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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.

Published: 1 March 2023 09:50 CET
Updated: 4 March 2023 08:42 CET
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

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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