Certification Process for Startups to Access Tax Benefits Now Open

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.

Visa for Digital Nomads

Spain aims to attract talent. A country considered idyllic for many foreign workers – and tourists – lacked a law that legalizes their residence beyond the tourist visa, which only allows a stay in our country for three months.

Addressing this issue was the focus of the startup law, approved in Congress at the end of 2022 and effective as of January 1, 2023. This law comprises a range of measures designed to promote innovative entrepreneurship in Spain, favoring investment and the attraction of international talent, among other goals.

The visa for digital nomads is one of the provisions included in this new law. This was the final step in the Residence Program for Investors and Entrepreneurs (PRIE) undertaken and maintained by all central Governments for years, aimed at attracting foreign talent, investment, and entrepreneurship. Until now, this program had regulated residency permits for investors, entrepreneurs, and high-ranking foreign officials. Now, through the startup law, the residency permit for digital nomads is regulated, placing them on par with these profiles in terms of required bureaucracy and the possibility of family reunification.

And what is a digital nomad?

The law promoting the ecosystem of emerging companies – the name of the startup law – defines digital nomads as “individuals whose jobs allow them to work remotely and frequently change residence, combining high-skilled work with immersive tourism in the country of residence.”

A specific visa has been created for them, reproducing the residency rights of the Golden Visa, granting both employed and self-employed workers a one-year visa to reside in Spain. After this period, they can apply for a residency permit for another three years, which then becomes renewable every two years. Starting from the fifth year of stay in Spain, permanent residence can be requested “as long as the conditions that generated the right are maintained.”

Eligibility

Non-resident foreigners who wish to apply for this visa must demonstrate that they are university graduates, vocational training graduates, have completed their studies in “recognized prestigious” business schools, or have a minimum professional experience of three years.

The visa can be granted to both employed and self-employed workers. In the first case, the digital nomad must demonstrate continuous activity for at least three months with the foreign company. Self-employed workers, on the other hand, must prove commercial activity with other foreign companies for at least one year. In these cases, the self-employed individual can allocate up to 20% of their activity to work for Spanish companies.

Additionally, telecommuters engaged in entrepreneurial activities and highly skilled professionals providing services to emerging companies or engaged in education, research, development, and innovation can benefit from this special regime.

Tax advantages

The main advantage for digital nomads is the opportunity to opt for the special regime for impatriates, better known as the “Beckham Law.” This is a special tax regime that allows them to pay taxes through the Non-Resident Income Tax (IRNR), which has a lower rate than the Personal Income Tax (IRPF): 24% taxation on the first €600,000 generated. Income exceeding this amount in a year will be taxed at the regular IRPF rate: 47%. This regime has a maximum duration of six years.

The Startup Law relaxes and expands the conditions for opting for this regime. While previously it was required not to have been a tax resident in Spain in the last ten years, now it is sufficient to meet this condition for five years.

New Income Tax deduction for investments in the Madrid Region: 20% of the investment will be deductible

New personal income tax deduction for new investments coming from a foreign country to the Region of Madrid. The regional government has announced an ambitious measure, a pioneer in Europe, which will allow all people, nationals and foreigners, who make an investment in the Community of Madrid after having lived outside Spain for more than 5 years, to deduct 20% of the investment through a reduction in the regional income tax bracket.

The measure will apply to any type of investment, be it real estate, financial or business. In the case of financial assets, it will not be necessary for them to be located in Madrid Region, something that will be required for real estate assets.

There is no limit to the amount of tax relief; in other words, it will be applied from the first euro invested. As for the ceiling, it will be the IRPF quota itself on which the 20% deduction is applied; in other words, if it is sufficient to compensate for the entire deduction, it can be made in the first year of the investment. If not, it will be spread over six years, the minimum time the investment must be maintained in the Community of Madrid.

The measure will be implemented following the amendment of the Consolidated Text of the legal provisions of the Region of Madrid on taxes ceded by the State, approved by Legislative Decree 1/2012 of 21 October. Following its validation by the Regional Government Council and its subsequent parliamentary processing, this measure is expected to enter into force this year.

According to estimates, this new measure will have a major impact on the regional economy, since for every billion-euro invested, it is expected to contribute €886 million to the regional GDP, as well as generating 13,000 new jobs.

COMMITMENT TO ETHICAL AND RESPONSIBLE CONDUCT

The foreign investor expresses their utmost will and commitment to ethical, responsible and sustainable conduct, as well as due compliance to the regulations applicable to all their activities and operations. In this sense, they commit to duly complying with the regulatory framework that applies to them, as well as implementing ethical, responsible and crime-preventing procedures and/or policy measures.

Said commitment requires the investor to formally transmit this ethical and responsible conduct duty to all those involved and/or all participants in their business area and/or project in Invest In Madrid; specifically, to all employees, executives, collaborators, providers, clients and, in general, any person or entity related to them.

As a way to facilitate follow-up and implementation of said commitment, Invest In Madrid has developed conduct guidelines and guides for the appropriate follow-up and implementation of the aforementioned commitment. As a result, a corporate Code of Ethics was developed. It establishes the principles and values of ethical and responsible conduct, along with the rights, duties and responsibilities in terms of regulatory compliance of Invest In Madrid to all the people involved in this project.

Thus, the investor declares they have access to the aforementioned Code of Ethics, which they are aware of and voluntarily assume, for the purposes of applying the commitments and obligations included therein. In this sense, the investor commits to always acting with due diligence, in the interest of guaranteeing regulatory compliance, and, in particular, of preventing corporate criminal liability that could arise from their conduct.

Likewise, the investor commits to responding to the veracity of the data included on the platform and to the correct use of the information, professional services and tools provided by Invest In Madrid, in any moment from the start, set-up and subsequent expansion of the business.

Finally, as a guarantee of the exact and appropriate application of our ethical and responsible commitment, the investor assumes the responsibility of communicating to Invest In Madrid any indication, suspicion or evidence of possible regulatory non-compliance, crimes, unethical conduct and, in general, actions or conduct that run counter to the entity’s protocols, regulations and codes of conduct, included in the aforementioned Code of Ethics; through the Internal Information System provided for that purpose. All this with the guarantees and requirements of confidentiality, data protection, independence and protection of the informant established by the regulatory framework applicable to said System.

Invest In Madrid appreciates your support and collaboration with our commitment to ethics and regulatory compliance, as a mechanism for detecting any irregularities and aligning your responsible conduct with the fundamental values and principles that underly the ethical culture of our entity.

Data controller information

Identity: FUNDACIÓN MADRID POR LA COMPETITIVIDAD (CIF G84442755)
Address: Calle Velázquez, 53, 28001, Madrid
Phone: 91 220 28 00
E-mail: protecciondatos@fundacionmadrid.org

— Purposes of the processing

FUNDACIÓN MADRID POR LA COMPETITIVIDAD will process the information provided to us by interested persons for the following purposes:

  • To handle applications and documents from companies applying for the “Madrid Excelente” seal, as well as applications and documents related to other FUNDACIÓN MADRID POR LA COMPETITIVIDAD activities (Madrid Excelente Awards for Customer Trust, among others).
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FUNDACIÓN MADRID POR LA COMPETITIVIDAD will treat the data and information provided for the selection processes with the strictest confidentiality, adopting the technical and organisational measures necessary in order to avoid loss, incorrect use, alteration and/or unauthorised access. Data retention: Furthermore, we inform you that FUNDACIÓN MADRID POR LA COMPETITIVIDAD may store your Curriculum Vitae for a maximum period of one year. After that time, it will automatically be removed.

— Data retention criteria

  • Management of Curriculum Vitae: FUNDACIÓN MADRID POR LA COMPETITIVIDAD may store your Curriculum Vitae for a maximum period of one year. After that time, it will automatically be removed, pursuant to the data quality principle.
  • For commercial communications: Any person can unsubscribe from these communications at the following email address: protecciondatos@fundacionmadrid.org
  • The rest of the data and information shall be kept for as long as necessary to fulfil the purpose for which they were collected.

— Legitimation

The legal basis for the data processing is the consent of the individuals concerned to:

  • Processing and management of any request for information or questions about our services.
  • The sending of commercial communications by FUNDACIÓN MADRID POR LA COMPETITIVIDAD.
  • The sending of invitations to conferences and events organised by FUNDACIÓN MADRID POR LA COMPETITIVIDAD, as well as attendance control of said conferences and events.
  • The sending of your curriculum vitae.

— Recipients

Personal data is not disclosed to third parties, unless legally required to do so. International data transfers to third countries are not carried out either.

— Source

Personal data is obtained directly from the individuals concerned and our collaborators. The personal data categories that our collaborators provide us are the following:

  • Identification data.
  • Addresses or email addresses.
  • Images.
  • No sensitive data is processed.

— Rights

Right of Access, Rectification and Erasure: The individuals concerned have the right to obtain confirmation about whether FUNDACIÓN MADRID POR LA COMPETITIVIDAD is processing personal data that may concern them or not. The individuals concerned have the right to access their personal data as well as to request the rectification of inaccurate data, or, if applicable, to request their erasure when, among other reasons, they are no longer needed for the purposes they were collected.

 

Right to Restriction: In certain situations, the individuals concerned might request restricted processing of their data; in such cases, we shall only store them to make or defend claims. In certain circumstances, and for reasons related to their specific situation, the individuals concerned may object to the processing of their personal data. FUNDACIÓN MADRID POR LA COMPETITIVIDAD will stop processing the data in this case, except for compelling legitimate reasons, or to make or defend possible claims.

 

These rights may be exercised at www.corporate-line.com/cnormativo-madrid-competitividad.

– Updates and modifications

FUNDACIÓN MADRID POR LA COMPETITIVIDAD reserves the right to modify and/or update data protection information when necessary, in order to comply with the Data Protection Regulations. If any modifications are made, the new text shall be posted on this page, where you shall have access to the updated policy. In all cases, the relationship with users will be governed by the regulations established at the precise moment the website is accessed.

This legal disclaimer contains the conditions that govern use and access of the websites https://investinmadrid.com/ and www.fundacionmadrid.org, (hereafter the website) and the responsibilities arising from its use.

Fundación Madrid por la Competitividad understands that website access and navigation on the part of the user implies that they accept all the conditions published by Fundación Madrid por la Competitividad on the website at that time.

The FMC is a Madrid Region non-profit organisation, under the Ministry of Economy, Finance and Employment. Its objective is to improve business competitiveness. It consists of the organisations Madrid Excelente and Invest in Madrid.

 

— PURPOSE

The purpose of this site is to provide information on FMC’s activities.

 

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The contents of the website (text and photographs) are owned by FMC. The rest of the features, buttons, software files, colour combinations, as well as the structure, selection, organisation and presentation of the contents are owned by ‘wordpress’ and are protected by Spanish and international Intellectual and Industrial property laws.

Under no circumstances does accessing this website imply any type of total or partial waiver, transmission or transfer of the rights granted by Spanish and international legislation on Intellectual and Industrial property.

Reproduction (except for temporary downloads from the website to the hard drive of the user’s computer or to proxy servers), copying, use, distribution, reuse, exploitation, making of second copies, sending by mail, transmission, modification, transfer or any other act that is done with all or part of the information contained on this website that has not been expressly authorised by the owner is prohibited. Disseminating images is only permitted with explicit reference to their creators (FMC).

The user under­takes to use the contents in a diligent, correct and lawful manner and, in particular, undertakes to refrain from deleting, evading or manipulating the copyright and other data identifying the rights of FMC or its owners incorporated into the contents, as well as the technical protection devices or any information mechanisms that may be included in the contents. Moreover, the user will abstain from using the contents, and, in particular, any type of information obtained through the site to send advertising, communications for the purpose of direct sale, or unsolicited messages to a large number of people regardless their purpose, as well as refraining from marketing or distributing said information in any manner.

 

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Users may access the site freely and free of charge.

 

— RESPONSIBILITY AND OBLIGATIONS

RESPONSIBILITY FOR THE CONTENT

The content of this website is of a general nature, with an exclusively informative purpose and effects of FMC’s activities and services.

FMC disclaims any liability for any decision taken by the user of the website as a result of the information contained therein, especially in regard to the technical features of the cables.

FMC accepts no responsibility for any information not created by FMC or not published under its name in an authorised manner, as well as any responsibility arising from the misuse of the contents. FMC also reserves the right to update, eliminate, limit or prevent access to the contents, either temporarily or permanently.

 

RESPONSIBILITY IN THE EVENT THAT THIS PAGE IS THE DESTINATION OF A LINK FROM A DIFFERENT PAGE

As regards links established by other pages to this site as well as if any user, entity or Web page wishes to establish any type of link to the FMC website, they must comply with the following conditions:

– They must seek permission before setting up the link and the granting of such permission must be expressly stated.

– Only the home page may be linked to.

– The link must be absolute and complete, meaning that it must direct the user to FMC’s web address and it must fully cover the entire extension of the screen of the home page.

– No erroneous or incorrect indications shall be provided with regard to the FMC page.

– Written authorisation is required in order to display any distinctive sign of FMC, such as trademarks, logos or name.

– The Owner of the website posting the link must be acting in good faith and not set out to harm the reputation or good name of FMC.

– It is forbidden, unless expressly authorised by FMC, to register the text elements of the trademark or logo, the domain name or the name fundacionmadrid.org as a keyword (metatags or metanames) for websites searches performed through search engines.

FMC declines any type of responsibility for any aspect relating to the pages that post the link. The establishment of a link does not imply the existence of any type of relationship, collaboration or dependency between FMC and the owner of that web page.

 

RESPONSIBILITY FOR TECHNICAL ASPECTS

FMC does not guarantee the continuity of the operation of the website, nor does it guarantee that the website will be operative and available at all times.

FMC accepts no liability for direct or indirect damages, including damage to computer systems and the introduction of Internet viruses, arising from the Internet browsing necessary for the use of this website.

 

OBLIGATION OF USERS

The user shall be liable for any damages that FMC may suffer as a consequence of noncompliance with any of the obligations determined in this legal disclaimer.

With regard to browsing, the user undertakes to diligently and faithfully observe the recommendations that FMC establishes at any given time in relation to the use of the site. For these purposes FMC shall address users by any means of communication through the website.

 

— DURATION AND MODIFICATION

FMC shall have the right to unilaterally modify the terms and conditions stipulated herein, in whole or in part. Any changes will appear in the same way as they appear in this legal disclaimer.

The duration of the validity of this legal disclaimer therefore coincides with the time of its display, until the time it is totally or partially modified by FMC.

FMC may unilaterally terminate, suspend or interrupt the operation of this website, with the user having no possibility to request compensation. Following said termination, the user must destroy any information about FMC that they own in any format and have obtained through the site or through the communications made individually to the user by it.

 

— LEGISLATION AND JURISDICTION

These terms of use are governed by Spanish law.

Users and FMC, expressly waiving their own jurisdiction, shall submit all interpretations or conflicts which may arise from this legal disclaimer to the Courts and Tribunals of Madrid.

COMMITMENT TO ETHICAL CONDUCT AND PROFESSIONAL RESPONSIBILITY

The local partner expresses their utmost will and commitment to ethical, responsible and sustainable conduct, as well as due compliance to the regulations applicable to all the activities and operations they contribute to Invest In Madrid. In this sense, they commit to duly complying with the regulatory framework that applies to them in the services and activities published on the web page, as well as implementing ethical, responsible and crime-preventing procedures and/or policy measures.

As a way to facilitate follow-up and implementation of this commitment, Invest In Madrid has developed conduct guidelines and guides for the appropriate follow-up and implementation of the aforementioned commitment. As a result, a corporate Code of Ethics was developed. It establishes the principles and values of ethical and responsible conduct, along with the rights, duties and responsibilities in terms of regulatory compliance of Invest In Madrid and its collaborating partners.

This is the framework of ethical and responsible conduct that all local partners have the duty to apply and formally transmit to all those involved and/or all participants in the area of the provision of services provided to Invest In Madrid (employees, executives, collaborators, providers, clients and, in general, any related person or entity). Thus, the local partner declares they are aware of and voluntarily assume the aforementioned Code of Ethics, for the purposes of applying the commitments and obligations included therein.

Likewise, the local partner accepts that they have the technical capacity, guarantees and experience needed to offer the investors the services included in the area of Invest In Madrid, with the necessary technical, legal and organisational requisites and high quality and safety standards. Therefore, the local partner commits to always acting with due professional diligence, in the interest of guaranteeing regulatory compliance, and, in particular, of preventing corporate criminal liability that could arise from their conduct. Likewise, the local partner is responsible for the veracity, accuracy, validity and authenticity of the information included in the form and/or provided through any other means.

Finally, as a guarantee of the exact and appropriate application of our ethical and responsible commitment, the local partner assumes the responsibility of communicating to Invest In Madrid any indication, suspicion or evidence of possible regulatory non-compliance, crimes, unethical conduct and, in general, actions or conduct that run counter to the entity’s protocols, regulations and codes of conduct, included in the aforementioned Code of Ethics; through the Internal Information System provided for that purpose. All this with the guarantees and requirements of confidentiality, data protection, independence and protection of the informant established by the regulatory framework applicable to said System.

Invest In Madrid appreciates your support and collaboration with our commitment to ethics and regulatory compliance, as a mechanism for detecting any irregularities and aligning your responsible conduct with the fundamental values and principles that underly the ethical culture of our entity.

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