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November 23, 2022

Spanish Congress of Deputies passes the new startups and digital nomad law. What does it mean?

Finally, the Startups Law has been approved in the Congress of Deputies with a large majority.

After 16 months of negotiations, the Spanish Parliament has given the green light to a new startups law. It’s full of real tax benefits and perks for entrepreneurs, remote workers and digital nomads who want to live and work in Spain. 

We’ve come a long way

In 2015, Spain ranked among the worst OECD countries to start a business in. The new law should change this, so fingers crossed.

Here are the highlights!

  • The new law is expected to come into force in January 2023.
  • The startups law will be open to anyone from the EU or third countries, as long as they haven’t been a resident in Spain in the previous 5 years.

For startups

Significant tax incentives are established for start-up companies and investors, including more favorable EU treatment of stock option remuneration

  • Startups and investors get a reduction in Corporation Tax from 25 to 15 percent during the first four years 
  • The use of stock options as a form of remuneration is facilitated and their tax exemption is raised from 12,000 to 50,000 euros per year.
  • The Law also raises the maximum deduction base for investment in newly or recently created companies from 60,000 to 100,000 euros per year.
  • In addition, the type of deduction goes from 30% to 50%, and the period in which a recently created startup is considered to be five years (seven in certain sectors).

For freelancers

Working in Spain will become easier, and cheaper for Digital Nomads from outside the EU.

  • It will allow digital nomads to get a special visa which can be renewed for up to five years. 
  • Remote workers will be eligible to pay Non-Residents Tax (IRNR), a reduced tax rate of 15 percent. 

What’s not clear yet…

…Is how much digital nomads will have to earn to be able to apply for the visa, and whether or not they have to pay for social security or get private health insurance.

This Startups Law has been debated for years and is one step away from being approved, pending its passage through the Senate and is expected to enter into force on January 1, 2023.. We’ll update you on that as soon as we know more!

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