Certification Process for Startups to Access Tax Benefits Now Open

Startups that want to take advantage of the tax conditions approved in the startup law that came into effect in early 2023 must apply to ENISA for the certificate of emerging company.

Spain is the first European country to implement a certification system for accrediting emerging companies, better known as startups. Months after the approval of the startup law that regulates, among other things, the tax benefits these companies will enjoy, the certification procedure for these companies has been approved, along with the requirements they must meet to be considered emerging.

The certificate of emerging company is essential to access the tax incentives established in the law. The requirements imposed on companies mainly focus on the company’s age (or novelty), its innovative nature, and the scalability of its business. The request for this certificate must be made to the National Innovation Company, ENISA, under the Ministry of Industry, Commerce, and Tourism. The window for doing so has been open since the end of July through this link. Once registered, ENISA will have a maximum of three months to resolve and, if approved, notify the emerging nature of the company.

What tax benefits will a certified emerging company have access to?

Among the various tax benefits that a declared emerging company can access are:

  • Taxation at 15% in corporate income tax during the first four years, as long as the emerging condition is maintained during that period.
  • Improvements in the tax treatment of stock options. This is a common salary supplement in this type of companies, as employees are compensated with company stocks or shares.
  • Previously, employees were exempt from declaring the first €12,000 generated from their stock options over a year. Now, this amount has been increased to €50,000.
  • Specific tax treatment for carried interest, the interest earned by Venture Capital or Business Angels. This benefit is now classified as labor income, becoming integrable at 50% without a quantitative limit.
  • Deferral of payment of tax debts during the first two years of activity.

What constitutes an emerging company?

Companies seeking the ENISA certificate of emerging company must meet the following requirements:

  • They must be newly created or no more than five years have passed since their registration in the commercial registry. This period is extended to seven years for companies in biotechnology, energy, industrial, and certain strategic sectors, as well as those that have developed technology exclusively designed in Spain.
  • Their revenue must not exceed €10 million, and no dividends or returns have been distributed, in the case of cooperatives.
  • The company must not have arisen from a split, merger, or transformation of other non-emerging companies.
  • 60% of the workforce must have a labor contract in Spain.
  • The scalable nature of the business must be detailed.
  • The project must be considered innovative. To meet this, one of the following conditions is required:
  • For the last two years, at least 15% of the total expenses of the company have been allocated to research, development, and technological innovation. For companies less than two years old, this will be calculated based on the last financial year.
  • At some point in the last three years, the company has benefited from investment, financing, or public aid for the development of R&D+i projects, provided that these aids have not been revoked due to poor execution.
  • The company must have a favorable opinion as an innovative company from certain public bodies, such as the Ministry of Science and Innovation through the Innovative SME Seal, or an explicit report on its degree of innovation. Certain certifications issued by Aenor are also considered.

If none of these requirements are met, ENISA will evaluate the innovative nature of the company, considering whether there is technological innovation in its products, processes, services, or business models.

In addition to these tax benefits, the startup law introduced an array of measures to promote entrepreneurship, talent retention, and foreign investment. Notably, it practically eliminated bureaucracy for international investors, who now only need to request a tax identification number (NIF) to initiate their investment activity. This procedure can be completed electronically and within 10 business days.

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