay down a proper basis for your operation. You may find the Offshore pages useful to read.