On December 21, 2022, the Spanish Parliament – Congreso de los Diputados– finally approved the Startup Law 28/2022, of December 21, 2022, which is expected to promote the entrepreneurial ecosystem of emerging companies, includes measures to attract and retain digital talent, to introduce some tax benefits for investors and entrepreneurs, favouring the establishment of international remote workers-digital nomads.
The Startup Law came into force on December, 23, 2022 with the aim to establish a specific regulatory framework to support the incorporation and growth of startups in the territory of Spain.
This law introduces important new features such as tax and social benefits for emerging companies or startups. This includes innovative technology companies in the field of activity known as ”technological or scientific-based companies”.
EMERGING COMPANIES – STARTUPS CONCEPT
The law establishes specific REQUIREMENTS which a company must simultaneously meet to access the benefits and support measures announced in the Law.
1.1. Seniority: Being a newly created company on the territory of Spain, or a maximum of 5 years from its incorporation in the Mercantile Registry, or 7 years in the case of biotechnology, energy, or industrial companies and those that are determined as belonging to strategic sectors or that have developed their own technology on the territory of Spain.
1.2. Independence: Having its headquarters, it must have a registered office or permanent establishment on Spanish territory.
1.3. Not having arisen from merger, spin-off, transformation, concentration or segregation operations, with the exception of those arising from other emerging companies or those spin-off technology-based companies originating from public universities.
1.4. At least 60% of the workforce must have a labour contract in the territory of Spain.
1.5. Innovative character: Develop an innovative entrepreneurship project that has a scalable model.
1.6. Not being listed: Not being listed on a regulated market.
1.7. Not distribute or have distributed dividends (or returns in the case of cooperatives) since the establishment of the company.
1.8. Business volume less than 10 million Euro: Have a business volume that does not exceed 10 million Euros per year.
1.9. Environmental: Not carrying out an activity that generates significant damage to the environment in accordance with Regulation (EU) 2020/852 of the European Parliament and of the Council of June 18, 2020 regarding the establishment of a framework to facilitate sustainable investments.
1.10. If the interested company belongs to a group of companies in the terms defined by article 42 of the Commercial Code, the group or each one of the companies that compose it must comply with the previously described requirements.
1.11. Additional requirements: Not being founded or directed by itself or by an intermediary, with pending Social Security obligations.
1.12. Not being founded or directed by intermediary persons convicted with a final sentence for an offense of unfair administration, punishable insolvency, corporate offenses, money laundering offenses, financing of terrorism, offenses against the Public Treasury and Social Security, offenses of prevarication, bribery, influence peddling, embezzlement of public funds, fraud and illegal exactions or urban crimes as well as the penalty of loss of the possibility of obtaining subsidies or public aid. Also not having lost the possibility of contracting with the Public Administration;
1.13. Not having holder partners, with the direct or indirect participation of at least 5% of the social capital or whose administrators have been convicted by enforceable sentence for any of the types of crimes mentioned above.
The formal accreditation of innovative entrepreneurship is carried out by ENISA, the National Innovation Company, S.M.E., S.A. The definitive criteria to accredit the emerging company, the existence of the entrepreneurial project and the scalability of the business model will be published by means of the joint ministerial order of the Ministry of Economic Affairs and Digital Transformation, the Ministry of Industry, Commerce and Tourism and the Ministry of Science and innovation. https://www.enisa.es
In order to success with the formal accreditation of EMERGING COMPANIES, some legal and technical adjustments should be carefully taken into consideration. Legal issues are often low on the priority list. However, they may jeopardize the ultimate success of a startup. A bit of legal foresight can help prevent costly problems down the road.