The Council of Ministers approved this Friday the Bill of Startups that establishes a battery of fiscal measures, the elimination of bureaucratic obstacles, the flexibility of procedures and the articulation of mechanisms, such as a visa for digital nomads that may be of up to five years, aimed at attracting talent and investment, supporting fast-growing and technology-based companies and facilitating digital nomads and international teleworkers to establish themselves in Spain.
When does it come into force?
From now on, the parliamentary procedure for the final approval of the law and its entry into force begins, which the Government anticipates for the summer of 2022. If this scenario is met, the visa for digital nomads could already come into force in June, an issue for which many non-EU remote workers have been interested in recent months with the aim of including Spain among their destinations to work and settle in the country temporarily. However, this Law will also entail numerous improvements in taxation and the contribution for the entrepreneur.
The negative scenario of the deadlines, also mentioned by the first vice president of the Government, Nadia Calviño, places the final approval of the law and its entry into force in September.
The approved bill has been improved with respect to the draft approved last July after undergoing a public hearing, listening to the entrepreneurial ecosystem and incorporating their observations and claims. For example, the first 100,000 euros of investment in a startup will be tax-free and corporate tax is reduced to 15% for the first four years.
Main new items:
Tax incentives
• In tax matters, the first 100,000 euros of investment in a startup will be tax-free, not only for the investor or business angels but also for the entrepreneur himself. There will also be a 50% investment deduction in the first five years of the company's life. The deduction will be for seven years if it is a biotech company.
• Non-resident investors in Spain will only need to have a Tax Identification Number (NIF) and not a NIE (Foreigner Identity Number).
Digital nomads: visa for five years
• The law will streamline visa processing for digital nomads who come to work for a Spanish startup, work independently or are digital entrepreneurs.
• Specific visas will be launched for these profiles, which will also benefit from favorable taxation and a lower tax rate. The tax regime of the Non-Resident Income Tax applicable to managers and employees of startups, investors and digital nomads (people in situations of telework temporarily displaced to Spanish territory) and their family members, who will be able to access a special visa of up to five years.
• This favorable regime also extends to Spaniards who have been non-residents in Spain for at least five years and their period of enjoyment is extended from 5 to 10 years, and the family can benefit from it.
"The bill establishes a more favorable and agile special procedure to obtain a visa and residence for reasons of telework and highly qualified work (...) They are important means to attract digital nomads," said the Minister of Economic Affairs and Transformation Digital, Nadia Calviño, at the press conference.
Serial entrepreneur
• The figure of the serial entrepreneur is included. In this way, the same entrepreneur will be able to enjoy benefits in up to three different business projects that he carries out in parallel or consecutively.
Advantages for companies
• The tax rate and the Non-Resident Income Tax are reduced for startups.
• The general rate is reduced from 25% to 15% during the first four years since the tax base is positive. The requirement for this is that the status of emerging company be maintained.
One-stop-shop
• A single window will be created to channel startup projects.
• The startups may request the postponement of the tax debt of the Corporation Tax or the Non-Resident Income Tax in the first two years as long as the tax base is positive, without guarantees or late payment interest. You will no longer have to make installment payments in individual taxes during that period of time.
No double contributions
• The double contribution to Social Security is eliminated for entrepreneurs who simultaneously maintain a job as an employee. In other words, the person who works for third parties and starts a startup project will not have to quote twice (as an employee and as a self-employed person).
Create a startup in 6 hours without leaving home
Facilities will be implemented in the management of procedures so that a startup with standard statutes can be established in 6 hours and digitally, without physical travel to any office. This agility in time and in the way of creating a company will revert to an increase in investments in Spain, given that it is one of the aspects most demanded by the sector. It should be remembered that the bureaucracy in Spain is one of the negative aspects of perception abroad.
Stock options
The new law facilitates the use of stock options as a form of remuneration. The exemption from taxation such as income from work to these stock options in startups is increased to 50,000 euros per year. Their holders will only have to earn them when they are liquidated.
Carried interest
Nothing was mentioned in the draft bill about this fee that venture capital managers get. Under the new bill, they will enjoy a 50% exemption without limit and as income from work.
The startups bill is called to be the legal tool for undertaking, working and investing in the technology and innovation sector in Spain to be attractive for Spanish and international professionals. The objective is to place Spain in an advantageous position in the dispute between countries for the global battle for talent. In Calviño's words, with this law "Spain will be among the most attractive countries for startups and for attracting high value-added talent."
