Since 1 January 2023, the Start-up Law has been in force. Many of the measures that we discussed in previous posts have been approved and in December 2022 Law 28/2022, of 21 December, on the promotion of the start-up ecosystem, more commonly known as the “Start-up Law”, was published in the Official State Gazette (BOE).
Let’s take a look at the approved measures and all the benefits they bring:
What requirements are needed to be considered as a start-up?
This law does not affect all start-ups; as to be considered a start-up, a new company must meet a series of requirements.
A start-up is a newly created company with great growth potential that goes to market quickly in search of financing. The requirements to be considered a start-up under the Spanish Start-up Law are:
- Companies with an innovative value proposition, generally digital. In other words, companies that develop new or improved products or services.
- Newly created companies or companies that have been in existence for up to 5 years in general or 7 years in strategic cases, such as biotechnology, energy and industrial companies.
- Companies with headquarters or registered office permanently established in Spain and with 60% of the workforce employed in Spain.
- Companies that have not distributed dividends and are not listed on any stock market.
- Companies with an accumulated turnover of a maximum of 10 million euros.
What are the main keys to the new Spanish Start-up Law?
The Start-up Law has a number of flexible measures that facilitate the creation of start-ups.
1) Administrative simplification
- Establishing a one-stop, telematic window for the certification of these companies.
- Eliminate notary and registry fees in the case of limited companies and companies set up electronically.
- Eliminate the requirement to obtain a foreigner’s identification number for non-resident investors, requiring only the NIF.
- Facilitate visa and residency for highly qualified workers and non-resident Spanish workers for at least 5 years.
2) Tax incentives
In order to encourage investment and attract international talent, the Start-up Law contemplates the following measures:
- Reduction of the tax rate on Corporate Income Tax and Non-Resident Income Tax, from the general rate of 25% to 15% in the first four financial years since the taxable base is positive.
- Increase in the amount of the tax exemption for stock options from 12,000 to 50,000 euros per year and relaxation of the conditions for the generation of treasury stock in emerging companies, preventing them from being dissolved due to losses until 3 years have elapsed since their incorporation.
- Increase in the maximum deduction base for investment from 60,000 to 100,000 euros per year and the deduction rate from 30% to 50%.
- Extension of the period in which a company is considered to be newly created, from 3 to 5 years in general or 7 years for companies in specific sectors.
- 100% reduction of the contribution to the Special Regime for Self-Employed Workers for corporate self-employed workers who continue to be employees.
- Possibility of applying for temporary trial licences for one year.
- Elimination of the obligation to make payments in instalments of Corporate Income Tax and Non-Resident Income Tax in the 2 years following the year in which the taxable base is positive.
Finally, as a significant measure to attract international talent, a new visa has been created for digital nomads or remote workers relocated to Spain.
Who exactly is the new visa for digital nomads for?
There are three different profiles of foreigners who could benefit from the new residence permit:
- Foreigners who work remotely from Spain for a company outside Spanish territory.
- Those known as “digital nomads”, people who in many cases have different sources of online income and who travel from one country to another.
- People who work in a foreign company located in Spain.
What are the benefits of this law?
- New residence permit
If the foreigner complies with the requirements, it will be easier to obtain residence in Spain. We must distinguish between two scenarios:
- Apply for residence as a digital nomad directly from Spain, during the first 90 days of the tourist visa.
Once approved, you will get a residence card for 3 years (unless you apply for a shorter period), which can be renewed every 2 years. You can then apply for long-term residence after 5 years, and for nationality after 10 years.
- Start the application at the Spanish consulate in the country of origin.
In this case, you would first obtain a 1-year visa that could later be modified to a 3-year residence card.
Advantages of this visa:
- it falls under the Entrepreneurs Law or Law 14/2013. This is means that its resolution must be express, in only 20 working days (rather than 3 months for permits under the general regime).
- The applicable administrative silence is positive, so if no notification is received after these 20 days the application will be considered as approved.
- Family members can be included in the application, and they can also obtain residence.
- It will allow working for a company or client in Spain (not only abroad), as long as the income of this Spanish company does not exceed 20% of the total turnover.
- Tax benefits
- Access to a very favourable tax regime, that of non-resident income tax (NRIT). This would mean a reduction in the tax payable. Up to 600,000 euros, only 24% is taxed on income derived from work, instead of paying a progressive rate of up to 48%.
- The conditions for accessing this reduced rate tax (the (NRIT)) are lowered, with the required period of non-residence for tax purposes in the country being reduced from 10 to 5 years.
- This special tax regime can be applied for up to 6 months after obtaining the authorisation of residence as a digital nomad; and it can be enjoyed for 5 years (after which it will be transferred to the general regime).
What are the requirements for applying for the digital nomad visa?
- Non-EU citizens (from outside the European Union) who are carrying out: (i) an employment activity as an employee under contract with a company established outside Spain; or (ii) a professional activity. If the interested party carries out a professional activity, the law allows the holder of the authorisation for international remote working to work both for a company located outside Spain and for a company located in Spanish territory. In the latter case, the percentage of the work should not exceed 20% of the total professional activity.
- The academic and professional profile of the applicant must be sufficient: either (i) graduate from a reputable university or business school; or (ii) demonstrate previous experience of at least 3 years.
- Prove that the position allows remote working and that the company authorises it.
- Demonstrate that there is a continuous employment relationship (at least three months) with the company for which you are working remotely.
- The company or companies with which the remote worker establishes a relationship must have been operating in the market for at least 1 year.
- Prove that there is a real and continuous activity of at least 1 year, but in this case with the company or companies with which you have the professional relationship.
- Demonstrate possession of sufficient financial funds: approx. €25,000 in a bank account (can be foreign); or receipt of a higher salary or equivalent.
In addition, there are also the general requirements applicable to all other residency applications:
- Criminal record certificate with a minimum validity of 90 days.
- Responsible declaration of the absence of criminal record in the last 5 years.
- Not being banned from entering Spain.
- Private health insurance.
- Fee payment.
Do you want to get a visa for digital nomads in Spain?
At Marc White & Co. we have a team of experts in international worker mobility. Among the services related to the visa for digital nomads, we can help you with issues such as:
- Preparation of the dossier and support in the drafting of documents.
- Electronic submission of the Digital Nomad Visa application.
- Review tax implications.
Get in touch with us today.
This post was written by Pilar Cerrutti