Guide · Company structure

From sole trader to limited company in Spain: when it pays off

Updated 9 October 2026 · Pablo Pedrajas

In short

As a sole trader (autónomo), all your profit is taxed in your personal income tax (IRPF), with rates that rise by bands to over 50% in some regions. In a limited company (SL), profit is taxed under corporate income tax: in 2026, a micro-company pays 19% on the first €50,000 of taxable profit and 21% on the rest. But what you take out of the company is taxed again in your income tax. So the question isn't just how much you earn, but how much profit you'll leave inside to reinvest.

The real question

The usual comparison, "income tax goes up to 47% and corporate tax is 25%", is incomplete. The money a company earns isn't yours until you take it out, and when you do, it's taxed:

As a dividend, in the savings part of income tax, at between 19% and 30%.
As a director's salary, in the general part of income tax, like any employment income.

If you need all the profit every year to live on, the difference between being a sole trader and having an SL narrows a lot. If you leave part of it inside to grow (more stock, another country, another product), the SL starts to make sense.

How much is paid in 2026

Corporate income tax, periods starting in 2026:

Type of company	Rate
Micro-company (previous year's turnover below €1 million): first €50,000 of taxable profit	19%
Micro-company: rest of taxable profit	21%
Small company (reducida dimensión)	23%
Newly created company (first year with profit and the next)	15%
Standard rate and asset-holding companies	25%

Micro-company rates keep falling: 17% and 20% from 2027.

Personal income tax: the state scale runs from 9.5% to 24.5%, and the regional scale is added on top. In the Valencian Community, for example, the combined top marginal rate reaches 54% above €300,000 of taxable income.

What an SL costs

Share capital: since 2022 it can be set up with €1. Until capital reaches €3,000, you must allocate at least 20% of profit to the legal reserve until it does, and if the company is wound up without enough assets, shareholders are liable for the difference up to €3,000.
Full accounts under the Commercial Code, not just record books.
Annual accounts: approved at a shareholders' meeting within the first six months of the year and filed at the Companies Register.
Corporate income tax and its advance payments, plus withholdings if you pay yourself a salary.
Notary and registry costs when setting it up.

It's more structure and more admin. It pays off when what the company gives you outweighs that fixed cost.

How to make the switch in an e-commerce business

There are two routes:

Set up the SL and start trading through it. The sole trader stops invoicing and the company starts. It's the simplest.
Contribute the business to the company as a line of business, under the special corporate income tax regime (article 87). It avoids tax on transferring the business assets, but requires, among other things, that your activity keeps accounts under the Commercial Code.

In e-commerce, what takes the most work isn't the deed: it's that every registration is in the owner's name. The new company needs its own ROI registration, its own One-Stop Shop (OSS) and its own VAT number in every country where you hold stock. And marketplace accounts, payment gateways and supplier contracts also have to move to the company.

Signs that it's time

Your profit already puts you in the top income tax bands and you don't need all of it to live on.
You are going to reinvest: stock, new countries, new products.
A partner is coming in, or you want to separate the business risk from your personal assets.
You're considering other businesses, and with them a holding company later on.

There's no magic turnover figure above which it pays off: it depends on how much you earn, how much you take out and what you'll do with the rest.

Frequently asked questions

At what profit level does it pay to move from sole trader to limited company in Spain?

There's no single figure. It depends on how much profit you'll leave inside the company. If you take everything out to live on, the advantage shrinks a lot because dividends and salary are taxed again in your income tax.

What rate does a Spanish limited company pay in 2026?

A micro-company, with turnover below one million the previous year, pays 19% on the first €50,000 of taxable profit and 21% on the rest. Small companies pay 23%. Newly created companies pay 15% in their first year with profit and the next. The standard rate is 25%.

Do I need €3,000 to set up an SL?

No. Since Law 18/2022 it can be set up with €1, but until capital reaches €3,000 a legal reserve of at least 20% of profit must be set aside, and shareholders are liable up to that amount if the company is wound up without enough assets.

If I have an SL, do I still pay self-employed social security?

If you are a shareholder and director who controls the company, yes: you contribute as a corporate self-employed person, with a higher minimum base than an individual sole trader.

Sources (official documents, in Spanish)

General information based on Spanish rules in force on 9 October 2026. It is not a substitute for analysing a specific case.

A real case · STRUCTURE When to set up the holding company Structure isn't decided on day one, nor once the problem is already big. It's decided when the business proves it works. Read the case →

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