Everything You Need to Know About Spanish Start-Up Law

This is good news for those foreign and Spanish locals who are gearing up to start a new business in Spain or want to work there remotely. The Spanish Start-up Law is an initiative promoted by the Spanish Government as a part of a national plan of becoming a country that promotes entrepreneurship and startups. This law represents a first step that will help stockholders, entrepreneurs, and professionals from all around the globe to invest, work and reside in Spain.

What is a Start-Up Law?

If you don’t know precisely what start-up law, take it easy, we will guide you. So, let’s get started. The Spanish government established this new regulation that aims to ease the start and growth of creative, technology-based businesses in Spain. This startup law is a groundbreaking ruling that wants to make Spain a reference for entrepreneurship. The Spanish administration designed this law to form a legal business setting for the up-to-date market needs through a course of tax inducements, promising procedures, exclusion of bureaucratic complications, and resilience in various measures. 

A Big Step for Start-ups: A Definition and a Common Ground Established

This aspiring strategy to transform the economic affluence of the country looks quite significant, emphasizing main domains like tax breaks for stakeholders, talent motivations, and a new digital migrant visa to entice technology experts globally, along with lessening the stretch and outlay of a startup in Spain. 

This law starts by defining what constitutes a startup and what does not. Therefore, it looks to become the essential foundation for determining when a business owner can benefit from all the advantages and benefits offered by this new rule. This step becomes more meaningful when we consider that in Spain, new businesses are currently subject to the same commercial regulations that apply to established businesses of all sizes and types. 

With this new regulation, the law will classify as a startup those companies that: 

  • Have yearly revenue of under 5 million euros. 
  • Are under the age of five, or seven in the case of industrial companies, belonging to a strategic sector, or that have developed their own technological projects.
  • Have a technological foundation and an innovative character. 
  • Don’t pay dividends and are not listed on the stock exchange.
  • Have internal structures that promote meritocracy.
  • Are working in a market niche. 
  • Improve the sustainability and effectiveness of other sectors.
  • Entice talent and investment from elsewhere.
  • Established its headquarters and the majority of its staff in Spain.

A Favorable Tax Regime for Start-Ups

The most notable advantage of this law it’s a good tax regime for startups. For new businesses, establishment tax will be lessened from 25% to 15% from the start of the business till its fourth year. Foreigner stockholders and workers can also be benefited from a similar lessening of foreign income tax, similarly for the initial four years. Also, all taxpayers in Spanish new businesses will be allowed to postpone the payment of income tax without interest consequences for six months.

Related:  Start Scaling Your Startup: 6 Funding Options to Raise Capital

Less Bureaucracy, More Efficiency

The law is intended to ease administration for startups and their workers. The digital nomads or those who relocated to Spain to work online for an overseas corporation will be able to receive a 1-year residence permit with the option of renewal for 2 more years (and so on). 

The government also intends to develop a particular residency permit for those employed by foreign businesses with offices in Spain, particularly those in the audiovisual industry.

Furthermore, the government intends to form an explicit residence certification for individuals employed in an overseas business located in Spain.

The Spanish Start-UP Law: A Big Challenge For Spain

Some professionals doubt start-up law and consider its procedures to be inadequate. Of course, some are deliberately looking for disadvantages of start-up law as it is accompanied by a ten-year tactic. The resolution provides some seriously inspected changes in the early version. If successful, the law will empower Spain to advance alongside the most striking countries in Europe to attract entrepreneurship, businesses, and talent, putting it at the vanguard of the entrepreneurial world.

If you´re seeking talents for your business, or want to hyper grow your company, let’s have a coffee. We can guide you along your path of scaling up your business with the best C Level professionals in the market.

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