Running an SL (Sociedad Limitada) company in Spain comes with various responsibilities, primarily for the company’s director (administrator). Understanding these formalities is crucial for compliance and long-term success.

The Role of the Director

The director serves as the primary representative of the company before authorities and third parties, responsible for ensuring the company meets all its registration, accounting, and administrative obligations.

 If the appointed director is not a resident of Spain, they must designate a representative via a notarized power of attorney to liaise with Spanish tax authorities.

In small businesses often the director is also one of the shareholder, and in many cases, he performs other works in the company. The same person may ware multiple hats as:

Such directors may wear multiple hats as:

• Shareholder: Contributing capital to the company.

• Administrator: Overseeing tasks like approving annual accounts and managing bank accounts.

• Worker: Participating in daily operations such as marketing, customer service, and management.

Social Security and Payroll Obligations

Unless proven otherwise, it is assumed that the director also works for the company. For this reason, the director must contribute to Social Security under the Special Regime for Self-Employed Workers.

The director’s position can be unpaid (there is no obligation to receive a salary) or remunerated, but in both cases, Social Security contributions are required, except when the director is a non-resident. In this case, the company’s representative in the country must contribute.

If the director receives a salary, the company must withhold income tax for payment to the authorities.

Formal obligations of the company

In addition to fulfilling their personal obligations, the director ensures that the company complies with its own obligations.

As the economy becomes increasingly global and digital, companies acquire new informational and procedural obligations.

Accounting and bookkeeping obligations

Companies must maintain accurate records of their business transactions, including:

• A list of issued invoices.

• A list of received invoices and fixed assets.

• Bank account reconciliations.

Starting in 2025, electronic invoicing will become mandatory, requiring companies to have the means to issue and manage received electronic invoices. This regulatory change means companies must have appropriate software for issuing and receiving invoices.

Tax

Corporate profits are subject to corporate tax, which varies depending on the activity:

• 25% for holding companies.

• 23% for companies with economic activity.

• 15% for companies with economic activity during their first two years of profitability if they meet additional requirements.

Beside corporate tax, other tax may apply depending on circumstances.

Reporting obligations

Depending on the volume of activity, the company may be required to report on the movement of goods within Europe, business volume with other entities, or transactions with foreign countries. In any case, the company must submit its annual accounts each year to the Mercantile Registry.

It is essential for companies to partner with an expert in accounting and management who understands these obligations and can help navigate the system efficiently.