Since the entering into force of the Act 14/2013, of 27th of September, to support entrepreneurs, individuals can directly and partially limit their responsibilities for the business or professional debts that they may incur as a result of their activities.

Such limitation of liability is constrained exclusively to the regular residence of the entrepreneur in a way that are creditors of said person may not be able to request a seizure on the residence in order to confront the debts that the entrepreneur may have incurred.

The requirements to be met by the entrepreneur’s regular residence so that it is extent from the debtor’s pecuniary responsibility are as follow:

  • The value of the main residence shall not exceed the amount of 300,000€ or 450,000€ if it is located in a town where the population exceeds 1 million people.
  • The debts incurred must arise from the exercise of the business or professional activity of the entrepreneur, meaning private or family debts are excluded from the exemption.
  • The acts of the entrepreneur do not constitute serious fraud or negligence in compliance with his obligations with third parties.
  • The condition of “freelancer with limited liability” is registered with the corresponding Mercantile Register.
  •  The condition of “Freelancer with limited liability” is stated in any documentation.
  • The exemption of the residence from confronting the future debts generated by the activity of the entrepreneur is registered in the Property Register.
  • The entrepreneur formulates and deposits in the Mercantile Register the annual accounts relevant to the entrepreneurial or professional activity, in accordance with the provisions for companies with limited liability.

The limitation of liability will have no effect on those debts that were already incurred at the moment of establishing the condition of “Freelancer of Limited Liability”.

 

 

Vilá Abogados

 

For more information, please contact

va@vila.es

 

23rd October 2015