SPAIN Law and Practice Contributed by: Raúl Salas and Elena Ferrer-Sama, RocaJunyent
1. Corporate Structures, Residence and Tax Treatment 1.1 Corporate Forms and Their Tax Treatment Businesses in Spain are generally developed as cor - porate entities, of which the most common forms are: • joint stock companies ( sociedades anónimas , or SA), requiring a minimum share capital of EUR60,000; and • limited liability companies ( sociedades limita- das , or SL), requiring a minimum share capital of EUR3,000. The responsibility of the shareholders is limited in both cases. From a tax perspective, corporations ‒ including other types of commercial companies (not just the SA or SL) – are usually subject to corporate income tax (CIT) regulations, which are levied on all legal entities resi - dent in Spain. Certain entities can be exempt from CIT. This exemption applies mainly to public entities and to certain income from non-profit organisations. CIT rules are also applicable to non-corporations, such as partnerships or dormant estates, provided they have a business purpose. If they do not have a business purpose, their income will be allocated (transparently) to their partners or co-proprietors. This is also the case for economic interest groupings, where profits or losses are taxed at the level of their co-proprietors. 1.2 Use and Taxation of Transparent Business Structures The most common types of transparent entities that are taxed under the income allocation regime ( regimen de atribución de rentas ) are civil partnerships without legal status or without commercial object. The income allocation regime applies to the following entities. • Communities of property. • Estates in abeyance. • Civil partnerships – although since 1 January 2016 the system only applies to:
(a) civil partnerships without legal status; and (b) civil partnerships with legal status that do not have a commercial object (ie, those engaged in agricultural activities, livestock activities, forestry activities, mining activities, and those of a professional nature subject to the law on professional societies). • Any entity that, not having legal status, constitutes an economic unit or separate assets liable to taxa - tion. • Entities established abroad whose legal nature is identical or similar to that of entities attached to the income allocation regime constituted in accord - ance with Spanish law. Moreover, the Spanish CIT Act provides for other spe - cial fiscal transparency regimes that are commonly adopted in particular business sectors. Temporary Business Association Under Spanish law, a Temporary Business Association ( Unión Temporal de Empresas , or UTE) is a system of collaboration between companies for the purpose of carrying out a specific project or service for a speci - fied or unspecified period of time. The purpose of a UTE is business collaboration in order to achieve a result that, owing to its importance or volume, would be difficult to achieve by just one of the companies alone. In practice, UTEs are frequently used for the execution of public infrastructure project works (such as roads, a recycling plant, etc) in which each company member of the UTE is specialised in a specific part of the project. This form of association is very common for engineering and construction pro - jects, and can be used in other sectors as well. Economic Interest Grouping The aim of an Economic Interest Grouping ( Agrupación de Interés Económico , or AIE) is to allow companies to join forces where they have common interests, while continuing to preserve their ultimate independence. The AIE is a trading company whose sole purpose is to carry out an economic activity ancillary to that car - ried out by its members, without aiming to obtain any profit, who may be natural or legal persons engaged in business, agricultural or craft activities, non-profit
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