SL vs Ltd: 
Spain or UK for Your Business?

SL vs Ltd is a common comparison for entrepreneurs weighing the benefits of starting a business in Spain or the UK. While both structures offer limited liability, they differ in key areas such as taxation, setup procedures, startup costs, and operational flexibility.

Each company type has its pros and cons depending on the legal and tax framework of the country. Here are the key points that set a Spanish SL apart from a UK Ltd.

Setting Up the Company

Starting an SL in Spain involves several bureaucratic steps. These include obtaining a name clearance certificate, depositing a minimum share capital of €3,000, and signing incorporation documents before a notary.

In contrast, setting up an Ltd in the UK is much quicker. You can register the company online within hours, with no high minimum capital or in-person formalities.

Therefore, if speed and simplicity in registration is a priority, the Ltd offers a significant advantage.

Share Capital and Company Structure

An SL requires a minimum share capital of €3,000, which must be subscribed before incorporation. While you don’t have to pay the entire amount in cash upfront, proper documentation is necessary.

A UK Ltd, on the other hand, can be set up with just £1 in share capital. This offers far more financial flexibility for entrepreneurs looking to keep start-up costs low.

Thus, in terms of share capital, the Ltd presents a more accessible option.

The Ltd also provides more flexibility when it comes to transferring shares—ideal for family businesses, holding companies, or ventures with international partners.

Ongoing Costs and Paperwork

In terms of ongoing costs, the UK Ltd stands out for its low administrative expenses and simpler bureaucracy. Shareholders don’t need to be physically present, and accounts are filed annually. Meanwhile, an SL in Spain requires more frequent filings, such as quarterly tax returns, and maintaining official company books.

Audits are only mandatory for an Ltd if it exceeds certain thresholds for turnover, assets, or employees. SLs are subject to audits at lower levels, potentially increasing costs for smaller businesses.

In the long run, running a Ltd can be more cost-effective.

Taxation and Deductions

Another important factor in the SL vs Ltd comparison is how each structure handles taxes and deductions. An SL pays Spanish Corporation Tax at a standard rate of 25%. Shareholders must also declare dividends on their personal tax returns.

In the UK, the corporate tax rate is also 25% for companies with profits above £250,000, but smaller firms benefit from a reduced rate.

Moreover, the Ltd also offers more flexibility in deducting business expenses, which helps optimise tax liabilities — particularly useful for companies with international operations or significant recurring costs.

Residency and Management

You don’t need to be a Spanish resident to set up an SL, but you do need certain tax identification documents like a NIE (Foreign Identity Number).

Similarly, you don’t have to be a UK resident to form an Ltd, but you must have a registered office address in the UK, which many specialist services offer.

Legal and Operational Considerations

While an Ltd can be set up and run by non-residents, it must still comply with the tax and company laws of the country where it actually operates. If an Ltd is active in Spain, it must register with the Spanish Companies Register and pay tax on income earned there.

So, choosing between an SL and an Ltd depends on where your operations are based, how your business is structured, and whether international growth is a goal.

Reputation and Global Image

The UK has a strong global reputation for business. Operating under an Ltd can help build trust with international clients and partners and makes it easier to access global markets and online payment systems like Wise, Stripe, or PayPal.

A Spanish SL, on the other hand, reflects a commitment to the local market—ideal for companies focused on Spain.

Depending on your audience and markets, this difference in image can be important.

International Expansion

An Ltd suits businesses aiming to expand globally. The UK offers a favourable environment for international trade, with strong trade agreements and logistics infrastructure.

An SL is more focused on Spain and Europe, which suits local businesses but may limit global ambitions.

In Summary

In the SL vs Ltd debate, the right choice depends on your market, structure, and growth goals.

If you’re targeting the Spanish market with local clients and operations, the SL may suit you better. However, if you’re after speed, less red tape, lower costs, and easier access to global markets, the UK Ltd offers compelling advantages.

In the end, understanding your current needs and future ambitions will help you make the best decision.