Spain’s Startup Law: tax benefits for founders and investors

Spain’s Law 28/2022 on fostering the startup ecosystem, known as the Startup Law, gives tax benefits to companies certified by ENISA as an «emerging company» and to the people who invest in them. The most relevant are 15% corporate income tax, better conditions for stock options and a 50% deduction for investors.

At a glance

• Who it is for: innovative, scalable companies under 5 years old (7 in biotech, energy or industry) with revenue up to €10 million.
• How: with ENISA’s emerging company certification.
• Key benefits: 15% corporate tax for four years, stock options exempt up to €50,000 a year and a 50% deduction (on up to €100,000) for investors.

What counts as an emerging company

Under the law, a startup can qualify if it meets, among others, these requirements:

• It is newly created or under 5 years old (7 in biotech, energy, industry and other strategic sectors).
• It did not result from a merger, demerger or transformation of non-emerging companies.
• It is not listed and has not distributed dividends.
• It has its registered office or a permanent establishment in Spain, with at least 60% of staff on Spanish employment contracts.
• It runs an innovative and scalable project, assessed by ENISA.
• Its annual revenue is up to €10 million.

Tax benefits for the company

1. 15% corporate income tax (instead of the standard 25%) in the first year with a positive tax base and the following three, as long as it keeps emerging company status.
2. Deferral of corporate tax payments for the first two years with a positive base: 12 months for the first and 6 months for the second, with no guarantees or late-payment interest.
3. No corporate tax instalment payments in the two years following the first year with a positive tax base.

Stock options and the team

Attracting talent without big-company salaries is a challenge for any startup. The law helps on two fronts:

• The exemption on shares delivered to employees rises from €12,000 to €50,000 a year.
• Taxation is deferred: employees do not pay tax on stock options until they can turn them into cash (IPO, sale to third parties) or 10 years pass.

Benefits for investors

Investors in an emerging company can deduct 50% of the amount invested from Spanish personal income tax, on a maximum base of €100,000 a year (up to €50,000 of deduction). There are holding-period and maximum-stake requirements, so review them with an adviser before investing.

How to apply for ENISA certification

1. Prepare a project description: problem, solution, market, business model, team and growth plan.
2. Apply for certification through ENISA‘s online portal.
3. Once certified, the company is registered as an emerging company in the Commercial Register.
4. Check every year that you still meet the requirements: if you lose them, you lose the benefits.

Frequently asked questions

How long does ENISA certification take?

It depends on ENISA’s workload and the quality of the application. Prepare the documentation carefully to avoid information requests.

Can a company that already has revenue apply?

Yes, if it meets the age, size (up to €10 million) and innovation requirements.

Does the Startup Law help raise a round?

Indirectly: the 50% deduction makes investing more attractive for business angels resident in Spain.

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This article is for information only and is not tax or legal advice.