On December 1, 2022, the Congress of Deputies approved the Law to Promote the Ecosystem of Emerging Companies. This Law is aimed at creating an entrepreneurial ecosystem by eliminating barriers that have been hindering the creation and development of innovative companies in the Spanish jurisdiction. With the Startup Law, a specific regulatory framework has been established, the purpose of which is to encourage and promote the development of startups in Spain.
Below, the set of fiscal measures adopted by the new standard that are considered most relevant will be briefly detailed.
1. Qualification and tax regime of the emerging company.
Firstly, the law establishes a series of requirements that must be met simultaneously and validated by the National Innovation Company SME, S.A. (ENISA) for a legal entity to be considered an “emerging company”:
- It is applicable exclusively to newly created companies, that is, that no more than 5 or 7 years have passed, as the case may be, since the registration of their constitution in the Commercial Registry.
- That do not arise from a merger, division or segregation operation.
- That they are not listed on a secondary market.
- That they do not distribute or have distributed dividends.
- Its registered office, registered office or permanent establishment must be in Spain.
- More than 60% of its workers must be employed in accordance with Spanish jurisdiction.
- The entity's project must be innovative entrepreneurship and have a scalable business model.
If the entity meets the requirements described, and is validated by ENISA, the start-up tax regime may be applied. This regime allows emerging companies to apply the following conditions in the Corporate Tax:
- They may apply a tax rate of 15% (and not the general 25%) during the first tax period in which they have a positive tax base and the following three, and must maintain the status of emerging company.
- As long as the entity is up to date with its tax obligations, the payment of the tax debt of its first two tax periods with a positive tax base may be deferred for twelve months, in the first period, and for six months in the second.
- The entity will be exempt from making advance payments of Corporate Tax during the first two tax periods following those indicated above in which the tax base was positive.
2. Tax incentives for investments and employees.
With the objective of promoting investment and the growth of the innovative projects that it seeks to promote, the Law grants a series of tax incentives to investors and employees of emerging entities, which are specified below:
- Increase in the exemption for the delivery of shares or options to workers provided for in the Personal Income Tax, going from 12,000 euros to 50,000 euros per year per employee of an entity administratively classified as an emerging entity.
The taxation of the excess (income from work), over the 50,000 euros indicated, will be deferred until the first of the following milestones occurs: 10 years or when the transfer of the shares or participations occurs, or the admission to the stock exchange or in any multilateral negotiation system, Spanish or foreign.
The Law introduces a special standard for the valuation of shares delivered to workers; According to this, in the event that, during the year prior to the granting of the shares to the worker, there has been an increase in capital subscribed by third parties, the shares obtained by the worker will be valued for tax purposes at the value at which they were valued in the capital increase and not by its market value. If there is no such extension, they will be valued at market value at the time of delivery to the worker.
- Improvement in the personal income tax deduction for investment in new or recently created companies, which allows a deduction in installments of 50% of the amounts invested (previously 30%) up to a maximum amount of 100,000 euros (increased from 60,000 euros). Likewise, the period in which the investment can be made to access the deduction is extended, from 3 to 5 years from the establishment of the entity.
3. Improvement and flexibility of the special regime for workers posted to Spanish territory.
The Startup Law also relaxes the requirements to access the impatriate regime and improves the conditions granted by it.
Firstly, the regime may be applied as long as the taxpayer has not been a tax resident in Spain during the five previous tax periods before to displacement, with ten years of non-residency being previously required.
Likewise, the reasons for traveling to Spain that give rise to the application of the regime are made more flexible. From the moment the Law comes into force, the regime will be applied provided that the taxpayer:
- Work remotely from Spanish territory, without requiring a travel order from the employer, using computer, telematic and telecommunications means and systems.
- Carry out an entrepreneurial activity in Spain.
- Provide services in Spain to emerging companies that carry out training, research, development and innovation activities; as long as this is a highly qualified professional and therefore receives a remuneration that exceeds 40% of his total earnings.
- Acquire the status of administrator of a Spanish company without limitations regarding the percentage of participation in the entity. However, if the entity is considered equity, the percentage of participation may not be equal to or greater than 25%.
On the other hand, the new Law allows the spouse and their children under 25 years of age to benefit from the special regime as long as they do not obtain income higher than that of the spouse or parent who allows them to apply the regime. These must move to Spanish territory within the first fiscal year in which the regime is applied and they cannot have resided in Spain in the five previous fiscal years.
Finally, the exemption of work income in kind described in article 42.3 of the LIRPF becomes applicable to taxpayers subject to the impatriate regime.
It is worth mentioning the silence of the Law on the effects of these modifications both on people who were already covered by the impatriate regime, and on those who initially did not meet the conditions to benefit from the regime at the time of transfer to Spain. , but that with the modifications they would meet the requirements to access it.
Tax Department.