Following the reform of the Spanish Companies Act (Ley de Sociedades de Capital) by Law 18/2022, the traditional minimum share capital requirement of €3,000 to set up a Limited Company (Sociedad Limitada (SL)) has been abolished.
It’s now perfectly legal to incorporate a company with just €1 in share capital (Article 4, Spanish Companies Act). Tempting, right? After all, if you can start your business with €1, why invest any more?
But, as with most things that seem “cheap”, that initial saving could cost you more in the long run. In this article, I’ll explain why, based on our experience as corporate law specialists in Barcelona, we don’t recommend setting up your SL with only the legal minimum share capital. It’s not just about complying with the law; it’s about laying solid foundations for your business.
Written by Abigail Sked
Paralegal
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SYMBOLIC CAPITAL ISN’T THAT SYMBOLIC: YOU’LL STILL BE LIABLE UP TO €3,000
This is a crucial point that often goes unnoticed: even if you incorporate your SL with just €1, the law states that you can still be held personally liable up to €3,000 if the company incurs debts or defaults.
In other words, that “saving” doesn’t exempt you from financial responsibility. If things go wrong, you’ll end up having to put in the money anyway, only later, and probably at a less than oportune moment.
So… wouldn’t it be better to invest that amount upfront and spare yourself the stress?
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YOU’LL CREATE DISTRUST FROM DAY ONE
Think about it: you set up your SL with €1, register the company, and start looking for clients, suppliers, or even funding. What do you think people assume when they see in the Commercial Register that your share capital is one euro?
Exactly: “This isn’t serious.”
You might have the best product in the world or a flawless business plan, but if your share capital doesn’t reflect commitment, people may not even give you a chance.
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LEGAL AND ACCOUNTING LIMITATIONS FROM THE START
Incorporating an SL with less than €3,000 comes with additional conditions. For example, 20% of the company’s profits must be allocated to a legal reserve until the reserve, together with the share capital, reaches €3,000.
This restricts your flexibility. You won’t be able to freely reinvest or distribute profits as you wish. Your accounting becomes more rigid, and every decision must pass through that legal filter.
Legal and financial obligations of companies in Spain
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THE CAPITAL IS GONE THE MOMENT YOU START up
Even if you only contribute €1, your company will start incurring expenses from day one: notary fees, Commercial Registry fees, accounting services, web design, software subscriptions... Just registering the company will have burned through that euro many times over.
In other words, you’re in the red from day one. And from an accounting and legal standpoint, that’s no small matter. If the company’s net assets fall below a certain threshold, you could face obligations such as recapitalising or even dissolving the company if no action is taken.
SO, HOW MUCH SHOULD YOU START WITH?
There’s no magic number, but we recommend starting with at least €3,000. Not because it’s still legally required, but because it sends the right message, covers your initial costs, and gives you greater operational freedom.
And that money isn’t “lost”; it remains in the company and can be used to get your business off the ground.
Incorporation of Companies: Legal advice in Spain
THINKING OF SETTING UP A COMPANY? LET’S chat
At our firm in Barcelona, we’ve spent years advising entrepreneurs like you; people who want to start strong and avoid legal headaches down the line.
If you’re considering setting up an Limited Liability Company (Sociedad Limitada) in Spain and you’re unsure how much share capital to contribute, which legal structure suits you best, or how to set things up from abroad, we’re here to guide you every step of the way.
Get in touch and tell us about your project. Incorporating a company is the first step and it's important that that step is made on solid ground.
