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WORKING IN SPAIN

The requirements for Spain’s new Startups Law

Foreign entrepreneurs waiting for Spain's highly anticipated Startups Law to come into force should know that the legislation comes with some requirements. The Local has outlined the major ones here.

Published: 1 August 2022 15:46 CEST
The requirements for Spain's new Startups Law
Photo: Pixabay.

Spain’s new Startups Law (Ley de Startups), which the Spanish government first announced all the way back in 2019, could finally come into force as early as September 2022, as indicated by Economy Minister Nadia Calviño, although Spanish media outlets are reporting that it is more likely to be early 2023.

The legislation is a recalibration of the well-known ‘Beckham Law’.

The original measure was a tax-decree aimed at foreigners living in Spain created in 2005 that got its name due to the famous England and former Real Madrid footballer David Beckham being one of the first people to take advantage of it. 

Regardless of when the new legislation actually comes into force for the first time, Spain will finally have a law directly aimed at the particularities of small technology-based companies.

The new ‘Startups Law’ hopes to attract foreign companies and talent, making it easier for startups to choose Spain by giving them incentives such as tax reductions. 

READ MORE: Spain’s new tax rates for the self-employed from 2023 onwards

Who will be able to benefit from Spain’s new Startups Law?

The Startups Law is open to anyone from the EU or third countries, as long as they haven’t been resident in Spain in the five previous years. It will allow them to gain access to a special visa for up to five years. 

This visa will be open to executives and employees of startup companies as well as investors and remote workers, in addition to their family members.

Self-employed workers will have three chances to make it work

The failure of a business is something that is being contemplated for the first time in legislative text in Spain.

The startup bill will make serial entrepreneurship easier, meaning that a freelancer who has started a business which ultimately doesn’t work, can try again and can continue to benefit from the advantages. Specifically, entrepreneurs are allowed to benefit from the Startups Law up to three times.

Deduction in Corporation Tax 

It will give startups and investors a reduction in Corporation Tax from the current 25 percent to 15 percent. 

The elimination of obstacles for foreign investment 

One of the main problems foreign investors encounter when they want to invest in a Spanish startup is bureaucracy.

As a result of this, the new law aims to eliminate the obligation for international investors to request a NIE (foreigner ID number) to carry out this type of business. Both investors and their representatives will only need to obtain Spain’s tax identification numbers (NIFs).

Fortunately for budding entrepreneurs, the Startups Law will work retroactively, meaning that those who have started a new company before the legislation comes into force (expected in September but not confirmed) can benefit from its advantages provided they meet the requirements. 

The new law does have some specific requirements, however. You can find a full Spanish government summary of the legislation here, but The Local has outlined the major criteria for you below.

READ ALSO: The tax cuts and other benefits Spain’s new Startups Law will bring to entrepreneurs

Requirements

Up and coming companies 

Companies wanting to take advantage of the new Startup law must be relatively new companies – founded in the last five years. They also must not have been created as part of restructures or rebrands, or have been divisions of another company or acquired through mergers.

In the case of startups in the biotech and energy sectors the limit is extended slightly to seven years.

Innovation

Start-ups must be considered innovative. The business must be trying to solve a problem or improve an existing situation. An agency will be created to accredit both this status and that of an ’emerging’ company: ENISA.

Dividend distribution 

Start-ups benefiting from the new law must not distribute dividends for as long as the law is in force. Furthermore, for tax purposes, the start-up must be permanently based in Spain.

Spanish contracts

Similarly, 60 percent of a company’s workforce must have employment contracts in Spain. 

Turnover 

To qualify for the new start-up law and special visas that come with it, companies must not exceed an annual turnover of €5 million.

Stock market

To qualify for the law, companies must be unlisted on the stock market.

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SPAIN AND THE US

Spain and the US sign new pensions and social security agreement

The Spanish government has made an agreement with the United States to improve pensions calculations and social security protections for workers who have worked and spent time between both countries.

Published: 9 April 2024 11:44 CEST
Spain and the US sign new pensions and social security agreement

Spain and the United States have signed a new agreement that improves the way in which pensions are calculated and extends social security protections for people who have lived and worked in both countries.

Spain’s Minister of Inclusion, Social Security and Migration, Elma Saiz, presented the agreement with U.S. Ambassador to Spain, Julissa Reynoso, at the formal signing on Monday.

The new deal updates the first bilateral agreement between the two countries, signed back in 1986 and in force since 1988.

Americans are increasingly moving to Spain to live, and the relaxed pace of life and relative affordability compared to many parts of the U.S. attracts pensioners in particular. In late 2022 there were 41,953 US nationals officially residing in Spain, according to Spain’s national statistics agency (INE).

READ ALSO: Where in Spain do all the Americans live in 2023?

The new deal will also benefit many of the hundreds of thousands of Spaniards living in the US. The United States is the third country in the world with most Spaniards living there, behind Argentina and France. As of 2023 there were 192,766 Spaniards living in the U.S, according to INE figures. 

At the signing, Saiz said that “thirty-six years after the signing of the first agreement, we are taking another step forward in promoting international labour mobility, which will undoubtedly be a powerful lever to continue stimulating our bilateral economic activity.”

The Minister emphasised that the deal will have an “impact on the lives of hundreds of thousands of workers”. Among the changes, the new agreement allows for the easier application and implementation of social security benefits in the two countries, eliminates coverage duplication, provides relief from double taxation and avoids gaps in the social security system for many workers.

According to a government statement: “The main changes included in the new text effect, firstly, the calculation of Spanish social security pensions, which will be more beneficial. From now on, there will be two pension calculations. The first will be based solely on contributions in Spain, and the second will add the time contributed in the United States.”

After comparing the two calculations, the more favourable one will be paid. This benefits pensioners, the government says, because “until now, if you were entitled to a pension only with contributions in Spain, the benefit was paid without the second calculation being made by adding the contributions in the United States, even though it could have been higher.”

“In addition, the calculation of the regulatory base for benefits has been improved when contributions from Spain and the United States are added together, based on the actual contribution bases prior to the last working day in Spain.”

This will especially impact those who spent the latter part of their working lives in the United States.

The agreement also makes improvements for self-employed workers abroad, and extends the period for self-employed and employed workers posted abroad to 5 years, extendable by a further 2 years in exceptional circumstances and subject to authorisation by the relevant social security system.

It also includes civil service and military pension schemes in the scope of the agreement.

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