Community of goods

When we create a company, in Spain at least, one of the legal forms that we can choose, among others, is the community of assets. Like a limited company or a joint stock company, our company could be configured as a community of property.

For us to understand each other, the community of property is the simplest way to create a company. It does not require a minimum capital contribution, and this common asset may be the contribution to start the economic activity. This is because, ultimately, the responsibility falls on the self-employed who made it up.

These freelancers, when they create a community of property, are known as "comuneros". These community members are still self-employed, so their tax treatment is the same as that of any self-employed person.

In short, it is a way of creating an attractive company due to the fact that it has a series of advantages, such as a simpler bureaucratic procedure and a minimum non-callable capital. Although, in the same way, it has drawbacks such as the fact that liability is unlimited, and, as we said, falls on the community members ultimately.

Characteristics of a community of property

As a summary, and to consolidate the concept and be able to continue deepening, let’s look at the main characteristics of the community of goods:

• It is a legal form, such as a public limited company (SA) or limited company (SL).
• There is the shared possession of a common good, from which it is expected to obtain a future return derived from an economic activity.
• The owners of the property in question, and founders of the community of property, are called "comuneros".
• These community members, although they have a company, have unlimited liability and, therefore, must respond with their assets.
• The tax treatment is the same as that of a self-employed person.
• It is the easiest way to create a company.
• It does not require minimum capital, nor complex bureaucratic procedures.

Requirements to create a community of property

Among the requirements presented by Spanish regulations, for example, to create a community of property, there are some such as the following:

• It must have a minimum of two partners.
• It does not have a minimum required capital, but it does require the contribution of a minimum, such as the common good.
• The community members, being the partners that constitute the community of property, must sign a contract under which the operation of said community will be governed.
• The community members must register the community of property in the corresponding regional administration body.
• In addition, if real estate or real rights are contributed, a public deed will be necessary.
• You do not have to pay the Corporation Tax, as it lacks legal personality.
• The responsibility of the community members is unlimited and joint, for which the community members have to respond with their assets.

Tax obligations of the community of property

Depending on whether we refer to the obligations of the community or those of the partners, we can speak of different obligations.

The community of property has a series of tax obligations, among which are the following:

• Informative return for entities under the income allocation regime.
• Withholdings on account of the personal income tax that this applies to its suppliers.
• Informative declaration of withholdings and payments on account.

Regarding the partners or community members, the following stand out:

• The partners must pay through the Personal Income Tax (IRPF).
• The community members, too, must account for the community’s expenses and income. It should be noted, incidentally, that each community member will report only on their corresponding part of the company’s accounts, and not on the whole of it.

Advantages and disadvantages of creating a community of goods

To finish, let’s see some of the advantages that creating a community of goods has for two partners:

• It is the easiest way to start a business.
• It does not require a minimum capital to be incorporated.
• Only two people are enough to create it.
• The procedures to establish it are quite simple.

However, there are also some drawbacks that we should point out:

• You cannot take advantage of the tax treatment of a company, through Corporation Tax.
• The commoners have unlimited liability, so they respond with their assets.
• The community of goods, since it is not a business to use, does not opt ​​for many aids offered by the Government and credit institutions.