Regulation of Partnerships in Spain and France

When setting up a company, the choice of legal form is not to be taken lightly. French and Spanish law recognises different legal forms in which the extent of shareholder liability, the particular requirements of the establishment process and the cost and time vary considerably.

Regulation of partnerships in France

A general definition of partnership does not really exist in French law, however, Article 1832 of the Civil Code provides a general definition of a general partnership which states that :

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French tax law has not provided a statutory definition of a partnership or a company assimilated to it, but rather a list of French entities assimilated to a partnership for income or corporation tax purposes (Articles 8 and 206 of the General Tax Code). Partnerships are not liable for income or corporation tax on their income which is allocated to their partners who, in turn, include their share of the partnership's profit in their taxable income.

The most important types of partnerships or similar structures are

  • Civil partnership: commonly used in real estate investments, business activities, asset ownership, etc.
  • Global partnership: according to the French Commercial Code, this is the basic form of commercial company.
  • Silent partnership: an unregistered general partnership regulated with little interest by the civil code provided that the names and addresses of the partners are disclosed to the tax authorities.
  • De facto partnership: here, the intention to create a partnership is not expressed even if the conditions are met.

Regulation of partnerships in Spain

In Spain, the partnership is regarded as an incorporated company, at least two partners are required. The partnership is formed only by the conclusion of a contract of association. Each partner is indefinitely liable, with his private assets, for the debts of the partnership. No minimum capital or entry in the register is required. The partners have the possibility to give the partnership a separate legal entity by means of a notarised agreement, which is registered in the Spanish Commercial Register.

Concept of partnership agreements in Spain

A company agreement or contract is a very effective instrument to privately regulate the life of a commercial company beyond its articles of association or legal provisions. But it should be borne in mind that commercial legislation is in some respects rigid and limited. As such, partnership agreements can solidify, supplement, amplify and even circumvent the rules applicable to a company and its partners. The validity of these agreements is widely accepted by the Spanish legal system and these agreements are not subject to any particular regulation.

The three main categories of agreements

  • Relationship agreements: they specifically regulate the reciprocal relations between partners so that in principle they do not directly affect the company.
  • Attribution agreements: Here, partners can make specific commitments to the company granting it certain rights and benefits.
  • Organisational agreements: These mainly concern the regulation of the day-to-day operations and decision-making of the company.
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