The Government boosts the Spanish ecosystem of emerging companies and attracts talent with the launch of the Startups Act public hearing
05/07/2021
The Ministry of Economic Affairs and Digital Transformation, through the Secretary of State for Digitalization and Artificial Intelligence, publishes in public hearing the Preliminary Draft Law on the Promotion of the Ecosystem of Emerging Companies, the so-called Startup Law. The preliminary project is aimed at promoting the creation and relocation of emerging companies in Spain with the aim of continuing to attract talent and international capital for the development of an entrepreneurial ecosystem with an innovative vocation in our country. This text establishes a specific framework for these companies, responding to their uniqueness and the main demands of the sector, in order to give visibility at a global level to the Spanish ecosystem of emerging companies, attract investment and talent.
The Ministry of Economic Affairs and Digital Transformation, through the Secretary of State for Digitalization and Artificial Intelligence, publishes in public hearing the Preliminary Draft Law for the Promotion of the Ecosystem of Emerging Companies, the so-called Startups Act. The preliminary project is aimed at promoting the creation and relocation of emerging companies in Spain with the aim of continuing to attract talent and international capital for the development of an entrepreneurial ecosystem with an innovative vocation in our country. This text establishes a specific framework for these companies, responding to their uniqueness and the main demands of the sector, in order to give visibility at a global level to the Spanish ecosystem of emerging companies, attract investment and talent.
With this new regulatory proposal, the Government intends to regulate and flexibilize all the activities that emerging companies have to carry out with the Administration throughout their life cycle, particularly in its early stages, due to the number of procedures involved in the development of an innovative company of recent creation and that penalize it with respect to other SMEs in aspects such as taxation or the processing of visas whose regulation is contemplated by the new Law.
The text submitted to the audience is addressed to all new companies or entrepreneurs and groups of “emerging” companies, with headquarters or permanent establishment in Spain, that have not distributed dividends, unquoted and innovative in nature. The Law sets out the criteria for innovation, encompassing the concepts that have existed up to now in different standards of “technology-based companies”, “innovative SMEs” or “young innovative companies”.
This Preliminary Project seeks to stimulate investment and the attraction of talent, promote collaboration between SMEs, large companies and emerging companies, promote R+D+I, also in the Administration through innovative public procurement, and promote the collaboration of emerging companies and entrepreneurs with universities and research centers.
Boost to talent
The bill seeks, among other issues, to give visibility to the Spanish startup ecosystem, to attract talent and capital and to stop the brain drain.
In this sense, important tax and fiscal measures are incorporated to promote the attraction of international talent and favor the creation of digital hubs in Spain. Thus, for startups, the tax rate on corporation tax and income tax on non-residents is reduced, from the general rate of 25% to 15% in the first tax period in which the tax base is positive and in the next three whenever it maintains the qualification of emerging company.
It also includes the possibility for startups to request the postponement of corporate tax or non-resident income tax debt in the first year in which the tax base is positive and in the following year, with no guarantees and no accrual of interest of delay, for a period of 12 and 6 months respectively.
In this same line, it is worth highlighting the measures favorable to the stock options. In particular, the amount of the exemption is increased from 12,000 to 45,000 euros per year in the case of delivery by startups of shares or participations derived from the exercise of purchase options and the conditions of generation of self-portfolio in limited liability companies are relaxed.
Finally, another of the great advances included in the Preliminary Draft is the one related to the “digital nomads”. On the one hand, with the creation of a specific tax regime so that these people in teleworking displaced to Spanish territory are subject to the tax on the income of non-residents, relaxing the requirements to access this regime (passing from 10 to 5 years the requirement of not being a tax resident in Spain) and extending the period of their enjoyment from 5 to 10 years. And, on the other hand, creating a specific visa for people working in Spain for a foreign company.
Investment promotion
This Preliminary Draft Law on the Promotion of the Ecosystem of Emerging Companies has among its great objectives the promotion of investment in the entrepreneurial ecosystem of Spain. Therefore, the maximum deduction base for investment in new or newly created companies is raised (from 60,000 to 100,000 euros per year), the deduction rate (from 30 to 40%), as well as the period in which it is considered newly created that rises from 3 to 5 years, in general, or to 7 for companies in certain sectors.
Administrative agility
In order to facilitate and speed up entrepreneurial activity from the public administrations, the obligation to make fractional payments of corporation tax and income tax on non-residents is eliminated in the 2 years following the one in which the tax base is positive.
In addition, the Preliminary Draft includes the non-obligation to obtain the Foreign Identification Number (NIE) for non-resident investors, requiring only that both they and their representatives obtain the Tax Identification Numbers (NIF).
On the other hand, taking into account that the failure of an emerging company must be accepted as a normal fact, the procedures for the cessation of activity are expedited, which will be completed electronically.
Finally, a general and basic regulation is made on regulated test environments based on the recent successful experience of the sandbox of the financial sector. In this way, the creation of controlled environments will be promoted, for limited periods of time, to evaluate the usefulness, viability and impact of technological innovations in the different sectors of productive activity.
A more digital Spain
The implementation of this Law responds to the weight that has been gained by entrepreneurship based on