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BUSINESS

Tax cuts and visas: Spain’s new law for startups, investors and digital nomads

The Spanish government approved its Startups Law on Friday, which aims to attract startups, foreign investors, and remote workers with special visas and tax incentives. Here's everything you need to know.

Published: 9 July 2021 11:23 CEST
Updated: 15 December 2021 11:43 CET
Tax cuts and visas: Spain's new law for startups, investors and digital nomads
Stock photo: Maria Tan/AFP

The new Startups Law hopes to attract foreign companies by making it easier for startups to choose Spain by giving them tax reductions. 

It also aims to entice foreign remote workers and digital nomads to Spain by creating a new special visa for them. 

“This law will put Spain at the forefront in the creation of these companies,” said Second Vice President and Minister of the Economy, Nadia Calviño, adding that it comes “at a time when there are more and more entrepreneurial digital nomads and investors who can work from anywhere in the world”. 

Although the law will still have to go through another round of government approval, sources from the Ministry of Economic Affairs indicate that it will finally be passed by summer 2022. 

What are the tax breaks for startups and investors? 

The proposed law is good news for startups, which will be able to benefit from reduced tax rates. 

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

It will also allow remote workers to be able to pay Non-Residents Tax (IRNR). Until now the IRNR was only levied on the income earned in Spain, by both individuals or companies, who are not residents or established in Spain. This means workers and companies who obtain income in Spain, but do not stay for more than 183 days.

The IRNR tax rate for people with annual incomes of up to €600,000 is around 24 percent.

Those who request to submit to this tax regime would have to prove their status as international remote workers.

What are the other advantages for startups and investors?

  • New companies will be able to register digitally and will be incorporated within a period from six hours to up to five days. 

  • The maximum deduction base for investment in newly or recently created companies is raised from €60,000 to €100,000 euros per year and the type of deduction goes from 30 to 50 percent.
  •  In addition, the period that is considered ‘recently created’ for eligible companies will go up from 3 to 5 years old. For biotechnology, energy or industrial companies, the bracket is wider: 7 years.
  • The Spanish government has added favourable conditions in terms of stocks by raising the tax exemption rate from €12,000 to €50,000 per year for shares or participation invested in new or recent startups.
  • Non-resident investors no longer need to get a foreign identification number (NIE). Both they and their representatives need to only now obtain Spanish tax identification numbers (NIF).

In 2015, Spain was ranked among the worst countries to start a business in, so hopes are that the new law will change this. 

Photo: Gino Crescoli from Pixabay

Who will be able to benefit from this?

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 startups, investors, and remote workers, as well as family members. 

What about digital nomads and remote workers?

The new law also proposes the creation of a special visa for digital nomads and remote workers who wish to work from Spain. 

To be eligible, they will have to prove their status as a remote worker and will also be able to access the visa for up to five years. However, they can’t have lived in Spain any time during the five years previously. 

Digital nomads and remote workers will also be able to benefit from the same tax reductions as startups by paying the Non-Residents tax rate.

The double contribution to Social Security will also be eliminated for the first three years for those entrepreneurs who simultaneously maintain a job as an employee.

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For members

TAXES

Can you pay taxes in Spain with a foreign bank account?

Many foreigners have tax obligations in Spain but might not have a Spanish bank account to pay them from. Changes by Spain's tax authorities might just make it easier, depending on your circumstances.

Published: 3 May 2024 09:01 CEST
Can you pay taxes in Spain with a foreign bank account?

Navigating the ins and outs of the Spanish tax system can be a little daunting at times. That’s why many people choose to pay for a gestor to handle it all for them.

But for many foreigners in Spain, especially those with property in the country but who aren’t resident, figuring out when and how to pay your taxes can be extra complicated, especially if you don’t speak Spanish.

READ ALSO: What does a ‘gestor’ do in Spain and why you’ll need one

This was compounded by the fact that, for many years, you couldn’t pay Spanish taxes from a foreign bank account. As such, many people were forced to open a Spanish bank account for the sole purpose of paying tax.

Can you pay taxes in Spain with a foreign bank account?

Fortunately, it’s no longer like that. From February 1st 2024, the tax authorities in Spain started allowing tax payments via direct debit from any bank account within the SEPA area, removing the need for a Spanish bank account.

So, in short, yes, you can pay your Spanish taxes with a foreign bank account — depending on the country in which the account is based.

What is SEPA?

SEPA stands for Single Euro Payments Area is a basically an integrated bank transfer system. SEPA includes all the EU members states, plus those in the EFTA (Iceland, Norway, Liechtenstein and Switzerland). The UK is also still member of the SEPA area, despite Brexit.

Before the change, you could only pay your taxes in Spanish via banks approved by the tax authorities.

READ ALSO: Spanish tax returns: A handy guide for foreigners

VAT and tax experts Marosavat explain that under the previous rules, “direct debit [was] only available when the taxpayer’s bank account belongs to a bank entity cooperating with the Spanish tax authorities. This requirement impose[d] an important restriction when using direct debit as a payment method, especially for foreign taxpayers.”

But slowly, the Spanish tax authorities have eased the rules and made it easier for foreign businesses and tax payers to pay their tax from abroad. First, in March 2021, the rules were relaxed for foreign businesses with tax obligations in Spain. 

Then from July 2023 foreign accounts were approved for deferment and split applications of tax debt, and from February 2024 for regular tax payments.

Following the changes, Marosavat says, “the payments will still be processed through a cooperating bank entity, which communicates with the taxpayer’s bank entity. In consequence, all commissions and bank expenses related to the procedure will be passed on by the tax administration to the taxpayer.”

According to Spain’s Agencia Tributaria website, which you can find an English language version of here:

  • Payments are allowed for those who do not have an open account in any collaborating entity in state collection management.　

  • It is especially intended for use by those who pay their debts from abroad.　

  • It can be done by both natural persons and legal entities.　

  • The payment will have releasing effects on the date of receipt and entry of the transfer. 　

Non-resident property owners

This is particularly welcome news for second home owners in Spain, many of whom are non-resident and manage their properties from abroad for most of the year. 

According to IberianTax, by extending tax payments to the wider SEPA area, “property owners can now continue to use their home country’s bank accounts or accounts from other SEPA countries to make tax payments towards their taxes. This change simplifies the process and alleviates the burden of setting up a separate Spanish bank unnecessarily.”

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