The Startups Law is already a reality in Spain. The Law to promote the startup ecosystem, known as the “Startup Law”, has been approved by the Council of Ministers, but what does it really consist of? We tell you all about it!
The regulation, which was approved on November 3rd with 177 votes in favor and will enter into force after the Senate incorporates some changes compared to the startup bill that we explained last year.
What is the startup law about?
Concept of startups
The new law defines the concept of startups as companies newly created or less than 5 years old – 7 years if they are biotechnology, energy or industrial companies – independent from other companies, which are not listed on the stock exchange, which do not distribute or have not distributed profits, which are of an innovative nature and whose annual turnover is up to 5 million euros.
In addition, a one-stop shop will be set up by ENISA, which will grant the declaration of innovative companies in order for them to be eligible for the benefits of the law.
Less bureaucratic hurdles
In order to speed up the creation of technology companies, several measures have been proposed:
- Notaries and registrars’ formalities and their publication in the Official Gazette of the Mercantile Registry will become free of charge if the new company is created telematically.
- Creation of a single electronic document to facilitate the creation of new projects telematically.
- Registration in the Mercantile Registry in 6 hours if the standard statutes are used and in 5 days for the rest of the cases.
- Elimination of the obligation to have a NIE for non-Spaniards who want to invest in a startup. It will be enough to have a NIF.
- Reduce to 1€ the share capital required to incorporate a company.
Attracting and retaining talent
In addition to facilitating measures for the creation of companies, the startup law incorporates tax measures to attract and retain talent and investment, and to favor the creation of digital hubs in Spain.
- Reduction from 25% to 15% in corporate income tax and non-resident income tax in the first four years after the taxable income is positive.
- Tax improvements are introduced for stock options, such as raising the minimum annual income tax exemption from 12,000 to 45,000 euros. In the draft bill it was 12,000 to 50,000 euros per year.
- The investment that can be made without having to pay taxes for new companies is raised from 60,000 to 100,000 euros per year.
- The deduction for investment is increased from 30% to 50%.
- It is allowed to defer the tax debt of the Corporate Income Tax or the Non-Resident Income Tax during the first 2 fiscal years with positive result, without guarantees or interests of delay, for a period of 12 and 6 months respectively.
- Elimination of the obligation to make installment payments in the 2 subsequent years in which the taxable income is positive.
In order to attract the so-called digital nomads, entrepreneurs or teleworkers who work for other companies from Spain, the law on startups establishes some advantages such as a new visa for international teleworkers that allows them to work remotely for companies outside the national territory.
In addition, the special tax regime has been extended to include non-resident income tax instead of personal income tax. Facilities are also offered to obtain visas and residency for digital nomads and the permission for foreign students of higher education to find employment or start a project in Spain once they have finished their studies is extended to two.
Although we do not yet know the economic impact that this new law will have, recognized entrepreneurs and investors with great experience in the sector such as Iñaki Arrola have applauded the new Startups Law saying that “No one has ever done this for Spanish Startups“.