A Partnership in Spain is a recommended corporate formation for small businesses that do not require investments and prefer simple management. The liability of the partners for debts against third parties is personal and unlimited. Its formal establishment is simpler and cheaper than for a company because a partnership does not require registration with the Spanish Commercial Registry of a public deed before a notary (except in the case of contributions in the form of property or proprietary rights) or a minimum initial share capital contribution.
- A partnership lacks legal personality
- The Spanish Commercial Code governs partnerships in commerce matters and about rights and obligations
- Each partner is debited against the company for the contribution promised in the contract and of the corresponding interest in case of delay. Additionally, a partner is liable for damages that may arise. In contrast, a partnership is liable to its partners for the amounts already contributed and the partnership’s contracted obligations
- There may be two types of partners: capitalist or working partners
- The capital is comprised of contributions in the forms of money, goods, or work from the partners
- A partnership may have a legal personality depending on whether its agreements are public or private.
- When agreements are private, provisions relating to Joint Properties govern them
- Partnerships may take all the forms that the Spanish Commercial Code recognizes according to the forms’ purposes
- The minimum number of partners for a partnership is two
- The liability of the partners for debts against third parties is personal and unlimited. Once the assets of a partnership are liquidated, if it does not cover all the debts the partners are liable for their current and future assets jointly before all existing creditors
- Partnerships allow diverse forms of administration and representation: a sole administrator, joint administrators (all must sign), or joint and several administrators (it is sufficient that one, whom the partnership determines, signs). In the case of debts against third parties that the partnership incurs, the administration must have the necessary powers to represent the partnership
- There is no legal minimum capital for creating a partnership
- The partners are taxed separately by the Tax on Personal Income (IRPF in Spanish). The partnership does not have to pay the Company Tax
- Considering the Spanish Social Security System, the partners must register as autonomous workers except in exceptional cases
- A partnership terminates when the stipulated duration in the contract is complete; when its business purpose or activity is complete; when the contributions are not complete; by death; by insolvency; by incapacitation of one of the partners; or by liens on a partner’s assists due to debts.
For more information on the features of partnerships in Spain,
