For members


New details: Spain’s rules and benefits for foreign startups

Spain recently approved its new Startups Law, with one of the aims being to get overseas investors and new companies to set up shop in the country. Here is the latest information on the requirements and benefits for these foreign startups.

New details: Spain's rules and benefits for foreign startups
Spain's new Startups Law. Photo: Austin Distel / Unsplash

Spain’s new 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 non-EU applicants to gain access to a special visa for up to five years. 

The law came into force in early 2023 and gives both startups and digital nomads several benefits.

For the purposes of this article, we will focus specifically on the rules and requirements for startup companies.

For those wanting to find out more about Spain’s digital nomad visa, click here

If you’re thinking about moving to Spain to create a startup company, there are several rules and requirements you should keep in mind to see if you’re eligible. 

Firstly, your company must be legally registered in Spain. This means having a registered office or headquarters established in Spain.

But what exactly does Spain define as a startup? Basically, if you want to apply for a residency visa through the Startups Law, then your company must have been created or registered within the previous five years. If your company is older than this, it is no longer considered a startup and you will not be eligible for this type of visa or the associated benefits. The period is extended to seven years for those startups in the industrial, biotechnology or energy industries.

If you are employing other workers, you must make sure that at least sixty percent of your workforce has an employment contract within Spain. It means that you can hire remote workers in other countries, but the majority of them need to be in Spain, creating more jobs on Spanish soil.

Your startup company must not be the result of a merger or a subsidiary or transformation of another company. This means that your company has been newly created or established and that it hasn’t existed previously in a different form.  

The company must not be listed on the regulated stock market and it must not distribute dividends either. 

What are the tax benefits?

Besides being able to get residency in Spain, the Startups Law allows companies to benefit from several tax breaks.

Startups will be able to pay non-resident tax rates or IRNR, rather than the regular tax rates for residents. The IRNR tax rate is generally 25 percent, but for startups that meet the above requirements, the rate will be reduced to 15 percent in the first tax period in which the company makes a profit, as well as the following three tax periods or the first four years.

This will be dependent on them continuing to meet all the rules.

READ ALSO: Your questions answered about Spain’s digital nomad visa

The new law also aims to eliminate the obligation for international investors to request an NIE (foreigner ID number) to carry out their business. Both investors and their representatives will only need to obtain Spain’s tax identification numbers (NIFs).

Startups will no longer be eligible for reduced tax rates if:

  • The startup earns a net profit of over €10 million.
  • It is acquired or bought out by another company that doesn’t meet the rules.
  • It is no longer considered a startup because its older than five years or seven years in the case of industrial, biotechnology or energy industries.
  • The company ceases to exist.
  • The company causes environmental damage which goes against the EU Regulation 2020/852 of the European Parliament and of the Council of June 18th, 2020.
  • Anyone who has at least a five percent stake in the company or that amount in shares is convicted of a criminal offence laid out in the Start-Up Law.

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For members


How self-employed workers in Spain can request sick leave

In many countries in Europe, including the UK, if you’re a self-employed, you simply won’t get paid if you get ill, but in Spain you can be.

How self-employed workers in Spain can request sick leave

This is good news for autónomos or freelancers in Spain, one of the toughest countries in Europe to be self-employed. 

This is mainly because, from the first euro you earn, you must pay taxes, plus a monthly social security fee. The fee now depends on how much you earn, but roughly it ranges from €230 for low earners, €320 for mid-earners, and €500 for high earners. 

READ ALSO: Self-employed in Spain: How to calculate your monthly social security fee 

Yes, freelancers in Spain pay a lot out, but there are several benefits they get in return, one of these is sick pay, if you fall ill or have an accident for example.

Whether you have multiple clients, own your own business or just freelance for one main company you will be entitled to paid sick leave in Spain if you’re self-employed. 

Spain’s Social Security office explains that, if due to illness or an accident, someone cannot temporarily carry out their own work, both the necessary health care and an economic benefit may be requested.

READ ALSO: Everything that changes for self-employed people in Spain this year 

How does it work?

If you get ill or have an accident that is not work-related, you will only be entitled to receive pay from the fourth day of leave.  

In order to benefit, certain requirements must be met:

  • You must be registered with the Régimen Especial de Trabajadores Autónomos or RETA. This is the Special Regime for Self-Employed Workers that you will have signed up for when you first became freelance in Spain. 
  • You must also be up to date with all Social your Security payments. 
  • You must have contributed to Social Security for a minimum of 180 days in the 5 years prior to the illness or accident.

The maximum period that you can benefit from temporary leave is 12 months, with periodic medical check-ups. However, an additional extension can be given for a maximum of six months.

READ ALSO: How to hire someone if you’re self-employed in Spain 

How to request sick leave?  

  1. The first step is to go to your doctor and request a ‘baja’ or leave from work. If they feel it’s justified or necessary, they will give you an official sick leave form. 
  2. You will also need to inform your Mutua or Mutual Society, which covers you in these types of events. You can find out which Mutua you belong to by looking at your original RETA confirmation document when you signed up to be autónomo
  3. Next, you must fill out an official Social Security document. Here, will have to specify why you are on leave and explain the situation. While you can download this form online, unfortunately, you will have to physically go to the Social Security or Mutual Insurance offices to present it with your corresponding documentation. In the event that your illness prevents you from doing so, you can authorise another person to do it for you, however, they must take a certified photocopy of your ID card such as your TIE.  

How much sick pay will I receive?

In the case of leave due to a common illness or an accident that wasn’t at work, you will be paid 60 percent of the self-employed regulatory base (the average amount you earn per month). You will receive this from the fourth to the twentieth day of leave. If your illness lasts longer than 20 days, this will go up to 75 percent of the same base.

If you are ill for a long time, remember, however, you must still keep paying your social security fee during the first two months of leave. This means that you will receive even less sick pay because you have to pay your contribution fee from it too. The fee will not have to be paid after the first 60 days. 

Work-related accident or illness 

If the disability is due to an accident at work or a disease derived from your job, no prior Social Security contribution period is required. You will be entitled to sick pay on your first day of leave.

Again, you must visit the doctor and contact your Mutua, and fill out the necessary forms from Social Security.