Mercantile aspects of the new startup law

Mercantile aspects of the new startup law

The startups law or the Law to support the startup ecosystem is a bill approved on December 10, 2021 that seeks to adopt measures to support Spanish entrepreneurs. 

Although the final text of the Law has not currently been approved, it is expected to be ready in August this year. 

The preliminary text of the law contemplates different benefits for startups, the most relevant being those associated with tax benefits, as well as the simplification of different processes and registration procedures for this type of companies. 

Novelties introduced by the law on startups

Among the different aspects included in the new legal text, there are reductions in the corporate tax rate, which goes from 25% to 15%.  

It is also contemplated that entrepreneurs who combine their startup with a job as an employee do not have the obligation to contribute as self-employed for three years. 

In addition, the new text contemplates a tax exemption for stock options, from 12,000 euros to 50,000 euros. In addition, the new law intends to delay their taxation until the moment in which they become liquid, either by their sale or by the company’s IPO. 

Another relevant aspect is that the maximum base of the deduction when investing in newly created companies is increased from 60,000 to 100,000 euros. 

From the commercial point of view, bureaucratic procedures are simplified, and the NIE is no longer mandatory for foreign investors. Different notary fees related to the incorporation of a company are also eliminated. 

One of the most interesting aspects is the possibility of incorporating a company by means of a single electronic document, being able to register it in the mercantile registry in 6 hours using standard statutes and in 5 working days in other cases. 

Advantages for entrepreneurs 

Given that in recent years the entrepreneurial ecosystem in Spain has grown a lot to become a reference throughout Europe, it has become necessary and indispensable to have a series of conditions and incentives that favor the development of projects and emerging companies. For this reason, the approval of this law is a very important moment. 

Among the various advantages, the recognition of the entrepreneurial collective that the approval of this law entails is especially noteworthy. 

In addition, this new law recognizes the figure of the “serial entrepreneur”, that is, the businessman who, given the success of a project he has started, proceeds to sell it and obtains a profit from it. This allows those who are constantly engaged in entrepreneurial activity to take advantage of the legal benefits more than once. 

Importance and other relevant aspects of the Startup Law

This law will be an important boost for entrepreneurial activity in Spain. Above all, it allows entrepreneurs to have a series of guarantees that motivate and facilitate the execution of the entrepreneurial activity. 

Despite the numerous tax benefits and the simplification of procedures that the new startup law entails, the truth is that there are still different aspects that need to be considered due to the nature of the entrepreneurial activity. Specifically, representatives of the entrepreneurial sector consider that the law will hardly generate a positive benefit for entrepreneurs.

This is due to the high costs involved in starting up an entrepreneurial activity and the numerous tax difficulties this entails. In addition, although it includes a series of benefits, these fall short for those investors who are actively injecting capital into different startups, such as business angels.  

In addition, it is mentioned that the tax benefits contemplated by the Startup Law are meaningless, since they end 5 years after the incorporation of the company. The problem is precisely that startups are characterized by generating profits once they reach 7 years from its creation, being inoperative the deductions considered in this draft bill. 

Although this draft bill has been widely criticized, it is still an interesting starting point to support the entrepreneurial ecosystem in Spain. 

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