5. Limited liability entrepreneur

The Entrepreneurs Law created the concept of the “Limited Liability Entrepreneur” (ERL), the main characteristics of which are as follows:

Concept	Limited Liability Entrepreneur status can be taken on by an individual entrepreneur, regardless of their business or professional activity, to limit their liability for the debt deriving from the conduct of their business which will prevent any such debt from affecting their principal residence under certain conditions. It makes an exception to the limited liability regime for any public law debts acquired by the Limited Liability Entrepreneur the collection of which is subject to the provisions of General Taxation Law 58/2003, of December 17, General Budget Law 47/2003, of November 26, and Legislative Royal Decree 8/2015, of October 30, 2015, approving the revised General Social Security Law.
Requirements	*1.Registration of ERL* status at the Commercial Registry corresponding to the registered office:** The notarial certificate that must be submitted by the notary to the Commercial Registry on the same day or on the business day following its authorization, or the application signed with the digital signature of the entrepreneur and sent by telematic means to the Commercial Registry, will be sufficient to apply for first registration of a Limited Liability Entrepreneur.
	2.Value of the principal residence for which liability for business or professional debts does not extend to such asset²⁶: May not exceed €300,000 (valued according to the taxable amount for transfer and stamp tax purposes at the time of registration at the Commercial Registry). In the case of residences located in towns with more than 1,000,000 inhabitants, a multiplier of 1.5 will be applied to the value under (a) above.
	*3.Disclosure of ERL* status** It must be mentioned on all documentation, stating the registry particulars.
	4.Registration at the Property Registry Once the ERL has been registered, the Commercial Registrar issues a certificate and sends it by telematic means to the Property Registry, for subsequent registration of the fact that the principal residence is not tied to the professional activity.

The Entrepreneurs Law provides that the necessary formalities for registration of ERL status may be performed using the CIRCE system and the DUE. In this case, the procedure would be as follows:

Nº	STEP
1	Completion of the single electronic document (DUE) at the Entrepreneur Service Point (PAE) and submission of the necessary documentation for registration at the Commercial Registry and at the Property Registry.
2	The PAE sends the DUE along with the relevant documentation to the Commercial Registry, requesting the registration of the limited liability entrepreneur. The Commercial Registry has 6 business hours in which to register the entry and send the certification of registration to the CIRCE system by telematic means.
3	The Commercial Registrar will send the certificate of registration to the Property Registry, requesting registration of the prohibition on attachment of the ERL’s principal residence in respect of professional and business debts.
4	The Property Registrar will register the prohibition within 6 business hours of receipt of the request, and shall immediately notify the registration to the CIRCE system, which will forward it to the tax authorities.

Entrepreneurs can ascertain the status of the procedure at any time from the corresponding PAE.

When it comes to this form of investment, of note is Royal Decree-Law 1/2015, of February 27, on the second chance mechanism, reduction of the financial burden and other measures of a social nature, whereby, among other reforms, a regime is established for the discharge of debts for natural person debtors in the context of an insolvency proceeding. Specifically, their debts will be discharged where:

The debtor is a bona fide debtor.
His/her assets are previously liquidated (or the insolvency proceeding is declared concluded due to an insufficiency of assets).
The debtor has paid in their entirety the post-insolvency order claims, the preferred pre-insolvency order claims and, if an out-of-court payment agreement has not been tried, 25% of the ordinary claims.
Where the claims indicated in point (iii) have not been paid, if the debtor agrees to submit to a 5-year payment plan (in this case, the debtor will be released from all of his/her claims except for public claims, alimony claims, post-insolvency order claims and preferred claims).

²⁶A Limited Liability Entrepreneur can limit his/her liability stemming from business or professional debts, as an exception to what is provided for in article 1911 of the Civil Code and article 6 of the Commercial Code, in accordance with article 8.2 of the Entrepreneurs Law and provided that this absence of connection is disclosed in the manner established in that Law.