On December 1st, the Congress approved the Law for the Promotion of the Emerging Companies Ecosystem, better known as Startups Law, which will come into effect the next January 1st.
What is the Startups Law?
This new Startups Law, launched by the Ministry of Economic Affairs and Digital Transformation, will come into effect soon. The approval of this normative makes it the first in Europe to specifically support the innovative entrepreneurial ecosystem.The objective is to stimulate investment and attract talent, encourage collaboration between SMEs, big companies and startups, promote R+D+i and foster the cooperation between startups and entrepreneurs with Universities and research centers.
This new law includes the definition of what a startup is and, therefore, who can be benefited from the new regulations. They are defined as newly created companies of an innovative nature, that is, that are not more than 5 years old (or 7 in some sectors); independent of others, so they can not be a result of a merger; that are not listed on a stock exchange and do not distribute dividends; that have their headquarters or registered office permanently in national territory; that 60% of their staff is hired in Spain and that they have a maximum turnover of 10 million euros.
What does this law mean for startups?
The Startups Law is mainly divided into two lines of improvement for entrepreneurs: the simplification of administrative procedures and a series of tax incentives. There are many points included in this law, but we leave you here the most relevant changes:
- Simplification of formation procedures to promote administrative agility through the creation of a single and telematic window, the National Office of Entrepreneurship (NOE).
- Reduction of corporation tax and non-residents tax from 25% to 15% for up to four years.
- Increase in the amount of the exemption from taxation of stock options from 12.000 to 50.000 per year in the event that startups deliver shares or participations derived from the exercise of stock options.
- Strengthening of incentives in the personal income tax to the creation of companies, not only startups. The deduction rate is increased to 50% and the base is raised from 60.000 to 100.000 per year.
- Facilitation to obtain the visa and residency for highly qualified workers of the startups and non-resident Spanish workers for at least five years.
- The period in which the company is considered to be newly created is increased to five years or seven in certain sectors.
If your startup fits in the definition given by this new Law, we suggest that you take a look at all the information and news that it brings, as they can be really useful for your project.