The Council of Ministers has approved sending to Parliament the Draft Law to promote the startup ecosystem, better known as the Startup Law. To be considered a startup, a company must be independent of other companies, not listed on a stock exchange, and have an annual turnover of €5 million or less.
Before analyzing the advantages that have recently been approved for newly created companies, it is necessary to understand their concept.
When we talk about "startups," we're referring to all those emerging companies that are born with an innovative philosophy characterized by their scalability and dynamism. In this sense, we're talking about young companies that don't have many resources, but do have great potential for positive results. From a technical standpoint, startups are generally founded by one to three people who focus on responding innovatively to market demand. It's worth mentioning that to be considered a startup, a company must be independent of other businesses, not publicly traded, and have an annual turnover of €5 million or less.
Until now, these types of companies have been subject to commercial and tax regulations, which can lead to difficulties, as these regulations do not address the specific characteristics of this type of emerging business, thus imposing highly burdensome requirements. For this reason, the Spanish Council of Ministers recently approved a law that creates a legal framework and a set of structured measures to help them adapt and grow in the market.
In this regard, we will proceed to analyze in broad strokes the main advantages that the new law will offer:
- Regarding tax advantages, a 15% reduction in corporate tax is planned, as well as a considerable reduction in residents' income tax (the general rate drops from 25% to 15%). Along the same lines, the requirement to make quarterly tax payments for the two years following the year in which the taxable income is positive is eliminated. The main objective of these measures is to attract and retain both national and international talent.
- The concept of serial creditor is recognized for the first time, meaning that those who have already launched a company with the characteristics analyzed are now eligible to undertake new projects. Therefore, a single entrepreneur may even be eligible for up to three different projects.
- Measures are being created to make it easier for limited liability companies, the legal structure adopted by most startups, to generate treasury stock. Specifically, more favorable tax treatment is being given to compensation paid through company shares or equity stakes. These measures aim to overcome the difficulties in attracting and retaining employees with specialized skills for these types of companies.
You can contact this professional office for any questions or clarifications you may have.
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A Àmbit Assessor, SL has 40 years dedicated to the tax, comptable and labor consultancy of the Pime.
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