The Government of Spain has approved in its Council of Ministers that the draft Law of the ‘Startup Law‘(of which we already knew the draft), which is officially named as ‘Law to promote the ecosystem of emerging companies‘. With it, the Executive affirms that he wants to “attract and recover international and national talent, favoring the establishment in Spain of teleworkers and ‘digital nomads'”.
Everything announced today is nothing more than a project that Congress and the Senate will have to approve, since that is where it is legislated, not in the Council of Ministers. Let’s see what was presented today.
What is a startup, improvement of competitiveness and tax advantages
The first thing to clarify is what the Government considers a startup to be:
“Newly created companies or less than 5 years old (7 years in the case of biotechnology, energy, industrial and other strategic sectors companies or that have developed their own technology designed entirely in Spain), independent of other companies, that are not listed in a stock market, they do not distribute or have distributed profits, are innovative in nature and have an annual turnover of up to 5 million euros.
The most important news of the ‘Startup Law’ proposed by the Government It has to do with the fiscal measures with which it is sought to gain competitiveness with other markets. In this sense, the document that we have been able to access speaks of a reduction in tax time (from 25% to 15%) in corporate tax and in the income tax of non-residents. It will be like this in the first four fiscal years since the tax base is positive. If the company has not made a profit, the measure does not affect.
As for investors, the maximum deduction base for investment in startups goes from 60,000 to 100,000 euros per year, with a type of deduction that goes from 30% to 50%. Another very important point of the bill is the increase in the amount of tax exemption for stock options, commonly called stock options.
The ‘Startup Law’ focuses on making it more attractive to invest and work in a startup in Spain, with tax incentives compared to the situation that existed
These stock options are widely used in other countries when a company buys a startup, as part of the payment., or by the startup itself as a way to attract talent by offering shares along with the salary. With this measure, its use as an asset in Spain becomes more attractive, since the options will have to have a much higher value in order to be taxed.
Regarding the measures to attract entrepreneurial talent, The Government proposes that whoever travels to Spanish territory to undertake and telework can live and work here for five years. In addition, you will be able to benefit from the taxation of the income tax of non-residents.
The period in which a company is considered recently created, in general, goes from 3 to 5 years
Previously, returning to Spain to work after leaving was not very attractive because to be able to benefit from this regime you would have to have lived in Spain for 10 years, so now it will be worth having left Spain 5. Finally, the Law eliminates the double contribution to Social Security for those entrepreneurs who simultaneously maintain a job as an employee.
Regarding bureaucratic matters, a point on which there are usually significant complaints regarding national regulation, the bill contemplates a streamlining of bureaucratic procedures. Of course, you will have to see the final document to understand what they are in particular. In the press release, the Government highlights in this regard “free fees for notaries and registrars” and “the creation of the company by electronic means.” In addition, with the possible approval of the Crea y Crece Law, a company can be created with just one euro.