In the bid to become one of the world’s most attractive countries for startups, Spain has introduced draft legislation. It aims to put Spain on the map for the new digital economy and create highly qualified jobs.
In our latest FAQs, we look at what the new law would mean for startups in Spain.
In a nutshell, what is the new legislation for startups in Spain?
The law is designed to facilitate paperwork for startups and their owners and employees. Its overall aim is to make setting up a company in Spain easier and quicker. There are also attractive tax breaks for companies, investors and entrepreneurs.
What stage is the new legislation at?
In early December, the Spanish government approved draft legislation for a range of measures designed to help startups in Spain and facilitate visas for digital nomads. The draft now goes to parliament where it faces several months of negotiations and modifications before approval.
What will it be approved?
At Costaluz Lawyers, we expect to see the new law come into play in spring 2022.
What conditions must a startup in Spain fulfill?
The new legislation contemplates several requirements for startups to access state funding and the new streamlined process. To qualify a startup must:
- Be newly formed or at maximum of five years old (seven for companies in the biotech and energy sectors).
- Have a branch or permanent base in Spain.
- Have most of its employees in Spain.
- Have a maximum income of €5 million.
- Have issued no dividends or be registered on the Spanish stock exchange.
How will it be easier to set up a company in Spain?
The draft law intends to make it considerably easier and quicker to set up a limited company in Spain. It contemplates the possibility of setting up in just six hours online or in a maximum of five working days offline.
The government wants startups in Spain to benefit from a one-step process to forming a company with no notary or registry charges.
The amount of capital necessary to form a limited company in Spain (sociedad limitada) could be reduced from a minimum of €3,000 to €1.
What about tax benefits?
The new Spanish law for startups includes generous tax breaks, both for companies and non-resident employees.
For companies, corporation tax will be reduced from 25% to 15% for the first four years of the company’s existence.
Non-resident investors and employees will be able to take advantage of a similar reduction (25% to 15%) on non-resident income tax, also for the first four years.
All taxpayers within Spanish startups will be permitted to delay payment of income tax with no interest penalties for up to six months.
Find out about tax representation in Spain
Do employees get any other benefits?
Yes, the law plans to give employees the option to receive remuneration in the form of stocks or shares. In addition, entrepreneurs who are also in salaried employment would no longer be required to pay social security twice a month.
What about personal paperwork for permits and visas?
The draft legislation for startups in Spain also wishes to make this kind of paperwork less onerous for employees and entrepreneurs. It proposes:
- No NIE requirement for non-resident investors.
- Digital nomad visas for employees and freelancers. The visa would be valid for five years and include direct relatives for the visa holder. Digital nomads would also be eligible for a specific tax regime.
Read more about the new digital nomad visa in Spain
How can I find out more about this new legislation for startups?
At Costaluz Lawyers, we are following the path of this new law with particular interest as we have many clients who stand to benefit from it. If you’d like to keep up-to-date with the latest developments, get in touch with our expert team.
Maria Luisa Castro
