The legal system applicable in Spain
follows the rules and regulations imposed by the European Union (EU), that prescribe the way in which commercial legislation
should be handled. Businessmen interested in setting up a company in Spain
or those who have already established their business presence on the market should know that they are allowed to change the type of the legal entity
under which they carry their operations. Our team of Spanish lawyers
can offer assistance to those who want to change the business form
of their company
Why change the company type?
The local legislation prescribes that the type of a legal entity
can be changed if the investors may choose to do so. One of the main reasons why this regulation is available is related to the needs of the company
that are no longer fulfilled under the current legal entity
. At the same time, the investors can change the business form
if they consider that another legal entity
would provide other investment opportunities or other rights and obligations; our team of Spanish attorneys
can offer more details on the procedure.
Change a sole proprietorship into a limited liability company in Spain
One of the most common changes of the business forms
refers to the statute of the sole proprietorship
, which is the simplest form of business available in Spain
. A sole proprietorship
is recommended for small businesses
, in which the investors represent themselves. There is no legal distinction
between the investor and the company
and this could become a liability once the business grows.
In this situation, the investor could opt to change the business form into a limited liability company (LLC), which, customarily, is the preferred legal entity in Spain, due to the rights and obligations prescribed for the shareholders.
is a distinctive legal entity
and the liability of the investor
is limited to the amount of shares
he or she owns in a company
. It is important to know that the level of taxation
applicable to the company will also change, as the owners of a sole proprietorship
are exempted of various taxes
. The LLC
is required to pay the corporate tax
, while in a sole proprietorship
, the owner pays the personal income tax on the company’s profits
Businessmen interested in receiving further information on the ways in which a company type
can be changed in Spain
, may address to our Spanish law firm
for legal assistance.