Civil Society:10 Facts You Must Know

The Civil Society as the “Community Property” , is a type of said company for business projects simple and compact. Like the previous one, this type of company in most cases involves the signing of a contract between two people who want to start a business activity for profit.

Once this partnership is set up, people become “industrial partners” if they only contribute work or “capitalist partners” if what they contribute is goods or their own capital. How is it different then from the “Community of Goods”?

Mainly in that while in the “Community of Assets” there must be a property (or an asset) that belongs to several people , in the “Civil Society” this obligation disappears and each partner can contribute goods, money, work or industry.

The second major difference is that while the “Community of Assets” may be limited to guarding or exploiting a common asset , the “Civil Society” is expressly constituted to carry out an economic activity and obtain benefits.

Finally, and after the 2016 reform, civil companies have to pay corporate tax, while the “Communities of Assets” do so for the Personal Income Tax (IRPF).

What do you have to know before forming a Civil Society?

To start a Civil Society, it is necessary to sign a private contract (which is recommended to be made public deed) between the partners, in which the following aspects must be detailed:

  • Business activity
  • Contributions from each partner
  • Percentage of participation of each partner (profit and loss)
  • Administration and representation system
  • Causes of liquidation and dissolution

As in the case of the “Community of Assets”, the liability of the partners for debts to third parties is personal and unlimited and the company that is constituted lacks its own legal personality.

For this reason and despite the fact that the company will be taxed by corporation tax, partners must register with Social Security as self-employed and each partner must pay income tax separately. The company that is constituted is governed by the Commercial Code in commercial matters and by the Civil Code in terms of rights and obligations.

As we indicated before, in the private contract that must reflect the administration and representation system, which can take the following forms:

  • Sole administrator
  • Joint administrators (all partners sign)
  • Joint and several administrators (signed by a partner, which binds the company)

As for the causes of liquidation and dissolution, it must be taken into account that a company is extinguished when:

  • It meets the duration stipulated in the contract.
  • Its corporate purpose or activity ends.
  • Contributions are not met.
  • Death, insolvency or incapacitation of a partner.
  • Seizure of corporate assets due to debts.

How to constitute a Civil Society

Establishing a “Civil Society” is not too complicated. The normal thing is that we do not have to take more steps than those detailed below:

  1. Constitution contract:all partners must sign the partnership contract. This contract can be private or become a public deed.
  2. Form 036must be duly completed . The partners must be autonomous and must register the company in the IAE
  3. Liquidation of Tax on Patrimonial Transmissions and Documented Legal Actsthat is levied on the constitution of the Civil Society in the event that assets are contributed On this basis, 1% of the value of the contributed goods is applied.
  4. Registration with the city council and obtaining the corresponding opening and operating licenses.

 

by Abdullah Sam
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