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Company formation within hours, Spain passed new law

New opportunities


Entrepreneurs in Spain have been struggling for years due to bureaucracy and long processes. To tackle this, Law 18/2022 on the creation and growth of companies, better known as the “Ley Crea y Crece”, was approved by the Spanish Authorities and goes into force on October 19, 2022.

This new law will promote the outward journey of those who dare to be their bosses. Along with other laws, such as the Startup Law, and the bankruptcy reform in the case they fail in their attempt, all anticipate positive indirect effects in terms of foreign investment and job creation.

Company formation within hours, Spain passed new law

The measures contained in this law aim to:

  • Speed up the creation of companies
  • Improve regulations for the development of economic activities
  • Reduce late payment practices in commercial transactions
  • Facilitate access to financing

Now it will be easier and faster to create a company, as this Law will allow:

Incorporation of a Limited Liability Company with a share capital of 1 euro (previously, the legal minimum required was 3,000 euros).

In addition, for limited liability companies whose capital stock is less than 3,000 euros, two specific rules have been introduced to safeguard the interests of creditors:  

– At least 20% of the profit must be allocated to the legal reserve until the sum of the legal reserve and the capital stock reaches the amount of 3,000 euros.  

– In the event of liquidation, if the company’s assets are insufficient to meet its corporate obligations, the partners will be jointly and severally liable for the difference between the share capital amount and the amount of 3,000 euros.

2. Reduce the creation time, notary, and registration costs.

The new process will facilitate the incorporation of companies by telematic means through the Information Center and Network for the Creation of Companies (CIRCE) and the Single Electronic Document (DUE) as a Single Window.

At present, CIRCE already allows the telematic incorporation of a limited liability company, with the exception of the notarial procedure.  

The reform of CIRCE will be completed with the upcoming Law on Digital Efficiency Measures for the Public Justice Service, “Ley de Medidas de Eficiencia Digital del Servicio Público de Justicia”, which transposes an EU Directive.  

This Directive requires, among other things, that a limited liability company must be able to register fully online within certain time limits.

3. It is important to distinguish between incorporating a company with:

  • Standardized Bylaws: Through CIRCE the deadline is of 6 hours after reception by the registrar of the deed.
  • Non-standardized Bylaws: The deadline for the registrar to register the company is reduced to five days

In the case of companies without standard articles of association, it is established the obligation to provide in all commercial registers a remote consultation service, including by videoconference, on the registrability of clauses or agreements in the articles of association.

Generalization of electronic invoicing

The promotion of the use of electronic invoicing in transactions between businesspeople and professionals is a measure to digitalize business relations, reduce transaction costs and facilitate transparency in commercial transactions. It is also a key measure to effectively tackle late payment practices in commercial transactions.

Companies with a turnover of more than 8 million euros per year will have one year until electronic invoicing becomes mandatory in all B2B relations.

The rest will have two years from the publication of the “Crea y Crece Law”.   It also establishes the obligation of electronic invoicing in B2C relations for companies providing services to the public of special importance in certain cases.

Finally, measures are included to strengthen the instruments for financing business growth, making alternative financing mechanisms such as crowdfunding, collective investment, and venture capital more flexible.

How can our English-speaking Lawyers assist you?

There are precise steps that must be taken to form a Spanish corporation while launching a business here. It is highly recommended for international businesspeople have legal aid and legal representation in such proceedings, especially if they are unfamiliar with the local legal system.

Our team of experts in commercial law can offer more details on the new regulations concerning setting up your company in Spain and will help you with a comprehensive advisory service in all situations that may arise from a commercial law point of view.

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