The Spanish government has agreed on the details of the draft start-up law – passing the baton to Parliament to debate and possibly amend the plan before it is voted on to turn it into actual law.
Today, the Council of Ministers announced the adoption of the draft text, which it said contains important measures to reduce red tape and remove bureaucratic obstacles to establishing and investing in startups in Spain.
The package also targets stock option and visa reforms in an effort to make the country a more attractive place for entrepreneurs and digital talent.
In a press release, the Spanish government said the stimulus package includes what it described as “the most beneficial treatment by the European Union for returns on stock options.”
Ministers agreed to raise the tax exemption on stock option income from €12,000 to €50,000 annually.
The draft also provides for tax deferral until the settlement date – either when the shares are sold or if the company goes public.
Other notable tax measures include the four-year corporate tax and non-resident income tax cut (which goes down from 25% to 15%) – which are meant to address a major drawback, since startups don’t usually focus on withholding revenue in the early years (however, Under current rules, you are expected to pay the same tax rate as more established companies).
The maximum deductible for investments in new or newly established companies is also raised (from €60,000 to €100,000 per annum), while the discount rate goes from 30% to 50% and the term of consideration for a “newly established” company is extended, depending on the project approved by Ministers.
The fix also appears poised to address another major complaint from local founders: the cost and bureaucracy of setting up a startup in Spain — which has led some founders to set up their businesses elsewhere in Europe even if they later build their product out of offices in Spain. country.
Under the bill, ministers say the procedures for setting up a company will be “simplified” in one step and can be completed online without the need to pay a notary or registration fee.
Startups will also be able to use an online portal to submit business advertisements and access benefits, according to the release.
Olivier Plante, co-founder of local keyboard startup ThingThing – which developed Fleksy (a keyboard SDK company) out of offices in Spain – said he felt compelled to integrate his UK startup in 2015 – due to the relative costs.
“It’s been like three years not making a penny,” he explains. “In the first months we needed a lot of money to start, registration, shares, banks, notary (they are tbh parasites) … etc. That’s why we set up the company in the UK – it cost us £70 instead of about €5k in Spain .”
Blunt welcomed the reform package – saying that his two most important components are simplifying setup for start-ups and lowering corporate tax rates in the early years.
The current approach is essentially to “kill the entrepreneurship from day one,” says Blunt, or limit the pool of potential founders to those who are in a position to save enough money to get started. “Often, real entrepreneurs have fewer resources,” he noted, adding, “And Spain doesn’t enable the poor to get rich at the source.”
The local startup association, asociación españa, also welcomed the adoption of the draft text by the Council of Ministers – although it said it was still waiting to see all the details of the full text once it was published.
She also said she hoped Parliament would go further in improving the proposal – indicating that the number of years it could be considered a startup should be increased; And – potentially (assuming the draft did not) – make changes to limited requirements (eg a startup that needs 60% of employees in Spain to qualify; or (only) €5 million in revenue).
The association was even more impressive in its praise of the planned tax-deductible payment for start-up investors – “excellent news that puts us on a par with other successful ecosystems”.
The reform package contains a number of other measures to stimulate entrepreneurship – such as entrepreneurs working at the same time as employees in another job are no longer required to contribute twice to the social security system (which discourages bootstrap); And plans to set up sandboxes or pilot licenses in regulated sectors to promote the development of new services and top companies.
Although it remains to be seen how Parliament can amend specific details.
Regarding the timeframe, a government source told TechCrunch that they believe the law will be approved in the first half of 2022 – however, they noted that the deadline allows until the end of the year.
On the financing front, the Spanish government has an investment target of up to €4 billion to direct it towards boosting the growth of start-ups – including relying on EU funding to recover from the coronavirus.
For an in-depth look at the country’s 10-year plan to reform startups, check out TechCrunch’s interview with Francisco Polo, the Spanish High Commissioner overseeing the implementation of the entrepreneurship strategy earlier this year.