Legal and financial obligations of companies in Spain

Commercial companies in Spain are subject to a number of obligations that they must comply with in order to operate in a legal and transparent manner. These obligations vary depending on the nature of the company, and therefore sector-specific rules must be taken into account.

However, in general, all companies must follow certain guidelines in order to maintain their legal status and avoid penalties. In this article, we will explore the main obligations of companies in Spain.

Written by Abigail Sked

Paralegal 

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1. Mercantile Register (Registro Mercantil): 

   One of the first obligations of a company in Spain is to register with the Mercantile Register of the province in which the company is domiciled. The Mercantile Register is also the place where changes to the structure of the company, such as amendments to the articles of association or changes to the management, must be filed.

Do you need help setting up your company? Find out more about how we can facilitate the process for you:

How to set up a company in Spain

2. Payment of Taxes: 

   Companies in Spain must comply with their tax obligations, which include the payment of Corporation Tax (el Impuesto sobre Sociedades), Value Added Tax (VAT) (el Impuesto sobre el Valor Añadido (IVA)) and other taxes and local fees. It is essential to keep proper accounting records and file accurate and timely tax returns.

3. Accounting Books: 

   Companies must also keep up-to-date accounting books reflecting their financial transactions at the Mercantile Registry. This includes the Libro Diario and the Inventory and Annual Accounts Book (el Libro de Inventarios y Cuentas Anuales). Companies are obliged to keep the books, correspondence, documentation and supporting documents concerning their business for a period of six years from the last entry made in the books, except as provided for by general or special provisions.

4. Filing of Annual Accounts: 

   Companies are obliged to file their annual accounts with the Mercantile Register. They must be clearly drafted and present a true and fair picture of the company's assets, financial situation and results, in accordance with the legal requirements.

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5. Auditing: 

   Some companies are required to have their accounts audited annually by an independent expert. This applies mainly to large companies or where certain economic thresholds are met.

6. Social Security and Recruitment: 

   Companies with employees must comply with the corresponding obligations, such as registering for social security, drawing up employment contracts and complying with labour laws. Depending on the specific circumstances, company partners with effective control may have to register for social security as corporate freelancers.
   Does your company employ 50 or more employees?  If so, there are some specific obligations that will apply to your company
   
   

7. Data protection:

   Companies must process personal data in accordance with the law. For example, they must limit the data processed, communicate to data subjects exactly what data is processed and why, and take appropriate security measures to protect that data.

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8. Compliance with Legal Responsibilities:

   Company administrators must act diligently and in the best interests of the company. They must avoid any conflict of interest and comply with their legal responsibilities.

Interestingly, more and more of a company's obligations can be fulfilled either partly or entirely by telematic means. For example, shareholders' meetings can now be carried out via videoconference and the process of obtaining notarial authorisations and signatures is being digitalised.

In summary, companies in Spain have a number of legal and fiscal obligations that they must comply with in order to operate in a lawful and transparent manner. Failure to comply with these obligations can lead to penalties and legal problems. In contrast, compliance with these obligations not only ensures the legality of the company, but also contributes to its good reputation and long-term success in the market. Therefore, it is essential to maintain clear and accurate financial and accounting practices and to obtain reliable legal advice to ensure that all obligations are fulfilled.

Conesa Legal is made up of a team of lawyers and experts with experience in labour law, company constitution, finance, accounting, and data protection, so we can help you with everything from setting up your company to managing your day-to-day obligations.

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