Post-Registration Compliance Requirements for Spanish Companies

After successfully registering a company in Spain, it is crucial to comply with ongoing legal and regulatory requirements to ensure the smooth operation and legitimacy of the business. These compliance obligations involve various administrative, financial, and legal tasks. This article outlines the key post-registration compliance requirements for Spanish companies registration.

1. Tax Registration and Compliance

Value Added Tax (VAT)

All companies in Spain must register for Value Added Tax (VAT) with the Spanish Tax Agency (Agencia Tributaria). The standard VAT rate is 21%, with reduced rates of 10% and 4% applicable to certain goods and services. Companies must:

File quarterly VAT returns (Modelo 303) to report and pay VAT collected.

Submit an annual summary VAT return (Modelo 390).

Keep accurate records of all transactions subject to VAT.

Corporate Income Tax

Spanish companies are subject to Corporate Income Tax (CIT) at a standard rate of 25%. Newly established companies may benefit from a reduced rate of 15% for the first two years. Companies must:

Make quarterly advance CIT payments (Modelo 202).

File an annual CIT return (Modelo 200) by July 25 of the following year.

Maintain proper accounting records and financial statements.

2. Social Security and Employment Obligations

Employee Registration

If the company employs staff, it must register with the Spanish Social Security system. Employers are responsible for:

Enrolling employees in the Social Security system and obtaining their Social Security numbers.

Making monthly contributions to Social Security, which cover pensions, healthcare, and unemployment benefits.

Employment Contracts

Spanish labor laws require that employment contracts be formalized in writing. The contracts should specify the terms of employment, including job duties, salary, working hours, and duration. Employers must:

Register employment contracts with the Public Employment Service (SEPE).

Comply with statutory employment rights and benefits, such as minimum wage, holiday entitlements, and working conditions.

3. Accounting and Financial Reporting

Bookkeeping

Spanish companies must maintain accurate and up-to-date accounting records in accordance with the Spanish General Accounting Plan (Plan General de Contabilidad). These records include:

Daily bookkeeping of all transactions.

Proper documentation of expenses and revenues.

Preparation of annual financial statements (balance sheet, profit and loss account, and annual report).

Annual Accounts Filing

Companies must prepare and file annual accounts with the local Commercial Registry within six months of the financial year-end. The accounts must be:

Approved by the shareholders during the Annual General Meeting (AGM).

Audited by a registered auditor if the company meets certain size criteria.

4. Commercial Registry Updates

Changes in Company Information

Any significant changes to the company's information must be reported to the Commercial Registry. These changes include:

Modifications to the company’s bylaws.

Changes in the registered office address.

Appointments or resignations of directors and other key officers.

Changes in the share capital structure.

Timely reporting ensures that the company’s records remain accurate and up-to-date, which is crucial for legal compliance and transparency.

5. Compliance with Data Protection Regulations

General Data Protection Regulation (GDPR)

Spanish companies must comply with the EU General Data Protection Regulation (GDPR), which governs the handling of personal data. Key requirements include:

Appointing a Data Protection Officer (DPO) if necessary.

Implementing data protection policies and procedures.

Obtaining explicit consent from individuals before processing their data.

Reporting data breaches to the Spanish Data Protection Agency (AEPD) within 72 hours.

6. Annual General Meeting (AGM)

Spanish companies are required to hold an Annual General Meeting (AGM) of shareholders within six months of the end of the financial year. During the AGM, shareholders must:

Review and approve the annual accounts.

Discuss and approve the distribution of profits or coverage of losses.

Appoint or reappoint directors and auditors as needed.

The minutes of the AGM must be recorded and filed appropriately.

7. Statutory Audits

Companies that meet certain size thresholds are required to have their annual accounts audited by an independent registered auditor. The criteria for mandatory audits include:

Exceeding €2.85 million in total assets.

Generating more than €5.7 million in annual turnover.

Employing more than 50 employees on average during the financial year.

Audits provide assurance that the financial statements present a true and fair view of the company’s financial position.

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Conclusion

Complying with post-registration requirements is essential for the successful operation of a company in Spain. Adhering to tax obligations, maintaining accurate accounting records, fulfilling social security and employment responsibilities, and staying updated with regulatory changes are critical to ensuring legal compliance and avoiding penalties. By understanding and fulfilling these ongoing requirements, companies can build a solid foundation for growth and long-term success in the Spanish market.