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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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For members

VISAS

EXPLAINED: When you can exchange visas in Spain

There are several different types of visas and residency permits you can get to be able to live and work in Spain, but what happens when your situation changes and you want to exchange your visa for a different one?

Published: 30 April 2024 14:20 CEST
EXPLAINED: When you can exchange visas in Spain

There are many different reasons you may want to exchange the type of visa or residency permit you have. Perhaps you’re on a student visa and have completed your studies, but still want to be able to stay in Spain. Or maybe you’ve been on a one-year non-lucrative visa, but can no longer afford not to work and want to exchange it for one where you’re allowed to work. 

Read on to find out which visas are possible to exchange and which are not. 

Student Visa to Digital Nomad Visa 

The simple answer is yes, it is possible to exchange your student visa for the new Digital Nomad Visa (DNV) that first became available last year. This will, however, depend on your individual circumstances and what job you plan on doing.

Firstly, in order to apply for DNV you must either have a degree from the field you want to work remotely in or have three years’ work experience in that industry. If you’ve just finished your studies this could be possible, but if you were studying something different, it could prove difficult.

If you are an older student, you could definitely have three years’ work experience in the industry you want to work in or you may have gained the experience working part-time in Spain while on your student visa.

Secondly, you must make sure you have worked for the company that hired you for a remote role for a minimum of three months before you apply for the DNV. The main caveat is that the company has to be registered outside of Spain as you are not eligible for the DNV if more than 20 percent of your income comes from inside Spain. This means that you will have to secure a remote job in another country while still on your student visa, making sure that you stick to the 30 hours a week you’re allowed to work.

Non-Lucrative Visa to Work Permit or Self-Employed

Being in Spain on the Non-Lucrative Visa or NLV can prove to be expensive because you’re not allowed to work, but have to prove you have a significant amount of savings or passive income. If you want to stay in Spain, beyond the initial year, you may be considering a different residency permit. Luckily, you can exchange it for a work permit or self-employed permit in a process called residence modification.

During your last few months on the non-lucrative visa, you are able to apply for jobs in Spain, which may give you the possibility of being granted a work permit. There are many prerequisites, including having lived in Spain for a year and being offered a pre-employment contract.

You could also decide to become self-employed at set up your own business. In order to do this you will need to meet the requirements that current legislation requires for opening and operating your chosen business. You will also need to sign up to the autónomo system, pay your own social security fees and submit your taxes five times a year.

READ ALSO: Should I change my non-lucrative visa for another residency permit in Spain?

Student Visa to Work Permit or Self-Employed

If you’re living in Spain on a student visa, then it’s relatively straightforward to exchange it for a work permit or become self-employed, if you want to be able to stay longer. The main requirement is that you have to have lived in Spain for three consecutive years, before you exchange it. This means, it’s really only possible for those who are doing a long-term course, such as a degree at a Spanish university. If you’re simply here for a year doing a language course, then it won’t be possible.

If you have been here for three years on a student visa, you have two options – the first is to find a job and become an employee by getting a work permit and the second is to become self-employed. If you opt for the first, the easiest way is to get a job offer and apply for the permit that way. Because you’ve already had a student visa and been here three years, it will be easier for companies to hire you as they won’t have to prove that there isn’t anyone from Spain or the EU that can do it first or that they have a shortage of professionals who can carry it out.

If you want to exchange it for a self-employment permit, you will have to present a business plan in order to get approval and prove you have the correct qualifications and experience to carry it out. If approved, then you will typically sign up to the autónomo system.

Student Visa to Entrepreneur Visa

Student visas are the easiest visas to modify in Spain, meaning you have many different options to exchange them if you want to stay longer. The Entrepreneur Visa – Visado de Emprendedor is another option that will allow you to stay for a period of three years (with the option of exchanging or extending). It is, however, slightly more complicated to exchange to than simply getting a work permit or becoming self-employed.

The Entrepreneur Visa is especially for those who want to set up a business considered to be innovative with a special economic interest for Spain. Unlike becoming just an autónomo, you must agree to be able to create employment opportunities for locals in the future. You could also in theory exchange your NLV for an entrepreneur visa too, provided you can prove that you haven’t done any work while you’ve been living in Spain for the year on your NLV.

Non-Lucrative Visa to Digital Nomad Visa

Unfortunately, this exchange is not possible. The main issue is that you’re not allowed to work while on a NLV and the requisites of the DNV are that you must have worked for the company that hired you for a remote role (or your clients if you’re self-employed) for a minimum of three months before you apply.

If this is the case then you’ll be admitting that you were working while on your NLV, which could get you into trouble. This means will have violated the terms of your visa and will be highly unlikely to be granted another one. You may also face penalties and fines, depending on your circumstances.

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