Opening Associations

In Spain, an association is a group of individuals engaged in collective activity based on democratic principles, without distributing profits or surpluses among the founders. Associations are independent from the government, commercial entities, and political parties. Once an association is established, it operates under the framework of Spain’s Organic Law 1/2002.

Associations are allowed to carry out economic activities, but any profits, financial surpluses, or grants must be reinvested in accordance with the objectives stated in the association’s statutes.

The set of documents is standard and defined by law. It includes:

1. Registration application form
2. Founding act signed by the founders, including their identification details (NIE or DNI)
3. Statutes, specifying the association’s objectives, governance structure, and members’ rights
4. Minutes of the founding meeting

You can choose a name for the association either in Spanish or in another language. However, in the latter case, an officially issued certificate with the translation of the name into Spanish must be provided during registration.

To avoid duplication, you can check the availability of the name in advance using the official registry on the website of the Ministry of the Interior.

The registration application is reviewed within a period of three months.

If all submitted documents and information meet the legal requirements, a registration certificate for the association is issued.

If minor errors or inconsistencies are found, the applicants are given 10 days to correct them.

If there is a suspicion that the association is being established for illegal purposes, including generating personal profit for the founders, the registration will be denied.

During its operations, an association must:

1. Authenticate the identities of the members of the Board;
2. Register the opening and closure of branches of foreign associations in Spain;
3. Register federations, confederations, and unions of associations;
4. Register any changes regarding the entry and exit of the association from federations, confederations, and unions.

Associations with the status of public utility benefit from favorable taxation, including a reduced VAT rate of 10%. These associations can make deductions from the taxable base and also receive free legal assistance. When receiving charitable donations, VAT is not charged.

To obtain the status of public utility, an application must be submitted to the Ministry of the Interior. If the decision is positive, this event will be published in the Official State Gazette.

Public utility status must be proven by providing the appropriate documents, including financial balances and activity reports. It is also necessary to confirm that there are no outstanding debts with the tax authorities and the social security fund.

The status of public utility allows for legal tax optimization, which ultimately helps to accelerate the achievement of the association’s goals.

Associations are subject to four types of taxes if they engage in economic activity like an LLC or receive compensation for intermediary activities:

1. IAE (Impuesto sobre Actividades Económicas) — Tax on Economic Activity, which is calculated starting from the third year of the association’s operation, provided that the annual turnover exceeds 1 million euros.
2. IVA (Impuesto sobre el Valor Añadido) — VAT, which requires maintaining calculations for VAT to be paid and refunded.
3. IS (Impuesto sobre Sociedades) — Corporate Tax on the association’s profits at the end of the year.
4. IRPF (Impuesto sobre la Renta de las Personas Físicas) — Personal Income Tax, applicable if employment contracts are made with hired employees, private entrepreneurs are involved, or rental income is derived from physical persons.