FAQs – Ley de Startups
When we talk about the "Startup Law" we refer to Law 28/2022, of 21 December, on the promotion of the startup ecosystem.
The rule is in force and takes effect from 23 December 2022.
The Startups Law introduces measures in several areas (commercial/corporate, tax, labour, administrative, etc.). Some of the most noteworthy new features that could be most beneficial to the ecosystem are those relating to improvements in the regime of the stock optionsThe tax incentives for investors and for entrepreneurs themselves, those relating to the carried interest and the reduction of bureaucracy for certain procedures, as well as for foreign investment.
An emerging enterprise is defined as an enterprise that simultaneously meets the following conditions:.
- Be newly created or, if not, when no more than 5 years have elapsed since the date of registration in the Mercantile or Cooperative Register. This period is extended to 7 years in the case of biotechnology, energy, industrial and other strategic sectors or companies that have developed their own technology, designed entirely in Spain.
- Not having arisen from a merger, spin-off or transformation of companies that are not considered as emerging companies.
- Not distribute or have distributed dividends or returns.
- Not listed on a regulated market.
- Have its registered office, registered office or permanent establishment in Spain.
- To have 60% of the workforce with employment contracts in Spain.
- Develop an innovative entrepreneurial project with a scalable business model.
- If the company belongs to a group (Art. 42 Ccom) all the companies that are part of this group must have the status of emerging companies.
A technology-based company is understood as a company whose activity requires the generation or intensive use of scientific and technical knowledge and technologies for the generation of new products, processes or services and for the channelling of research, development and innovation initiatives and the transfer of results.
Innovation will be analysed at both product and business level. For these purposes, a company will be considered to be innovative when its purpose is to solve a problem or improve an existing situation by developing products, services or processes that are new or substantially improved compared to the state of the art and that entail a risk of technological, industrial or business model failure.
ENISA (Empresa Nacional de Innovación, S.M.E., SA), is the entity in charge of this after the application by the company or startup.
This application can be made through a procedure that will be made available on ENISA's own website, which has yet to be published.
At the moment, the website enabled by ENISA to receive notices about the activation of the portal to apply for the emerging company certification is here.
If I have not received a reply within 3 months, it shall be understood to have been approved by positive administrative silence.
The Law reduces bureaucratic requirements for investors who will not reside in Spain.
Thus, individual investors will no longer need to obtain a NIE to be able to invest in Spain and from now on it will be sufficient to obtain a NIF.
When the investor is a legal person or an unincorporated entity of foreign nationality, the representative applying for the tax identification number on its behalf must be assigned a TIN and its power of representation may be stated in a notarial document or in a mandate contract with representation in which the acceptance of the tax representation is expressly stated. If the notarial document has been issued by a foreign notary, it is not required to bring its content into line with Spanish law.
The application for the NIF may be made through an electronic procedure that must be resolved by the Administration within 10 working days of the submission of the application.
Notaries will now also be able to request the assignment of a TIN for foreign investors when they become partners in a start-up company on the occasion of a capital increase or other corporate transaction.
Finally, the Law also states that a specific website will be set up so that persons interested in obtaining a residence permit under the provisions of the Law, which we have detailed below, can request online appointments to obtain their NIE.
Profits will cease to apply, both to the start-up and to its investors:
- When the company ceases to meet the requirements to qualify as a start-up company (as described in Question 1).
- For 5 to 7 years after the creation of the company.
- In the event of termination of the company before the end of the period indicated above.
- When the annual turnover exceeds 10M euros.
- When carrying out an activity that generates significant damage to the environment, according to Regulation (EU) 2020/852 of the European Parliament.
- In the event that the shareholders who hold, directly or indirectly, a stake of at least 5% of the share capital or administrators have been convicted by final judgement for the offences referred to in the Law itself.
Treasury stock" is the situation in which a company holds a percentage of its own shares (Art. 134 et seq. LSC).
Following the entry into force of the Startups Act, start-ups may hold up to a maximum of 20% in treasury shares (previously a maximum of 10%) in order to offer them as incentives to their directors, employees or collaborators. To do so, they must comply with a series of requirements, among which we highlight that this situation must be expressly provided for in their Articles of Association (which are the rules governing the day-to-day running of a company) and be approved by the General Shareholders' Meeting.
This measure applies only to "start-ups" that are limited liability companies (S.L.).
Some of the measures included in the Startup Law aim to be comparable to those of other countries, either because there was an obligation to transpose some EU Directives, or because the aim of the Law was to bring us closer to the legal framework and compete with the rest of the EU countries.
In this regard, measures have been established to facilitate the entry and stay in Spain of certain groups for economic reasons, with the aim of improving internationalisation.
Entry and stay will be facilitated for those who can prove that they are:
- Highly qualified professionals
- Workers engaged in intra-corporate movement
- International teleworkers (so-called "digital nomads")
Until now, the Law to Support Entrepreneurs and their Internationalisation only allowed foreign entrepreneurs to enter the country for a period of one year for the sole purpose of carrying out the necessary procedures to develop an entrepreneurial activity.
The Startups Act has removed this limitation, introducing as a novelty that foreign entrepreneurs may receive a residence permit for business activity provided they meet the legal requirements (established in the aforementioned Entrepreneurs Support Act), which will last for 3 years, with the possibility of extending it for a further 2 years (a total of 5 years).
Entrepreneurial and business activity will be that which is innovative and/or of special economic interest for Spain and has a favourable report from ENISA.
No, the entrepreneur must send his application for a favourable report to the Large Companies and Strategic Groups Unit, which will automatically request the report from ENISA, and it must be processed by the latter within 10 working days.
Once the authorisation is received, the entrepreneur can apply for the corresponding visa.
ENISA will assess:
- The applicant's professional profile and involvement in the project. If there are several partners, the profile of each one.
- The Business Plan which will include a description of:
- Financing: investment required and possible sources
- Los elementos que generen valor añadido a la economía, la innovación y las oportunidades de inversión
Yes, you can. The period of validity of the residence permit for researchers will be 3 years or equal to the duration of the agreement or contract, if it is shorter.
The Law introduces the figure of the "international teleworker", i.e. foreign persons authorised to reside in Spain to carry out their work or professional activity at a distance for foreign companies, through the exclusive use of computer, telematic and telecommunication means and systems.
In addition to the general requirements that must also be met by entrepreneurs, as mentioned above, these "teleworkers" must meet other additional requirements and apply for a visa that will be valid for 1 year.
60 days before the expiry of the visa, if the requirements are still met, these persons may apply for an international telework residence authorisation for a maximum period of 3 years, but renewable for 2-year periods if these conditions are maintained.
Some of the advantages that will be reflected are:
- Improvements in Corporate Income Tax (IS) taxation, establishing 15% during the 4 years following the first positive base.
- The taxation of stock options is improved.
- Possibility to defer tax debts
In general, investment in new or recently created companies will be more attractive as deductions for investment in such companies will be extended from 30% to 50% of the amounts contributed.
In other words, you will now be able to deduct up to 50% of your personal income tax liability, with the maximum base to which this deduction can be applied being 100,000 euros (therefore, the maximum deduction is 50,000 euros).
However, in order to benefit from this deduction, you must make your investment within certain deadlines:
- If the startup in which you make the investment is not "emerging", you must do so within the first 5 years of its incorporation. If the startup in which you make the investment is not "emerging, you must do so within the first 5 years of its incorporation.
- If it is "emerging"within the first 7 years since its establishment.
In addition to meeting these deadlines, you may not own more than 40% of the company at any time, unless you are a founder (and this is stated in the articles of association) of an "emerging" start-up.
On the start-up side, the main requirements remain the same, i.e. it must prove that it is engaged in an economic activity and its equity at the beginning of the financial year should not exceed €400,000.
In general, the rule for valuing them has been changed, an extension of the personal income tax exemption they enjoyed until now has been introduced and the temporal imputation of those that are not exempt has been changed.
Specifically, regarding personal income tax exemption, stock options already enjoyed a general exemption up to a maximum of 12,000 euros, but now, in addition to this general exemption, which affects any company, whether emerging or not, for emerging companies it has been increased to 50,000 euros per year for each employee and it will not be necessary to grant shares or holdings under the same conditions to all, it will be sufficient for them to be granted in accordance with the general remuneration policy.
The payment of corporate income tax corresponding to the first two periods (24 months) with a positive tax base may be deferred for twelve and six months, without the need to provide guarantees and without accrual of late-payment interest.
Other new features include the possibility of registering shareholders' agreements in the commercial register, measures to prevent dissolution due to losses in the case of Article 363 of the Capital Companies Act, more streamlined procedures for the incorporation of companies and lower notary fees, etc.
There are also other very interesting incentives in the field of universities for public-private collaboration through the creation of spin-offs between entrepreneurs and the university, incentives for teleworking, etc.