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1.1.1.3. Types of Partnerships and Hybrid Entities Available for International Business / Structuring

Spanish law provides for the following types of partnerships:

“Sociedad Regular Colectiva” or “S.C.” is a general partnership governed by the Commercial Code in which partners are jointly and severally liable for the partnership’s debts, with personal and unlimited liability. There is no mandatory minimum capital amount established by statute.

“Sociedad Comanditaria Simple” or “Sociedad Comanditaria por Acciones” are simple limited partnerships and limited stock partnerships respectively, and both are governed by the Commercial Code. The shares of the latter are also governed by the Publicly Held Corporations Law. Both share the same partnership structure: one partner with unlimited liability who is in charge of the management and representation of the partnership, and at least one limited partner who is liable only up to the value of his share in the partnership for its losses and other liabilities. Limited partners may not perform management functions or act in the name and on behalf of the partnership. There is no mandatory minimum capital established by statute.

A type of partnership without legal personality is the “sociedad civil”. The sociedad civil is not subject to the Corporate Income Tax itself and income is taxed in the hands of the partners.

Joint ventures may be set up using any of the legal forms described above. Parties may also contractually agree to share interests in a business venture without creating a separate legal entity. This possibility is often used for public construction works or service projects under the name “UTE” (“temporary union of undertakings”).

Spain does not recognize trusts or private foundations. In such cases income is attributed, for Spanish tax purposes, directly to the beneficiaries.