Spain’s New Startup Law is exciting, so who can benefit?

Alastair Johnson from Moving to Spain explores Spain’s new Startup Law.

The Startup Law took effect on January 1, 2023 – aiming to boost entrepreneurship and innovation in Spain. The full name is “Proyecto de Ley de fomento del ecosistema de las empresas emergentes”, but you’ll hear it called the “Ley Startups”. The law is an exciting project from the government, impacting many areas of immigration, taxation, and administration.

We’ll explore how the new law affects people moving to Spain under the new rules.

What makes these changes so exciting is what they say about the country Spain wants to be. It aims to be a high-growth, innovative economy that creates the jobs of the future. It is outward looking, aiming to bring the best and brightest to Spain. And it seeks to build the capabilities and skills that Spain will need to thrive in the future.

Nomad Law

There are two immigration headlines.

1. Startup/Entrepreneur Visa. Spain may welcome you if you have a business idea and the skills and resources to bring it to life. The process and qualification for this visa have been streamlined to attract entrepreneurs and startups. Your idea must be of value to the Spanish economy, and you’ll need a realistic business plan. ENISA will assess your business plan, and once that is approved, it’ll take just ten days to evaluate your application. There’s a three-year residence permit if approved, and it is a pathway to PR and citizenship.
2. Digital Nomad / Remote Work Visa. Spain has long been a beloved destination for remote workers and Digital nomads. However, there were no easy ways to work in Spain for offshore employers and clients legally. The new Digital Nomad visa changes that – with Spain now having one of the best remote work immigration options worldwide. You may qualify for this visa if you can show a steady income of more than €30,240 from sources outside Spain. This visa does lead to permanent residency and citizenship, and you’ll have an answer to your application in a maximum of 20 days.

The tax changes are significant too.

1. Corporate Tax: Your startup can have a reduced corporate tax rate of 15% (down from 25%) for up to four years. There are other tax benefits as long as your company meets the startup classification.
2. Personal Income Tax: There is a considerable benefit for remote workers and digital nomads on the Digital Nomad Visa. You may qualify to be taxed as a non-resident in Spain. This ruling means you’ll be under the famous Beckham Law, now amended to take on a broader group of people. The classification of IRNR (Non-Resident Income Tax) and not IRPF (Personal Income Tax) is significant. You’ll pay just 24% instead of the standard resident progressive tax rates. And that can mean substantial tax savings.
3. Wealth Tax: Again, there is an excellent tax advantage here for Digital Nomad Visa holders. For asset-rich Expats, this removes a hurdle to moving to Spain. The ruling excludes them from Spain’s Wealth and Solidarity taxes under this regime.

These changes are quite a shift in attitude from the government, and the commitment to cutting red tape and attracting talent and ideas will boost Spain’s economy. The short-term impact is significant, but the longer-term results may be even more remarkable. The message seems to be getting out to the right people, too, with Google searches for “Spain Digital Nomad Visa” 400% higher in January 2023 than the year before.

Silicon Valley is an excellent example of how innovation snowballs and governments worldwide have moved to take advantage. Now Spain has taken an essential step towards becoming an innovation hub and building jobs for the future.