Thinking of Launching a Startup in Spain? New Tax Cuts and Visa Laws Could Help!

In a bid to attract new businesses and investments to their shores, the Spanish government have launched a range of new requirements under their umbrella Startups Law. The new Startup Law is incredibly appealing as it offers both special visas, tax reductions, and other tax incentives to both startup businesses and remote workers.

Wondering if the Startups Law could provide you with a route to Spanish residency? Here’s everything you need to know:

What is the Startups Law?

The Startups Law has now been proposed and initially approved; however, it will need to go through another round of government approval before it is passed into legislation. The Ministry of Economic Affair has suggested this final stage will be completed by summer 2022. At this point, the Startups Law will offer tax reductions to investors and individuals who choose to open their new businesses in Spain. The law will also launch a new special visa aimed specifically at remote workers and digital nomads who can work anywhere that they have a laptop and strong internet connection.

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

What Benefits Will This Bring to Startups and Investors?

One of the biggest benefits of the Startups Law, from the perspective of business owners and investors, is that they will receive an initial reduction in their Corporation Tax, paying just 15 percent rather than the current standard figure of 25 percent.

Remote workers and digital nomads will also receive tax benefits, as under the new law they will be eligible to pay Non-Residents Tax (IRNR), which would provide them with a significant tax saving, provided they don’t remain in Spain for more than 183 days.

The IRNR tax rate for people with annual incomes of up to €600,000 currently sits at 24 percent. Under the new law, digital nomads will see this figure drop to 15 percent, for a period that is currently proposed to be four years. In order to take advantage of this reduced tax code, you will need to prove that you are an international remote worker via existing business contracts and work agreements. 

Other Savings for Startups

As well as the obvious tax benefits, the new Startups Law will bring over benefits and savings to startups, investors, and digital nomads. The vast majority of these changes are designed to make the process of starting a startup in Spain easier and more hassle-free. They include:

  • A reduced paper trail, with new companies able to register digitally. This process has also been sped up, with the incorporation process now taking between just six hours and five days.
  • The maximum deduction base for investment in newly or recently created companies will be raised from €60,000 to €100,000 euros per year. What‘s more, the type of deduction goes from 30 to 50 percent.
  • To be considered a startup or ‘recently created business, your business had to be less than three years old. This figure has been increased to five years. If your business is in the biotechnology, energy or industrial sector then it will be considered a startup business for seven years.
  • In another step to simplify the paperwork involved in working in Spain, 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), provided they don’t intend to move to the country in the long-term.

What About Visa Benefits?

For digital nomads and remote workers,  particularly those from the UK and other third party countries, the most attractive offering from the Startups Law is the introduction of a special visa specifically intended for this group. If you are able to prove your status as a remote worker then you will have access to a visa which will allow you to stay in Spain for up to five years. This visa is only available to individuals who haven’t lived in Spain in the five years prior to making their application.

In conjunction with the reduction in tax payments outlined above, this is an attractive proposition. What’s more, if you are an entrepreneur working as an employee whilst simultaneously trying to launch your own startup or remote business, you will be exempt from paying the double contribution to Social Security for three years.

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