STARTUP LAW AIMS TO ATTRACT AND RECOVER TALENT

What’s new in the Startup Law

In December 2021, the Government approved the preliminary draft of the Startups Law (officially the Law for the Promotion of the Startup Ecosystem). Its aim is to boost innovative entrepreneurship and position Spain as one of the most attractive countries for the creation of startups.

The regulation is part of the Recovery, Transformation and Resilience Plan, which seeks to renew Spain’s productive structure, improving the business climate for investors and generating highly qualified jobs. The deadline for its approval is the last quarter of 2022, although it is expected to be approved in the summer of 2022.

We present the main novelties of the draft bill:

1. Definition of startup

To be considered a ‘startup’, the company must meet the following requirements:

• be innovative,
• newly created or up to 5 years old in general, or 7 years old in the case of biotechnology, energy and industrial companies;
• have its registered office, permanent establishment and the majority of employment in Spain;
• not having distributed dividends, not being listed, and having revenues of up to 5 million euros.

The Government informs that it will be the National Innovation Company SA (ENISA) – which depends on the Ministry of Industry, Commerce and Tourism – the one in charge of accrediting the companies as startups so that they can access the benefits established by the law. Likewise, the Entrepreneur Service Points (Spanish acronym, PAE) and the National Entrepreneurship Office (Spanish acronym, ONE) will be portals or windows for information and access to public aid.

2. Simplification of the procedures for the creation of the company

We highlight the following measures:

• Elimination of notary and registry fees in the case of companies created under the standard statutes and electronically;
• Creation of a company through a single electronic document and the registration in the commercial registry in 6 hours (if the standard statutes are used), and in 5 working days in the rest of the cases enabled;
• Elimination of the requirement to obtain the NIE (foreigner’s identification number) for non-resident investors;
• The startup is exempted, during the first 3 years, from the cause of dissolution due to related losses or losses generating an equity imbalance.

3. Tax benefits

We highlight the following measures that benefit companies, their investors and employees:

• Reduction of the tax rate in corporate and non-resident income taxes, from the general rate of 25% to 15% in the first four fiscal years from the time the taxable income is positive;
• Deferral of the tax debt without guarantees or late payment interest is allowed;
• Elimination of the obligation to make installment payments and increase of the maximum deduction base for investment in new or recently created companies from 60,000 to 100,000 euros per year;
• Improvement of the treatment of the forms of employee remuneration based on options on shares of the company itself or stock options;
• Elimination of the double Social Security contribution for 3 years for those entrepreneurs who simultaneously maintain an employment as an employee;
• Streamlined procedure for digital nomads in relation to the obtainment of the visa and residency, as well as a special tax regime. This measure includes Spaniards who have been non-residents in Spain for at least 5 years.