Spanish Law requires that a director, or directors, be appointed to lead and represent the business. This group, called a “management body”, manages its day-to-day operations and is responsible for the decisions made. This blog explains how to be a Company Director in Spain.
An Overview of Being an Ex-Pat Company Director in Spain
The directors can take different forms. They can be a single director, several directors (known in Spanish as “Administradores Mancomunados”), Joint Directors (“Administradores Solidarios”) or even a Board of Directors.
Spain has a welcoming business culture for entrepreneurs and startups from across the world. The government has reformed its business formation process to make it easier for startups to attract talent, fund their operations and grow. There have also been reforms to tax regimes for ex-pats. For exmaple the so-called Beckham Law allows people to reduce their headline income tax rate. This is attractive for foreign company directors in Spain.
However, when a non-resident decides to start a venture in Spain or bring their business into the country, they can be unsure of the requirements and conditions that they must adhere to. This blog explains what you need to know as non-resident planning to launch their business in Spain or grow their existing operation into the country.
Who can be appointed a Director?
Any citizen of legal age with a Spanish tax ID number (a DNI or NIE) can be a director. However, there are restrictions for Civil Servants, members of the Government and those with criminal convictions for tax or financial crime.
There are some restrictions on non-EU citizens, mainly when the Director and the Shareholder are the same people. In these circumstances, it’s essential to comply with any laws requiring the individual to have a work and residence permit. This is important for foreign company directors in Spain.
Can Directors receive a salary?
Spanish law currently states that the position of Director is not remunerated. So if you would like to receive compensation, you must note it in the company’s Bylaws. The Board of Directors must approve it at the General Meeting of Shareholders.
It’s essential to understand the tax and legal implications of receiving a salary as a Director. For example, the current Corporate Income Tax Law allows corporations to deduct salaries from their corporate income taxes as long as the salaries are reflected in the Bylaws.
Usually, you must file your corporate tax in July. The contractual relationship between the Director and the company must strictly follow the Mercantile Regulations regarding remuneration.
What responsibilities does a Company Director in Spain have?
The Director is accountable for their decisions during the execution of their duties. Therefore, they must act “with the due diligence of an orderly businessperson”.
If a Company Director in Spain does not act with the due diligence mentioned above, they can be held liable through their personal assets.
Therefore, it is widespread for companies to work with a legal advisor and structure their Management Body as a Board of Directors. This structure would include a Company Secretary as a non-director. A lawyer usually fulfills it by executing the following functions, among others:
- Legal support to the Chairman and Member of the Board.
- Management of documentation and records.
- Drafting corporate minutes.
- Legal advice
Lexidy LegalTech Boutique work with clients from across the world to establish or expand a business in Spain. We help with the details around their legal immigration status and taxes throughout the coporate activity for structuring their business and appointing the right Board of Directors and governance. Contact us today if you have any questions about launching your business in Spain or concerns involving your governance structure. You can work with us and become a company director in Spain