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Startup Law in Spain: what it consists of and how it will affect the digital sector - Start Up Gazzete
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Startup Law in Spain: what it consists of and how it will affect the digital sector

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Startups are the companies of the moment, projects born in the current technological environment and with innovative proposals, adapted to new demands. They have become one of the fastest growing economic sectors in recent years and in Spain, the startup ecosystem has emerged as a key to the recovery of the economy, after the crisis of 2020.

However, despite the opportunities that these types of companies show, current legislation does not particularly favor their development. For this reason, a new bill has been initiated to help soften the fiscal aspects of these companies and promote their growth and creation.

This past Tuesday, the Council of Ministers approved the draft of a new startup law, focused on promoting the creation of new companies of this type. Now this project will be submitted to the public hearing, in order to receive contributions to conclude a more adequate and complete law for its use.

Specifically, the main idea shown in this preliminary project is to promote the creation of new startups, as well as the attraction of emerging companies and investors, with the idea of ​​generating an environment conducive to the arrival of new talents associated with this sector, and thus also avoid brain drain to other countries. All this as part of the Recovery and Resilience Plan to retake the Spanish economy.

What the new startup law offers

This draft law offers a series of tax benefits. In the first instance, it proposes a reduction of the corporate tax rate from 25% to 15% up to a maximum of four years. On the other hand, it proposes a reduction of the deduction fee for investors from 40% to 30%. In addition, the maximum deduction base for investment in newly or recently created companies is raised to 100,000 euros per year, as well as the type of deduction (at 40%) and the period covered (which goes to 5 years for all sectors and up to 7 years for companies in the fields of biotechnology, energy and industry).

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Finally, the possibility is included for startups to request the deferral of the tax debt of the corporation tax or the income tax of non-residents in the first fiscal year in which the tax base is positive and in the following, with exemption of guarantees. and without accrual of late payment interest, for a period of 12 and 6 months respectively.

Additionally, it is planned to generate a special visa for digital nomads, teleworkers that will help feed the new startup ecosystem, as well as the option to buy shares in startups, among other actions.

A definition of a startup that is not widely accepted

Just as the approval of this draft represents a great step towards creating a better ecosystem for startups in Spain, it has also led to some controversy. In this case, in reference to the fact that several of the measures or definitions presented, fall short for the current panorama in this sector of the economy.

One of the points discussed that some of the referents of the national entrepreneurship scene discuss is the definition of startup used. This is limited to companies with 5 or less years of experience and a low turnover, no more than 5 million euros. For them this definition, while covering the most recent growing startups, leaves out some older ones. In addition, it does not support the development of already growing startups that might seek to join Glovo or Cabify, as new unicorns.

However, the idea of ​​this draft is precisely to generate the framework to create a more solid and effective proposal when the legislation is properly presented. Therefore, we can expect that some changes will be incorporated within these characteristics, which will adapt to the demands of those immersed in this sector.

Author avatar
Joshua Smith
https://startupgazzete.com

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