Key aspects of Startup Act

On December 1, 2022, the Congress of Deputies (lower house of parliament) approved the Act to Promote the Startup Ecosystem, known as the “Startup Act” (the “Startup Act”), aimed at establishing a specific regulatory framework to support the creation and growth of startups. It will be published in the coming days in the Official Gazette of the Spanish State (“BOE”).

The act is expected to enter into force on the day following its publication in the BOE, although the main tax developments will not apply until January 1, 2023.

We indicate the main new developments introduced by the Startup Act for: (i) management companies and funds; (ii) startups, their investors and entrepreneurs; and (iii) impatriates.

• Carried interest qualifies as income from work, and 50% of that income will be subject to personal income tax if certain requirements are met.

• Greater flexibility is added to the treasury stock system of startups and also allows them not to have grounds for dissolution due to losses until three years have elapsed from the date of their incorporation.

• Tax benefits are introduced regarding taxation of stock options.

• A tax credit of 100% is established under the Special Regime for Self-Employed Workers for corporate self-employed workers that continue to work as employees. 

• Startups that operate in regulated sectors can request temporary trial licenses for one year.
  
  
• Changes are introduced to the impatriate tax regime to enable more taxpayers to benefit from it, as well as changes regarding migration to promote international remote working.

• Certain companies and branches must disclose “country-by-country” information about company tax.