Buying a Spanish SL: how do I protect myself from hidden debts and tax issues?

When acquiring 100% of the shares of a Spanish S.L., the buyer fully assumes the company’s past. A statement from the seller that “everything is clean” does not eliminate the risk of hidden liabilities, particularly in tax, labour and contractual matters.

For that reason, the transaction must be approached on two parallel fronts:

1. Minimum due diligence scope

Tax (Corporate Income Tax, VAT, withholdings and Social Security), labour (employment contracts, seniority, potential termination exposure), key commercial contracts, and corporate matters (title to shares, powers, litigation and sanctions). In Spain, the most significant exposure is typically Tax Authorities and Social Security.

2. Proper contractual protection

The share purchase agreement should include:

• Broad representations and warranties, with no knowledge qualifiers for tax and labour matters.


• Specific indemnities for any identified risks.


• Price retention or escrow mechanisms.


• Clearly defined liability caps.

3. Recommended survival periods

• General warranties: 12–18 months.


• Tax and Social Security: 4 years.


• Labour matters: up to 3–4 years.


• Title to shares: unlimited or long-stop period.

In transactions of this nature, the buyer’s real protection is a well-drafted contract, not reliance on the seller’s assurances. Our role is to identify risks upfront and structure the transaction so that no surprises arise after completion.

If you wish, we would be happy to review your specific case and propose a secure acquisition structure from the outset.