Why the Spanish “Startup Law” is also good news for the Latin American entrepreneur

The opinions expressed by the collaborators of Entrepreneur they are personal.

After almost a year since the Government presented the draft of the “Startup Law”finally the Spanish Congress approved it to take effect on January 1, 2023. This marks a milestone in the Spanish innovation ecosystem and its benefits will mean a powerful attraction for the entrepreneurs and investors from all over the world who are interested in exploring doing business in the Iberian Peninsula. Latin America is no exception and we will see why.

M_a_y_a | Getty Images

Although the text of the law includes various considerations for startups on Spanish soil, it is interesting to highlight some points that explore tax aspects, talent attraction (among them, the so-called visas of digital nomads) and foreign investment.

To begin with, something to celebrate is the reduction in the tax rate on corporate tax and non-resident income tax. That way, startups will go from paying 25% to 15% during the first four years from when the tax base is positive.

But the new law also facilitates the use of calls stock options (that is, the right that a company grants its employees to buy a certain number of shares of the company at a certain price) as a form of compensation. In these cases, the tax exemption will be raised from €12,000 to €50,000 starting in 2023, in addition to delaying their taxation when they become liquid, either through the sale of shares or through an IPO.

The “Startup Law” The Spanish also raises the maximum deduction base for investment in new or recently created companies from €60,000 to €100,000 per year. At this point, the period in which a newly created startup is considered has been set at five years (seven years in certain sectors, such as biotechnology or deep tech).

Another important point is the one that refers to the attraction and retention of talent. In this sense, the creation of a new visa category for digital nomads, called visa for international teleworkers, to carry out a work or professional activity remotely for companies located outside the national territory, with a duration of one year. Thus, managers and employees of the startupsinvestors, and digital nomads and their families, will be able to access a special visa of up to five years.

As for foreign investment, the bureaucratic requirements for investors who are not going to reside in Spain are reduced. This means that those who want to invest in startups in Spanish territory will not be required to obtain a Foreigner Identity Number (NIE). An electronic application will be enough to obtain a Tax Identification Number (NIF).

“The law will make it easier for Latin American startups to settle in Spain”

For Maria Benjumeapresident and founder of South Summit, the great Ibero-American meeting of innovation ecosystems, who spoke exclusively with Entrepreneur in Spanish, the “Startups Law” in Spain will have a very positive impact on Latin American entrepreneurs. From a room in the IE Tower, in the financial center of Madrid, María enthusiastically talks about the possibilities of this milestone for the Latin American innovation ecosystem.

“I am convinced that we are a great region. With the approval of the law, this will make it much easier for Latin American startups to settle in Spain. The advantages offered by the ‘Startup Law’ will boost entrepreneurship,” says Benjumea. The president and founder of South Summit also highlights the use of stock options proposed by the law and tax reductions as some of the most important aspects of it.

South Summit was born in 2008 in the midst of the crisis in Spain with the conviction that innovation and entrepreneurship had to be key to the economic development and recovery of the country. Benjumea highlights that with this law, the Spanish ecosystem seeks to compete with the rest of the countries in the region and the world. He also comments that, somehow, this bill originated 10 years ago coinciding with the founding of the great forum for entrepreneurship and innovation that is South Summit.

Benjumea highlights the action of the current Spanish Government and the political will of the different parties, which overcame their differences to approve a country’s commitment to the future that contemplates the promotion and creation of startups. An initiative that started from consulting with the various actors in the ecosystem about their needs to achieve the goal of turning Spain into a pole of attraction for investors and entrepreneurs.

This meeting with Benjumea took place within the framework of the 5th edition of enlightED, the world conference on education, technology and innovation, which has established itself as a world benchmark in educational innovation. Under the motto “Connecting innovation. Education that transforms”, The event addressed three main themes on which the 21 conference presentations revolved: digital skills today and tomorrow; disruptive classrooms and progress in equity and inclusion through innovation.

After two hybrid editions, this year the conference was held again on November 16 and 17 in face-to-face format with an attendance of 2,000 people. This edition also had the support of the “la Caixa” Foundation, which joins Fundación Telefónica, IE University and South Summit as organizers of the event.

(About the Author: Stefano of March is site editor novobrief).

Why the Spanish “Startup Law” is also good news for the Latin American entrepreneur