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The tax cuts and other benefits Spain’s new Startups Law will bring to entrepreneurs

Foreign entrepreneurs have been waiting for years for Spain's highly anticipated Startups Law to be finalised. The latest news is that it will come into force in September 2022; and new details on the benefits it will bring have also been released.

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Spain's Deputy Prime Minister and Minister of Economic Affairs Nadia Calviño has revealed new details about Spain's upcoming Startups Law. (Photo by OSCAR DEL POZO / AFP)

Spain’s new Startups Law, which the Spanish government first announced in 2019, could finally come into force in September 2022, as indicated by Economy Minister Nadia Calviño. 

For the first time, Spain will have a law directly aimed at the particularities of small technology-based companies. 

The new Startups Law hopes to attract foreign companies, making it easier for startups to choose Spain by giving them incentives such as tax reductions. 

Although there is still a long way before the final text of the Startups Law is published, and it may have to go through several amendments yet, here’s the latest on the draft law so far and the benefits it will bring.

There will be no obligation to pay the social security self-employed fee for multiple activities

One of the most important announcements is the elimination of having to register as self-employed (autónomo) in the Special Scheme for Self-Employed Workers (RETA) for three years, provided that the entrepreneur who launches the startup is in turn hired as an employee by another company.

This is the case for 25,000 self-employed workers in Spain who currently combine working for themselves with being hired by someone else.

Overall, it’s good news as Spain’s social security fee is among the highest in Europe at €294 a month, an amount that’s set to change from 2023 onwards. 

READ MORE: Spain’s new tax rates for the self-employed from 2023 onwards

Self-employed workers will have three chances to benefit from the new law

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 same advantages. Specifically, entrepreneurs are allowed to benefit from the Startups Law up to three times.

Improvement in the tax treatment of stock options

Stock options are often a form of remuneration for work that is frequently used in startups. It consists of offering directors or employees the possibility of obtaining shares of the company where they work. Specifically, the tax exemption amount will rise from €12,000 to €45,000.

In addition, tax will only be paid on these shares when the sale of them takes place, or when the company goes public.

Deduction in Corporation Tax to 15 percent

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 action. Both investors and their representatives will only need to obtain Spain’s tax identification numbers (NIFs).

Tax breaks

The new law includes a series of tax benefits in order to make national investment more attractive.

The maximum deduction base for investment for newly or recently created companies will be raised from €60,000 to €100,000 per year and the type of deduction will increase from 30 to 50 percent.

The period of time that a company is considered ‘recently created’ will increase

The period that is considered ‘recently created’ for eligible companies will go up from 3 to 5 years old. For biotechnology, energy or industrial companies, the bracket is wider still – 7 years.

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 startups, investors, and remote workers, as well as their family members. 

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SPAIN AND THE US

Spain and the US to exchange more language assistants in bilingualism push    

The governments of Spain and the United States have agreed to recruit more English and Spanish-language assistants from each other’s countries as a means of bolstering bilingual education in the two nations.

Spain and the US to exchange more language assistants in bilingualism push    

Spain’s Education Minister Pilar Alegría and US ambassador to Spain Julissa Reynoso met on Wednesday to sign a memorandum of understanding which will reinforce educational cooperation between the two countries. 

The agreement had been previously signed by Miguel Cardona, the United States Secretary of Education, who tweeted: “This week, alongside [Spanish] Ambassador [Santiago] Cabañas, I signed a memorandum supporting the study of Spanish language & culture in the US, and the study of English in Spain”.

It is in fact a renewal of a memorandum between the United States and Spain which has facilitated mobility of both conversation assistants and students between the two countries in recent years.

The aim of this newest memorandum of understanding is to further strengthen student and teacher exchange programmes and promote bilingual and multicultural teaching in both educational systems.

No exact details have yet been given about how many extra language assistants will be given grants to join the programme. 

Several teacher recruitment sources suggest the current number of North American language assistants (including Canadians) heading to Spain every year is between 2,000 and 2,500. 

The Spanish government has stated that in 2023, this figure will be around 4,500, which represents a considerable increase in the number of US and Canadian citizens who can apply through the NALCAP programme, which stands for North American Language and Culture Assistants in Spain. 

According to Spain’s Foreign Ministry, the following requirements must be met by US candidates in order to participate in the programme:

  • Be a U.S. citizen and have a valid passport
  • Have earned a bachelor’s degree or be currently enrolled as a sophomore, junior or a senior in a bachelor’s programme. Applicants may also have an associate degree or be a community college student in their last semester.
  • Have a native-like level of English
  • Be in good physical and mental health
  • Have a clean background check
  • Be aged 18 – 60.
  • Have at least basic knowledge of Spanish (recommended)

NALCAP recipients receive a monthly stipend of €700 to €1,000 as well as Spanish medical insurance.

Application dates for 2023 are usually announced in late November. See more information on the NALPAC programme for US nationals here

According to The Fulbright Program, one of several US cultural exchange programmes that organises the recruitment of US nationals for Spain: “English Teaching Assistants assist teaching staff at the early childhood, elementary, middle school, high school, vocational and/or university level for up to 16 hours per week, with an additional two hours for planning & coordination meetings. Responsibilities include assistant-teaching, in English, subjects such as social studies, science and technology, art, physical education, and English language.”

READ MORE: The pros and cons of being an English language assistant in Spain

There are also currently more than 1,000 Spanish teachers working as visiting teachers in the United States, Spain’s Moncloa government has said, without adding yet how many more will be recruited in 2023.

Additionally, more than 1,000 North American students now take part in the Spanish Language and Culture Groups managed by the Spanish Education Ministry’s Overseas Education Action (or Acción Educativa Exterior, AEE).  

Canadian applicants can find out more about working as language assistants in Spain by visiting the NALCAP Canada website.

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