Startups law

To benefit from the measures included in the law, the regulation defines what is meant by a startup company.

A "startup company" is understood to be any legal entity that simultaneously meets the following requirements:

1. Be newly established or, if not, not more than 5 or 7 years have passed since its registration in the Commercial Registry.
2. Not have originated from a merger, split, segregation, or transformation operation of companies that do not qualify as emerging companies.
3. Not distribute or have distributed dividends.
4. Not be listed on a regulated market.
5. Have its registered office or permanent establishment in Spain.
6. Have 60% of the workforce under a labor contract in Spain.
7. Develop an innovative entrepreneurial project with a scalable business model.
8. Have an annual turnover that does not exceed 10 M€.
9. Be up to date with tax and social security obligations.
10. Not having been convicted by a final judgment for a crime of breach of trust, punishable insolvency, corporate crimes, money laundering offenses, terrorism financing, crimes against public finance and social security, among others.

The National Innovation Company (ENISA) is responsible for accrediting companies applying for certification as startups and granting access to the benefits outlined in the law. ENISA verifies that all requirements to be considered an emerging company are met before registering this status in the Commercial Registry. The following requirements are requested for this purpose:

• Innovation level. Having received public funding in the last 3 years will be assessed, and consideration will be given to expenses in research, development, and technological innovation relative to the total expenses of the company during the preceding 2 years.
• Market Attractiveness Level. The assessment will consider the supply and demand in the sector, traction generation, user or customer acquisition strategies, among other aspects.
• Company Life Stage. The implementation of prototypes, obtaining a minimum viable product, or bringing the service to market will be assessed.
• Business Model. The scalability of the number of users, the number of operations, or annual revenue will be taken into account. 
• Competition. Competing companies in their field or sector of activity, as well as differentiation from them, will be assessed.
• Team. The experience, education, and track record of the team comprising the company will be considered.
• Dependence on suppliers, providers, and rental contracts. Relationships with other economic operators will be taken into account.
• Customers. The volume of clients or users of the company will be assessed.

Once the company has submitted its certification application (along with supporting documentation) through the electronic registry established for this procedure, ENISA has a maximum period of 3 months to assess the application. Link to the ENISA Certification Process.
 

Discover the key benefits of the startups law for innovative entrepreneurship.

Fiscal Incentives. Taxation of Emerging Companies.

• Taxation of emerging companies at a reduced rate of 15%. Reduction in corporate tax, decreasing from 25% to 15% for the first four years. That is, the first year with a positive taxable base and the following three years, as long as the company maintains the status of an emerging enterprise.
• Deferral of tax debt. The payment of corporate tax debt for the first two years may be deferred for twelve and six months, respectively, without the need to provide guarantees and without accruing late payment interest.
• Elimination of installment payments. During the first two taxable periods with a positive taxable base, emerging companies will also be exempt from the obligation to submit installment payments.

Incentives in Personal Income Tax.

• In-kind employment income derived from the delivery of shares or stock options:
  • The exemption is increased from €12,000.00 annually to €50,000.00 in the case of the delivery of shares or stock options to employees of emerging companies.
  • A special rule of temporary attribution is established for non-exempt income exceeding the previous limit, allowing for the deferral of its attribution until the tax period in which the company is sold, goes public, or ten years have elapsed since the delivery of the shares or stock options.
  • Finally, a special rule for the valuation of employment income is introduced to clarify the value corresponding to the granted shares or stock options.
•  Deduction for investment in newly established or recently created companies.
  • The deduction for investment in newly established companies in Personal Income Tax (IRPF) is increased, raising the rate from 30% to 50% and increasing the maximum base from €60,000.00 to €100,000.00.
  • The deadline for subscribing to shares or participations is extended from three to five years, starting from the establishment of the company, and up to seven years for certain categories of emerging companies.
  • Additionally, founding partners of emerging companies can apply for this deduction regardless of their percentage of ownership.
• Bonus for carried interest rights.
  • Fiscal classification of returns obtained from managing funds linked to entrepreneurship, innovation, and economic activity development (carried interest), considering them as employment income, and therefore integrating them into the taxable base at 50% of their amount, without any exemption or reduction applicable, provided certain requirements are met.

Discount on contributions for self-employed workers of emerging companies.

• A 100% discount on the minimum base of self-employed workers' contributions is established for the first three years from the date of registration, for self-employed workers who meet the following requirements:
  • They must have effective control, directly or indirectly, of a company that meets the definition of an emerging company according to the startup law.
  • Simultaneously, they must work as employees for another employer.

Benefits for the impatriate regime.

• Ease of adoption of the Special Regime for Workers Dispatched to Spanish Territory.
  • The fiscal regime for workers dispatched to Spanish territory is made more flexible, reducing from 10 to 5 the number of tax periods prior to the date of their dispatch to Spain during which the taxpayer cannot have been a tax resident in Spain.

Other benefits of the startup law.

• Promotion of regulatory sandboxes through a temporary trial license.
  • The possibility for startups to conduct trials for one year in an environment controlled by the corresponding regulator is contemplated.
• Ease of entry and stay in Spain, introducing regulations for the visa and residence authorization of a previously unforeseen group: international teleworkers (digital nomads).
• When grants or advance payments are conditioned on the provision of guarantees, beneficiary emerging companies can request that the guarantee be reduced in exchange for reducing the amount of the aid or advance payment in the same proportion.

Explore the opportunities of international remote work as a digital nomad.

Who are they?

Individuals from a third country authorized to stay in Spain to engage in remote work for companies located outside of Spain, exclusively using computer, telematic, and telecommunication means and systems.

International remote workers are divided into two groups:

• If they perform a labor activity: they can only work for companies located outside of Spain.
• If they perform a professional activity: they can work for a company located in Spain, as long as this work does not exceed 20% of their total professional activity.

What are the requirements?

In addition to the general requirements for staying or residing in Spain to apply for a visa or teleworking authorization, digital nomads must provide:

• A real and continuous activity for at least one year from the company or group of companies with which the worker maintains a labor or professional relationship.
• That the labor or professional relationship can be carried out remotely;
• In the case of a labor relationship, the existence of a labor relationship between the worker and the company not located in Spain for at least the last three months prior to the submission of the application, and that said company allows the employee to carry out the work remotely; or
• In the case of a professional relationship, the worker has a business relationship with one or several companies not located in Spain for at least the last three months, as well as the terms and conditions under which the professional activity will be carried out remotely.

What is the validity and renewal of the visa and residence authorization?

• Visa: It is granted to international remote workers for a maximum of 1 year, unless the work period is shorter, in which case the validity of the visa will be the same as the work period.
• Residence Permit: It can be requested up to 60 natural days before the expiration of the visa. It is valid throughout the national territory and has a maximum validity of 3 years. Renewal can be requested for periods of 2 years, as long as the conditions that gave rise to the right are maintained.