What is a community property
The legal dictionary of the Royal Spanish Academy of Language (RAE) defines the community of property as “the grouping of a plurality of owners who are holders of the domain of a certain thing”.
The above definition, the RAE tells us that it is a situation in which an asset or right, or a set of assets or rights belong to several owners (< em>called commoners) jointly and simultaneously.
The figure of community members is regulated in the Civil Code, specifically in articles 392 and 393.
In relation to community members, we can find two types: the capitalist partner, who only contributes capital to the community; and the industrial partner, who will initially provide work, although this does not prevent them from also providing capital.
Within the community of goods we can highlight two types:
- The contractual or voluntary community , which is born as a result of the coincident will between several people to jointly acquire or exploit a thing or right.
- The incidental community , which arises as a result of an event independent of the will of the parties, such as a succession or donation.
Once we have already defined and differentiated the different types of community of property that we can find, we approach the topic related to the possible advantages and disadvantages that the community of property has regarding to the constitution of a possible company.
Advantages of a community of property
Focusing on the advantages, the procedures for the constitution of the community of goods are simpler than those necessary to be able to incorporate a commercial company, regardless of whether it is a company limited liability, anonymous or any other form of commercial company.
Thus, to establish a community of property all you need is a minimum of two or more people, who must sign a private contract between them. After signing the aforementioned contract and in order for it to be recorded, they must proceed to register it with the corresponding body of their Autonomous Community.
In the event that the community of property is made up of real estate or real rights, its constitution must be carried out by means of a public deed.
For the constitution of a community of goods it is not necessary a minimum capital for its constitution, although the contribution must be specified in the private contract carried out by each of the community members.
On the other hand, the responsibility of the community members for the debts of the community will be unlimited and jointly and severally among them, contrary to the provisions for commercial companies , having to respond with their own assets in the event that the assets and rights that are part of the community are not sufficient. Ultimately they would have to respond with their own assets.
As a caveat, there is the possibility that community members take advantage of the regime of limited liability entrepreneurs. The figure of the limited liability entrepreneur can be found regulated in Law 14/2013, of September 27, supporting entrepreneurs and their internationalization.
In order to be considered a limited liability entrepreneur, it will be necessary for the entrepreneur to register in the Mercantile Registry corresponding to his domicile, according to the provisions of article 9 of the aforementioned Law The second Chapter of the same deserves special attention, specifically in relation to articles 7 and 8 where the limits of their liability are typified, an example of this would be the limitation of liability of the debtor’s habitual residence provided that its value does not exceeds 300,000 euros.
The aforementioned limitation of liability in the home must be registered in the Property Registry in order to be enforceable against third parties.
It should be noted that community members will not be eligible for the limited liability entrepreneurship regime when the community has contracted debts of a considerable amount to third parties . Another disadvantage is that civil societies, such as community property, are not usually able to benefit from the different aids and subsidies granted by public bodies.
In another order of things, and referring to the tax treatment of this type of company and of the community members, the first aspect to take into consideration is that for the purposes of the Law General Tax The communities of property are considered taxpayers. This implies that the income obtained by the community of bineswill be attributed individually to each community member, who must reflect it in their corresponding income tax return.
In addition to paying each of the community members individually in their respective personal income tax, the community must attend to another series of tax obligations inherent to the development of their activity.
Among which we find the obligation to pay VAT presenting the corresponding settlements quarterly (model 303), or annually (model 390) depending on the activity that develop.
They will also have to make the corresponding personal income tax withholdings that they will have to make to their suppliers and the declaration of personal income tax withholdings and Corporate Tax (hereinafter, IS) , in the event that there are capitalist partners. The withholdings made for the purposes of the IS, will only be given when a commercial company with legal personality is part of the community of goods.