Social Security requirement if you start your own company
Starting a business in Spain can take many forms, the most common of which are the self-employed (autónomo) and the limited liability company (SL). As you know, in Spain you need to be covered by Social Security if you carry out a business activity.
The topic of today is is whether the shareholders and the legal representative of a company should be insured by Social Security.
Social Security system in Spain has two main types: self-employed (autónomo or cuenta propia) and employee (cuenta ajena).
Shareholders of a limited company
First of all you should know that no Social Security is required for mere shareholding.
If a shareholder only holds shares, regardless of the percentage, and does not work in the company nor does he or she perform any duties or work for the company, then no need to be covered by Social Security.
Whether a shareholder should be covered by self-employed or employee Social Security regime depends on the percentage of shares.
The Social Security Law states that if a shareholder holds 33% or more of the shares and works for or with the company, then self-employed regime shall apply.
If it is said that the shareholder’s shareholding is up to 25% or more, but below 33%, and has performed a position with decision-making power in the company (such as a legal representative or general manager), then self-employed regime shall also apply.
On the contrary, the law states that if a shareholder has less than 25% of the shares and has no decision-making power in the company, then he or she should be covered by employees regime.
Legal representatives of a limited company
According to the Spanish Social Security Law, if the legal representative (directors) of the company is also a shareholder, then please refer to the above.
If the legal representative does not hold any shares in the company, or has less than 25% of the shares, and has no decision-making power, then employee Social Security regime shall apply.
Related article: Social Security regime of company shareholders
