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WORKING IN SPAIN

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

PROPERTY

Spain unclear how it will legally cancel golden visa scheme

Spain's government still isn't sure how it will cancel its golden visa scheme through property investment two months after the announcement, with ministers hoping they can slip the amendment through parliament in an unrelated bill.

Spain unclear how it will legally cancel golden visa scheme

In April of this year, Spain’s socialist government announced it would be scrapping its property-based golden visa, a scheme that grants non-EU nationals residency in Spain when they buy real estate worth €500,000.

However, it’s finding it difficult how to actually legally approve this move and pass it through parliament.

It’s worth noting that the visa is still available for those who invest €1 million in shares in Spanish companies, or €2 million in government bonds, or who have transferred €1 million to a Spanish bank account, but it will no longer be available for those who want to buy property. 

READ ALSO: When will Spain’s golden visa scheme officially end?

The Spanish government had initially agreed that the cancellation of this visa through property investment would be included in the land law, known as the ‘Ley del Suelo’ in Spanish, but it was withdrawn from the agenda in parliament as it did not have the necessary support to move forward.

The Ley del Suelo regulates the use and valuation of land, establishing a legal framework for urban development that balances both private interests and collective well-being.

Essentially the golden visa was just going to be a small part of regulating this law, but because it was withdrawn in anticipation of another parliamentary defeat for the Socialists, the intention now, according to sources from the Ministry of Housing headed by Isabel Rodríguez, is to ‘slip in’ this amendment to one of the other laws currently being processed in parliament. 

It’s not unusual for Spanish ministers to add an enmienda (amendment) to a bill that has nothing or little to do with the crux of the law being processed.

Only last May, Pedro Sánchez’s party added an amendment which eased the requirements for decrees to be approved to the Gender Parity Law, which focuses more on equal pay and work rights between men and women.

READ ALSO: Chinese investors rush to buy properties before Spain’s golden visa ends

To accelerate the elimination of the property-based golden visa, Rodríguez’s team are now assessing various regulations being processed in parliament, with special attention paid to those that have more guarantees of being approved by opposition MPs.

READ ALSO – Spain’s soon-to-end golden visa: Can I still apply and what if I have it already?

Spain’s golden visa has long been controversial, with many blaming it for adding to the housing crisis. Junior coalition partner Sumar’s spokesperson, Íñigo Errejón said back in May that these visas are a privilege that must be scrapped “immediately”.

He said that they have an inflationary effect on the housing market, adding that other countries such as Ireland, Portugal and Greece have already taken similar measures in order to not become “tourist colonies” or “money laundering” locations.

According to data from the Ministry of Housing and Urban Agenda, between 2016 and January 2024, 10,528 ‘golden visas’ were granted in Spain. This figure rises to 14,576 if those granted between 2013 and 2023 are taken into account.

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