Is it good for me to start in Spain?

21 April, 2022
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Commercial
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Patricia Fernández


Following the approval of the draft promotion law the startup ecosystem, better known as the Startups Law, the answer seems to be yes.

The Startups Law, which is expected to come into force this summer, includes a package of measures that not only seek to streamline the bureaucratic procedures for company incorporation, but also to reduce the tax burden for start entrepreneurs setting up in Spain.

The theory is all very well, but how do these measures materialize?

The main novelties in terms of bureaucratic streamlining are the following:

The qualification and registry registration of the incorporation will be carried out within 6 hours if standard bylaws are used, or 5 days if personalized bylaws are chosen.

The payment of notary and registry fees is exempted, in case the incorporation is processed telematically.

The obligation to obtain the NIE for non-resident investors in Spain is eliminated, being sufficient with the application for the NIF, which can also be processed telematically.

In the area of tax and social security incentives, the following issues stand out:

The tax rate for corporate income tax and non-resident income tax is reduced to 15% during the four fiscal years following the first positive tax base.

Is introduced the deferral of the payment of the tax debt of the Corporate Income Tax and Non-Resident Income Tax during the first two years with positive taxable.

Is eliminated the obligation to make installment payments of Corporate Income Tax and Non-Resident Income Tax in the two years following the first positive taxable income.

The maximum deduction base for investment is increased to 100,000 euros per year, and the deduction rate is increased to 50%.

The double contribution to the Social Security of the start entrepreneurs en who works simultaneous as an employee (pluriactivity) during the first three years is eliminated.

The amount of the tax exemption for stock options is increased to 50,000 euros per year.

Regardless of these measures, what happens if the company does not take off as quickly as expected?

Taking into consideration the risks and uncertainties involved in the Startup business model, an exemption is introduced to request dissolution in the event of losses that reduce the net worth to less than half of the share capital, within three years of its incorporation (provided that the requirements for filing for insolvency proceedings are not met).

What requirements must be fulfilled to be able to access all these advantages?

All those news companies (Startups) that simultaneously meet the following conditions, the fulfillment of which must be evaluated and certified by ENISA (Empresa Nacional de Innovación S.A.), will be eligible for these advantages:

1. To be newly created or, not being newly created, that no more than five years have elapsed since the date of registration in the Mercantile Registry of the public deed of incorporation, in general, or seven in the case of companies in biotechnology, energy, industrial and other strategic sectors or which have developed their own technology, designed entirely in Spain.
2. Not have arisen from a merger, spin-off or transformation operation.
3. To have its head office, registered office or permanent establishment in Spain.
4. To have 60% of the workforce with an employment contract in Spain.
5. Be an innovative company.
6. Not distribute or have distributed dividends.
7. Not be listed on a regulated market.
8. In the case of belonging to a group of companies, the group or each of the companies that comprise it must comply with the above requirements.

What is the conclusion?

Although it is clear that there are many issues that have not been addressed, or that h    ave not been developed with the necessary depth, the fact is that with the entry into force of the Startups Law, start entrepreneurs in Spain will be considerably facilitated, granting significant advantages to those who choose to take the step.

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