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Self-Employed & Companies

Legal Form Comparator

Compare sole trader, SL and single-member SL in 2026: minimum capital, liability, personal income tax vs corporate tax, self-employed contributions and dividend taxation.

Datos oficiales AEATActualizado 2026Resultado orientativo
When to choose each form?
Sole traderYou are starting out, profits are moderate or you want minimal paperwork.
Private Limited Company (SL)High profits you do not need to withdraw, you have partners or you want limited liability.
Single-member SLYou are the only partner and want the benefits of an SL without sharing it.

Sole trader

Progressive income tax (top 45%–54% by region)
Minimum capital€0
LiabilityUnlimited: your personal assets are at stake
TaxationPersonal income tax on net profit; top marginal rate from 45% (Madrid) to 54% (Valencia)
2026 self-employed contributionIncome-based: €205.88 to €607.35/month at the minimum base (31.5%)
Flat rate€80/month for 12 months (+12 if income is below the minimum wage)
Set-upRegistration with the Tax Agency and RETA · 1 day
Initial cost€0
AccountingIncome, expense and capital-asset registers

Advantages

  • No initial capital
  • Registration in one or two days, minimal paperwork
  • €80 flat rate for the first 12 months (extendable 12 more if you earn below the minimum wage)
  • Profits are yours with no additional tax on withdrawal
  • Simple administration

Disadvantages

  • Your personal assets are at stake
  • Progressive income tax: with high profits the marginal rate exceeds corporate tax
  • Hard to attract external investors
  • Less corporate image for large clients
Most common

Private Limited Company (SL)

2026 corporate tax: 15%–25%
Minimum capital€1 (Law 18/2022). Below €3,000: 20% of profit to the legal reserve and joint liability of partners up to €3,000 on liquidation
LiabilityLimited to contributed capital
Taxation2026 corporate tax: 25% standard · 23% small companies (under €10M) · 19%/21% micro-companies (under €1M) · 15% new entities
DividendsDistributed profits are taxed in the partner's savings income: 19%–30%
Social SecurityPartner with effective control (e.g. director with 25% or more): corporate self-employed, minimum base €1,424.40 → €448.69/month in 2026
Partner salaryTaxed in personal income tax and deductible for corporate tax
Set-upNotarial deed and Commercial Registry filing · 1–4 weeks
Initial costNotary, registry and advisor (approx. €400–1,000)
AccountingFull Spanish GAAP and annual filing of accounts at the Commercial Registry

Advantages

  • Liability limited to capital
  • 2026 corporate tax of 19%–23% for SMEs, below the top income tax rate with high profits
  • Reinvested profits only bear corporate tax
  • Easier access to investors and financing
  • Separation of personal and business assets

Disadvantages

  • Double taxation on dividends (corporate tax + 19%–30% savings income tax)
  • Higher corporate self-employed contribution (minimum base €1,424.40 in 2026)
  • Heavier accounting and mandatory filing of accounts
  • Notary, registry and advisor costs
  • With capital below €3,000, 20% legal reserve requirement

Single-member SL

2026 corporate tax: 15%–25%
Minimum capital€1 (same rules as the SL below €3,000)
LiabilityLimited (single partner)
Taxation2026 corporate tax: 25% / 23% / 19%–21% / 15%; dividends taxed at 19%–30%
Social SecurityA sole partner who works or manages is usually corporate self-employed (minimum base €1,424.40)
PartnersOne partner; single-member status must be registered
Set-up1–4 weeks
AccountingFull Spanish GAAP and register of contracts with the sole partner

Advantages

  • Full control: a single owner
  • Same tax advantages as the SL
  • Limited liability

Disadvantages

  • Single-member status must be registered and disclosed
  • Same administrative burden and dividend double taxation as the SL
  • If new partners join, it becomes a standard SL
As a rule of thumb, an SL pays off when profits are high and you do not need to withdraw them all: distributed profits bear corporate tax plus personal income tax on dividends. 2026 figures. Indicative result. Always consult a professional advisor for precise information.

Choosing between registering as self-employed and setting up a limited company determines the taxes you will pay, the liability you take on and the administrative workload of your business. This comparison summarises, with 2026 figures, the differences between a sole trader (autónomo), a limited company (SL) and a single-member limited company (SLU) in minimum capital, liability, taxation, social security contributions, incorporation and bookkeeping, to help you identify the option that best suits your situation.

The three most common ways to start a business in Spain

A sole trader is an individual carrying out an activity on their own account. No capital or deed is needed, and business profits go straight into their personal income tax return. In return, there is no separation between personal and business assets: business debts can reach personal property.

A limited company is a legal person separate from its shareholders, with its own assets, tax number and accounts. Shareholders are liable for company debts only up to the capital they have contributed, except in situations such as personal guarantees they have signed or directors' liability for breaching their duties. A single-member limited company is the same structure with only one shareholder, who must record that status at the Companies Register and in the company's documents.

Tax: personal income tax versus Corporation Tax

Sole traders pay personal income tax (IRPF), whose progressive scale combines a state and a regional component. Marginal rates start at around 19% and reach 45% in Madrid for the highest incomes, with higher top rates in other regions.

Companies pay Corporation Tax at a standard rate of 25%. Law 7/2024 introduced a phased reduction for smaller businesses: for tax periods beginning in 2026, small companies (turnover below €10 million) pay 23%, and micro-companies (turnover below €1 million) pay 19% on the first €50,000 of taxable profit and 21% on the rest. Newly created companies can apply 15% in their first period with taxable profit and the following one, with exclusions such as asset-holding companies.

Bear in mind that company profit is not money the shareholder can spend. If it is paid out as a dividend, it is taxed again in the shareholder's IRPF as savings income, at rates from 19% to 30%. A proper comparison therefore adds together the company's tax, the director's pay and the tax on dividends. The advantage of an SL shows mainly when part of the profit is reinvested in the business.

When each legal form makes sense

The comparison offers a quick guide based on the level of profit, how much you need to draw and the needs of the project:

This guide is indicative and does not set turnover thresholds. The point at which setting up a company pays off depends on actual profit rather than turnover alone, on how much you need to draw to live on, on the fixed costs of running the company and on your personal and family circumstances.

  • Sole trader: when starting out, with moderate profits or when you want minimum red tape and to test an idea at the lowest cost, using the €80 a month flat rate where eligible.
  • Limited company: when profits are high and you do not need to draw them all each year, when there are several partners or when the risk of the activity makes limited liability advisable.
  • Single-member limited company: for those who are the sole shareholder and want the advantages of a company without sharing ownership. If a partner joins later, it is enough to register the loss of single-member status.

Formation, capital and ongoing obligations

Registering as self-employed requires a tax registration declaring the start of activity and enrolment in the special Social Security scheme, and can be done within a few days at no cost. Formal obligations are limited to keeping registers of income, expenses and capital assets, plus periodic VAT returns and IRPF payments on account.

Setting up an SL involves obtaining a company name certificate, paying in the capital, signing a public deed before a notary, registering it at the Companies Register and obtaining the definitive tax number. The reference capital figure is €3,000, although since Law 18/2022, known as the Crea y Crece law, it is possible to incorporate with less, even €1. In that case part of the profits must be allocated to a legal reserve until that figure is reached, and shareholders are jointly liable for the shortfall if the company is wound up without sufficient assets.

Once trading, the company must keep accounts under the Spanish General Accounting Plan, have its official books legalised, prepare and file annual accounts at the Companies Register and submit Corporation Tax returns. In addition, a shareholder who runs the company and has effective control usually has to register as a self-employed company director, with a specific minimum contribution base of €1,424.40 a month in 2026, which means a minimum contribution of about €448.69 a month compared with €205.88 in the lowest band for an individual sole trader.

Common mistakes when choosing a legal form

The decision has effects for years, so it is worth avoiding some frequent oversimplifications:

  • Deciding solely on the headline Corporation Tax rate, without adding tax on dividends and the running costs of the company.
  • Assuming a company removes all personal risk: guarantees signed with banks or suppliers and directors' liability can reach personal assets.
  • Mixing personal and company finances. Any money the shareholder takes out must be documented as salary, dividend or loan.
  • Setting up the company too early, when profits do not yet cover the fixed costs of running it.
  • Not planning the move from sole trader to company, which can create tax costs when transferring clients, assets or contracts.

Content written and reviewed by the advisory team at Vertice Gestión Empresarial. Results are for guidance only and do not replace professional advice.

Frequently asked questions

At what level of profit is an SL worth it?

There is no single figure. As a guide, it tends to become attractive when annual profit is consistently above €40,000 or €50,000 and you do not need to draw all of it for personal spending. The calculation must include the company's costs and how you will pay yourself, so a personalised simulation with an adviser is recommended.

Does the director of an SL have to be self-employed?

It depends on their degree of control and whether they carry out management functions. As a general rule, a shareholder who controls and runs the company must contribute to the self-employed scheme as a company director. Directors without effective control may fall under the general scheme on an assimilated basis or not be required to register, depending on the case.

Can I set up an SL with €1 of capital?

Yes, since Law 18/2022 came into force. Until capital reaches €3,000, the company must allocate at least 20% of its profit to a legal reserve and, if it is wound up with insufficient assets, shareholders are jointly liable up to that figure. A very low capital figure can also signal limited solvency to banks and suppliers.

What is the tax difference between an SL and an SLU?

None: both pay Corporation Tax at the same rates and with the same deductions. The difference is a matter of company law, since an SLU has a single shareholder and must register and disclose that status. In addition, contracts between the sole shareholder and the company must be in writing and recorded in a specific register.

Can I start as a sole trader and switch to a company later?

Yes, it is a common path. The company is set up and the business is moved into it, either by contributing assets or by starting to invoice through the new entity. It is worth planning so as to choose the right moment, review contracts and licences and avoid unnecessary tax costs when transferring assets.