The Government adopts the draft Startup Law, placing Spain at the forefront to attract investments, innovative entrepreneurship and talent

The Spanish Council of Ministers has approved the draft Startup Law; this legislation puts Spain at the forefront of Europe in supporting the eco-system of innovative startups, attracting investments and talent. The text will be sent to the Senate to continue its processing there. The government expects the new law to come into force before the end of the year.

The regulation mainly contemplates two lines of improvement for entrepreneurs: on the one hand, the simplification of administrative procedures and, on the other hand, a series of tax incentives. It also incorporates key measures to attract and recover international and national talent, favouring the establishment in Spain of remote workers and digital nomads.

In particular, the main measures incorporated by the draft law are as follows:

• Extension of the definition of Startup Concept: addressed to new companies or companies less than 5 years old (7 years old in the case of biotechnology, energy and industrial companies and other strategic sectors or that have developed proprietary technology designed entirely in Spain), that are independent from other companies, not listed on the stock market, do not and have not shared their profits, are innovative in nature and have annual revenues of up to 5 million euros.
• Administrative Agility: the procedures for setting up a company are streamlined into just one step and can be completed online without notary or registry expenses.
• Reduction in Corporate Tax and in Non-Resident Income Tax (which drops from 25% to 15%) for four years, as well as interests and deposit-free deferral of tax debt payments.
• The use of stock options as a payment method is encouraged and the tax exemption on this income is raised from 12,000 to 50,000 euros per year.
• The maximum deductible amount for investments in new or recently created companies is raised (from 60,000 to 100,000 euros per year), the deduction rate goes from 30% to 50%.
• In order to attract talent the tax regime has been improved for Non-Resident Income Tax. This is applicable to executives and startups employees, investors and “digital nomads” -people who temporarily settle in Spain and work remotely- and their families, who are eligible for a special visa for up to 5 years. The draft Law encourages talent return by reducing the previous non-residence period in Spain to 5 years in order to have access to this special regime.
• Entrepreneurs who simultaneously stay at another job as employees will no longer be required to contribute twice to the Social Security system
• The Government has deployed financial resources to foster startups growth, such as FondoICO Next Tech and the Empresa Nacional de Innovación (ENISA)

The draft law enables Spain to be aligned with the most attractive countries in Europe for drawing investments, entrepreneurship and talent.

Do not hesitate to contact us if you need more information or have any questions.

To read the oficial Press Release click here.

JDA/SFAI