The new Startups Law approved on December 10, 2021 in the Council of Ministers makes these emerging companies an investment attraction for other companies and promotes the presence of entrepreneurs and digital nomads in Spain. The text has been validated after some last minute changes.
The Prime Vice President and Minister of Economic Affairs and Digital Transformation, Nadia Calviño, has affirmed that, with this regulation to promote innovative entrepreneurship, Spain is going to be among the most attractive countries for the creation of startups, “thinking very especially of the generation of opportunities for young people and in attracting investment and talent “.
Calviño also pointed out that it was necessary to provide a specific regulatory framework for these types of companies, which generate highly qualified jobs and have a lot of potential to grow if they manage to overcome difficulties such as lack of financing and the ability to attract and retain high added value workers.
The Law includes several of the demands of the business fabric after public consultation, according to sources from the Ministry of Economic Affairs, who acknowledge that there were “ambiguous” parts in the first statement.
⦁ Modifications have been made to the definition of ‘startup’ to allow serial entrepreneurs (those who have created several companies) to benefit from the law that reduces the corporate tax by up to 15% for the first four years of life, in addition to introducing the possibility of deferring payments of other taxes for two years.
⦁ Certification as a ‘startup’ will be done through a single window managed by Enisa and by the National Entrepreneurship Office, a recommendation from the National Markets and Competition Commission (CNMC).
⦁ The preliminary draft includes that the limit of tax-free ‘stock options’ goes from 12,500 euros to 50,000 euros and that the holders of the same will only have to accrue them when they are settled.
⦁ In tax matters, the first 100,000 euros of investment will be tax-free and later there will be a deduction for investment of 50% in the first five years of the firm’s life and seven in the case of biotechnology, 10 percentage points more than in the first draft.
⦁ Non-resident investors in Spain will only need to have a Tax Identification Number (NIF) and not a NIE (Foreigner Identity Number (NIE).
⦁ They can be constituted in six hours, digitally.
⦁ Notary fees have been eliminated and they will also be exempt from the obligation to go to contest for losses.
⦁ Entrepreneurs who work for others in the first stages of company formation will be exempted from the self-employment contribution so that they are not subjected to a double contribution.
⦁ It will speed up visa processing for digital nomads, who come to work at a Spanish startup, work independently and digital entrepreneurs, as well as for Spaniards who want to return to Spain with a favorable tax system, which includes a lower tax rate.
The Spanish entrepreneurial sector has welcomed and assures that it is an expected recognition of the role that startups play in the economy.
After approval in the Council of Ministers, it must now go through the parliamentary process.
Sources from the Ministry of Economic Affairs have shown confidence that the “Startups Law” will be finally approved by the summer of 2022, which is the period in which the European Union has been promised that these reforms would be carried out, as part of the Plan of Recovery, Transformation and Resilience.
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