In December 2022, Law 28/2022 of the 21st of December on fostering the startup ecosystem, better known as the Startups Law, came into force. This law is aimed at improving business demographics and the business climate, increasing the size of companies, boosting entrepreneurship and strengthening the ecosystem of innovative start-ups, especially in the new digital economy.
The Startups Act is aimed at innovative start-ups and companies that have been in business for up to five years, or up to seven years if they are:
- biotechnology, energy, or industrial companies,
- have their permanent registered office establishment and at least 60% of their workforce in Spain,
- which have not distributed dividends and are not listed and,
- finally, with revenues of up to 5 million euros.
This law aims to encourage the creation and promotion of startups in Spain through tax benefits and a reduction in the formalities involved in their incorporation.
The National Innovation Company SA (ENISA), under the Ministry of Industry, Trade and Tourism, will be responsible for the accreditation of companies as Startups so that they can access the benefits established by the Law. There will also be Entrepreneur Service Points (PAE) and a National Entrepreneurship Office, which will function as portals or information and access points for public aid.
Among the measures included are the following:
- Reduction of the corporate income tax rate from 25% to 15% in the first four years, as well as in the non-resident income tax, allowing the deferral of tax debt without guarantees or interest on arrears for a period of 12 and 6 months respectively
- Elimination of instalment payments in the two years following the year in which the tax base were positive
- The tax exemption for employee remuneration on company shares is increased from 12,000 to 50,000 euros per year
- The bureaucratic and administrative burden for the incorporation of a start-up is reduced, as it can be carried out by means of the Single Electronic Document and registration in the Commercial Register in between 6 hours and 5 days, reducing notary and registry fees, and eliminating the requirement to obtain a foreigner’s identification number for non-resident investors
- A more streamlined visa and residency procedure is established to attract so-called digital nomads
- The deduction for investment in new or recently created companies is increased, raising the deduction rate from 30% to 50% and increasing the maximum base from 60,000 to 100,000 euros
- The regime of pluriactivity is eliminated for 3 years for those employees who start a start-up.