REAL CONSULTATION RECEIVED FROM A NEW CHINESE INVESTOR:
“I WANT TO START AN EXPORT-IMPORT BUSINESS IN IN ALICANTE (SPAIN). SHOULD I ESTABLISH A LIMITED COMPANY OR ALTERNATIVELY TO REGISTER AS “FREELANCE” SELF-EMPLOYED PERSON?
OUR ADVICE: First of all, the main advantage of working as a self-employed person (“autonomo” in Spanish) is that the paperwork is easy, and the initial capital is NOT compulsory required (3.000 Euros). However, this option has some disadvantages:
1. As a freelance, the individual will be 100% liable with all his personal assets for all the possible future business’s debts. This would include for example joint assets shared with your wife or husband. However, a limited company, as a general principle, will respond only strictly with its own capital and business assets.
Obviously, this can lead to situations of abuse. For instance, regarding the purchasing of “off-plan” properties, it has been unfortunately almost impossible for many innocent English buyers to claim their money back from unscrupulous criminal Developers who easily liquidated their companies “legally” by filing for bankruptcy, leaving their poor buyers with no money and no properties at all.
2. If the business starts growing considerably, as far as taxes are concerned, the limited company option will be more advantageous. (25%corporate income tax versus up to 56% income tax in some regions). In general terms, the approximate threshold should be a turnover of around 45.000 Euros per annum.
3. If you are planning to conduct the business with more than one partner (family relative or not), then a S.L is definitely the most advisable option, in order to prevent dispute problems in the future.
With regards to our Chinese client, we finally recommended the limited company option. In the second part of this article to be published next week, we will give you some useful advice about the steps required in order to establish a limited company in Spain.
Therefore, should you ever need a reliable, 100% independent, honest, cost effective and efficient English speaking Spanish solicitor, to help you with the company formation, (or with any other legal problem), make sure you bookmark this page, visit our websites: www.ricorabogados.com and www.englishsolicitorinspain.com
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Thank you very much for your kind attention and we look forward to helping you!
Mr Oscar Ricor
“NON-PRACTISING ENGLISH SOLICITOR IN ENGLAND AND WALES”, under the “Solicitors Regulation Authority” (SRA) SRA number 519196 and practicing Spanish Solicitor Nº1247