On December 22nd 2022, the Law 28/2022 on the promotion of the startup ecosystem (“Ley de fomento del ecosistema de las empresas emergentes”), known as the Startup Law, came into force. This law is created with the aim of complying with the “EU Startups Nations Standard” and attracting foreign talent to Spain while also boosting the country’s emerging and innovative companies.
This law is aimed at newly created companies, or those less than 5 years old, or less than 7 years old for companies that have developed their own technology in Spain, or are in strategic sectors such as biotechnology. All must meet the following requirements:
- they are independent from other companies;
- they are not listed on the stock market;
- they do not distribute profits;
- they have an annual turnover of up to 5 million euros; and
- they have an innovative character, which will be determined by the National Innovation Company SME.
The law incorporates various fiscal and administrative measures with the aim of increasing investment and improving the attraction of talent, which is sought through the implementation of a more favourable tax regime and greater administrative agility.
In order to promote foreign investment and encourage international teleworking, the possibility of residence and work for 5 years is introduced for entrepreneurs and people who travel to Spain to telework, in addition to allowing them to benefit from the special tax regime and to pay non-resident income tax. The requirement of previous non-residence in Spain to benefit from the special tax regime is also reduced from 10 to 5 years.
A reduction in the tax rate for corporate income tax and non-resident income tax is also introduced, decreasing the general rate of 25% to 15% during the first four years after the taxable income is positive.
Stock options become exempt from taxation up to an amount of 50,000 Euros per year (a big increase compared to the current amount of 12,000 Euros) as remuneration in kind by the company, in addition to introducing greater flexibility in the conditions for the generation of treasury stock in limited liability companies.
The bill also aims to boost investment in startups by increasing the maximum deduction base for investment from the current 60,000 Euros up to 100,000 Euros per year, and the deduction rate increases from 30% to 50%.
Another advantage introduced is the possibility of requesting the deferral of the tax debt, which may be granted without the need for guarantees or the payment of late payment interest in the first two years with a positive taxable base.
With respect to administrative streamlining, the elimination of notary and registry fees for the incorporation of a new limited liability company and its publication in the Official Gazette of the Commercial Registry is noteworthy. It is also no longer compulsory to obtain a NIE (foreigner identification number) for non-resident investors, who will only be required to obtain a NIF (tax identification number).
Óscar Vilá
Vilá Abogados
For more information, please contact:
30th December 2022
