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As is logical, the first objective of the law is to define as precisely as possible what is considered as a startup and what is not.


Well, it will be the fundamental basis to understand when an entrepreneur will be able to benefit from all the advantages and benefits provided in this new regulation.


And this is even more true if we take into account that startups in Spain are currently governed by the same commercial laws that also regulate large corporations and companies of a totally different nature.


The requirements to be considered a startup within the Spanish Startup Law are:

  • Have an annual turnover of 10 million euros max.
  • Less than 5 years old, or 7 in the case of biotechnology, energy and industrial
  • Companies with headquarters or registered office permanently established in Spain and with 60% of the workforce hired in Spain
  • Companies with an innovative value proposition, generally digital. That is, companies that develop new or improved products or services.
  • Have an innovative character and a technological base
  • They are not listed on the stock market or distribute dividends
  • Companies that have not distributed dividends and are not listed on any stock market.


What are the main keys of the new Law of Startups of Spain?

The Startups Law has a series of flexible measures that facilitate the creation of emerging companies.


1) Administrative agility

The actions that will be taken to streamline administrative procedures are:

  • Establish a single window and telematics for the certification of these companies.
  • Eliminate notarial and registration fees in the case of limited companies and companies that are incorporated electronically.
  • Eliminate the requirement to obtain the foreign identification number for non-resident investors, requiring only the NIF.
  • Facilitate obtaining a visa and residence for highly qualified workers and non-resident Spanish workers for at least 5 years.


2) Tax attractions

In order to encourage investment and attract international talent, the Startup Law contemplates the following measures:

Reduction of the tax rate on Corporation Tax and Non-Resident Income Tax, from the general rate of 25% to 15% in the first four years from when the tax base is positive.

Raising the amount of the tax exemption for options on stock options from 12,000 to 50,000 euros per year and making the conditions for generating treasury stock more flexible in emerging companies, preventing them from incurring in causes of dissolution due to losses until 3 years have elapsed from their start-up Constitution.

Extension of the maximum deduction base for investment from 60,000 to 100,000 euros per year and the type of deduction from 30 to 50%.

Reduction of 100% of the quota of the Special Self-Employment Regime for corporate self-employed persons who continue to be employed by others.

Possibility to request temporary trial licences for one year.

Elimination of the obligation to make instalment payments of Corporation Tax and Non-Resident Income Tax in the 2 years after the one in which the tax base is positive.

Digital nomads will be able to reside and work in Spain for 5 years and will have the possibility of taking advantage of a special tax regime and paying Non-Resident Income Tax.


Creation of a new visa for digital nomads and remote workers


All those who are considered digital nomads or who have moved to Spain to work remotely for a foreign company will have much easier access to Spanish residence with the new visa that will be created with the startup law: the visa for digital nomads. It can be granted independently of the nationality.


It is a 1-year residence permit with the possibility of renewing for 2 more (and so on) as long as the initial requirements are still met.


In addition, it is also planned to create a specific residence permit for people who work in a foreign company located in Spain, including the audiovisual sector.


We still have to wait for the official publication of the law to find out what the exact requirements will be and how the foreigner can demonstrate their status as a digital nomad or remote worker, but in general the income received in Spain cannot exceed more than 20%. of all their income.


Thus, this new residence will become the alternative to the non-profit residence (no lucrativa) that so many foreigners wanted to find.


Offer significant tax advantages

Another of the most important points of this law will be everything related to taxes.

Undoubtedly, tax regulation is one of the environmental factors that can most influence the development and creation of new companies, so this new regulation for startups will dedicate a large part of its content to creating a beneficial tax climate.


Thus, we will find tax incentives that are favour investment and the creation of new companies focused on the following audiences: 


Tax benefits for startups


In the first place, it is intended to reduce corporate tax from 25 to 15% for a maximum of 4 years as long as the company continues to be considered a startup (see criteria in the previous section); starting to count in the first year in which the company has a positive result.


Remember that corporate tax is the main tax rate paid by companies once expenses are subtracted from the income generated during the year.


On the other hand, the deferral of tax debts will be allowed during the first 2 years with a positive result (and without interest), which will give a little more "air" in the initial phases of the startup's life.


Tax benefits for foreign professionals

Foreigners are one of the population groups that will benefit the most from these measures.


Well, from the moment this law comes into force, they will be able to enjoy much easier access to IRNR (non-resident income tax).


Until now, in order to benefit from this regime they had to prove that they had not lived in Spanish territory for the last 10 years. This amount will be reduced to just 5 years. But, in addition, they will be able to enjoy this measure for 10 years (instead of 5 as currently).


And why is it so beneficial to be able to take advantage of this tax?

Well, since it will mean paying only 15% of income instead of 24% up to €60,000.


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