Your guide to tax for startups in Spain

guide to startups tax

The Spanish parliament has just given its definitive approval for the new law for startups in Spain. The legislation, due to come into effect in January 2023, includes generous tax perks for startup companies, their employees, and investors. This article sums up the main fiscal benefits. 

Did you know? The startup law also includes provision for the digital nomad visa with its own fiscal benefits. Read our guide to the digital nomad visa

Lower company tax 

A reduced rate of company tax is the main advantage of tax for startups in Spain. Instead of paying the usual 25%, startups will be subject to a tax rate of 15%. 

The much lower rate stands for a maximum of four years as long as the company continues to qualify as a startup. 

Find out about company taxation in Spain

Lower non-resident tax 

In addition, non-residents who are part of the startup will benefit from the same reduction in income tax, also for a maximum of four years. As a result, they will pay just 15% of the income earned from a startup with its permanent base in Spain. 

Additional benefits for dependents 

The same reduced income tax rate applies to the non-resident payer’s dependents. They, too pay 15% instead of 25%. Qualifying dependents are the spouse and children under 25 (there are no age restrictions if the child is disabled). 

Read more about taxes in Spain

Delayed payment of tax debts 

The startup company and its non-resident employees may also postpone payment of tax debts for the first two years of activity. To take advantage of this delay, the taxpayer must be up to date with their tax obligations and file their tax declaration within the stipulated time frame. 

Stock option discounts 

The startup law in Spain aims to attract new talent to Spain and contains numerous other tax advantages for the companies and their employees. One of these is an improvement in fiscal obligations for stock options. 

Stock options up to a value of €50,000 are exempt from tax when given to employees of startups. In addition, stock options will only be taxed when sold by their holders.

Deductions for investment 

Individuals who invest in startups in Spain also stand to benefit from generous tax perks. Investment in new or recently created startups attracts a tax deduction of 50%. Furthermore, the first €100,000 is tax-exempt. 

Find out how to set up a company in Spain

Founding partners in a startup may apply this deduction independently of the share percentage they hold in the company. 

Carried interest benefits 

The new startup law in Spain also includes new regulations for taxation on carried interest. The Spanish tax authorities have established a specific fiscal regime for the successful management of risk capital, bringing Spain into line with other countries in the EU. 

The new tax provisions aim to promote entrepreneurship, boost innovation and drive economic activity. 

Advice on company taxation in Spain 

The Costaluz Lawyers offers a comprehensive tax advisory service for companies in Spain, and it includes assistance for startups. Get in touch with our team for a free consultation now.

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