Written by Luis Tatay Lawyer specialized in VC and Head of the Valencia Office, and Carles Meseguer Tax Advisor at Across Legal.
What is the Spanish Startup Law?
Law 28/2022, on the promotion of the ecosystem of emerging companies (the Startup Law), establishes the specific regulatory framework designed to boost the creation and growth of innovative companies in Spain and attract international talent. This is an objective to which initiatives such as Invest in Valencia contribute significantly, acting as catalysts for Valencia’s entrepreneurial ecosystem.
But what exactly is an emerging company?
To be considered an “emerging company” and fall under the Startup Law, you must request official recognition from ENISA and meet the following requirements:
- Develop an innovative entrepreneurial project with a scalable business model.
- Have your registered office or permanent establishment in Spain.
- Have not exceeded five years since registration in the Commercial Registry (or seven years in certain strategic sectors).
- Not be the result of a corporate restructuring of a nonemerging company.
- Not have distributed dividends or be listed on a regulated market.
- Have at least 60% of staff under Spanish employment contracts.
The status of “emerging company” lasts for five or seven years, depending on the sector.
Key Tax Benefits of the Startup Law
The Startup Law improves the tax treatment applicable both to emerging companies and to their investors and the talent joining them.
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Corporate Income Tax at 15%
A reduced 15% Corporate Income Tax rate applies instead of the standard 25%. This reduced rate applies in the first tax year with a positive taxable base and the following three years (as long as the company maintains its emergingcompany status).
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Improved Liquidity
Companies can defer Corporate Income Tax debts during the first two years with profits, reinforcing liquidity in their early stages. As long as the company remains an emerging company, it is also exempt from making advance instalment payments.
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Increased Incentives for Investors
The Personal Income Tax deduction for investment in new or recently created companies is expanded:
- The annual maximum base increases to €100,000 (formerly €60,000).
- The applicable deduction increases from 30% to 50%.
In practice, an investor can recover up to €50,000 in Personal Income Tax for a €100,000 investment, provided all requirements are met.
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More Competitive Stock Options
Stock options are strengthened as a key tool to attract and retain talent:
- The annual tax exemption increases from €12,000 to €50,000.
- Amounts above €50,000 may defer taxation until the shares are sold, the company goes public, or—at most—10 years after the shares are granted.
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Expanded “Beckham Law”
The required period of nonresidence prior to applying is reduced from ten to five years, thus expanding eligibility.
The regime is also extended to strategic profiles such as international remote workers, entrepreneurs, and highly qualified professionals.
In addition, spouses and children under 25 can also benefit, further strengthening Spain’s attractiveness for global talent.
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Regulation of Carried Interest
The law expressly regulates the taxation of carried interest—variable remuneration linked to the successful management of venture capital entities. It is treated as employment income, with a 50% reduction if certain conditions are met.
Moving to Spain: Digital Nomad Visa vs. Startup Visa — Which Is Better?
Spain has become the leading European destination for tech talent thanks to the new Startup Law. Most people only talk about the Digital Nomad Visa (DNV), but if you are a founder, CEO, or have an innovative project, applying for the DNV could be a strategic mistake.
Spanish regulations distinguish between two oftenconfused categories:
- the International Remote Work Visa (Digital Nomad Visa), and
- the Entrepreneur Residence Permit (Spain Startup Visa).
Both allow residence in Spain, but they serve different purposes.
Understanding the Digital Nomad Visa
- Digital Nomad Visa
Intended for foreigners authorized to work for companies located outside of Spain.
Selfemployed applicants may work for Spanish companies if such work does not exceed 20% of their total activity.
This visa is designed for professional mobility, not business establishment.
Duration:
- Initial visa: up to 1 year
- Subsequent residence permit: up to 3 years, renewable in 2year periods
Applicants may request the residence permit from within Spain after entering as tourists (90 days), allowing them to obtain a 3year residence permit—often the most convenient route, since one further 2year renewal grants access to longterm residence.
The Spain Startup Visa for Entrepreneurs
- Spain Startup Visa (Entrepreneur Residence Permit)
Targeted at individuals carrying out an innovative entrepreneurial activity and/or one of special economic interest to Spain.
The key requirement is securing a favourable ENISA report, requested ex officio by the Large Companies and Strategic Groups Unit (UGECE, by its initials in Spanish).
ENISA evaluates:
(i) the applicant’s professional profile,
(ii) the business plan (product, market, financing), and
(iii) the added value to the Spanish economy (innovation, investment, employment).
This screening acts as an institutional validation mechanism, providing legal certainty and credibility before investors.
Duration:
- Initial authorization: 3 years
- Renewal: 2 years
- Access to permanent residence after 5 years
From a strategic perspective, the duration alone reflects that the Startup Visa is designed for stable, scalable business projects.
Comparative Table
| Concept | Digital Nomad Visa | Spain Startup Visa |
| Purpose | Professional mobility | Business establishment |
| Spanish company | Not required | Required |
| Innovation report | No | Yes (ENISA) |
| Access to Startup Law benefits | No | Yes |
| Initial Duration | 1 year | 3 years |
For remote service professionals, the Digital Nomad Visa may be sufficient.
However, for founders seeking to incorporate a company, attract investment, close funding rounds, or implement stockoption plans, the Spain Startup Visa is the appropriate legal pathway.
How Else Does the Startup Law Help Your Business Grow in Spain?
The Startup Law includes several corporate measures aimed at streamlining and flexibilizing the legal structure and operations of emerging companies.
- Treasury Stock Regime
The general meeting may authorize the acquisition of up to 20% of the company’s own shares to implement remuneration plans for employees, directors, and collaborators—subject to certain conditions.
- Faster Procedures and Lower Costs
Registration times in the Commercial Registry are reduced, as are notarial and registry costs.
- Registration of Shareholders’ Agreements
Shareholders’ agreements can be registered, providing greater legal certainty.
- Temporary Exception to Dissolution Due to Losses
During the first three years, startups whose losses reduce net equity below half of share capital are not subject to mandatory dissolution, unlike ordinary companies.
Valencia as a Launchpad
While the tax benefits of the Startup Law are national, operational efficiency depends on the local environment.
In this regard, Valencia—through Invest in Valencia—positions itself as a highly competitive destination for setting up tech startups, offering:
- lower operating costs than other national hubs;
- a consolidated and fastgrowing entrepreneurial ecosystem;
- strong links to university and tech talent;
- the ability to attract and retain international professionals.
Ultimately, proper structuring and compliance with the Startup Law are essential to fully benefit from its incentives. Support from specialized firms in startups and international investment, such as Across Legal, ensures legal certainty and strategic coherence from the outset.
If you would like more information or guidance, feel free to contact Invest in Valencia.
If you are considering starting a business in Spain, we recommend reading our article on that topic.
And if you want to learn more about the Beckham Law (tax regime for impatriates), you can read more here.
