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Special Tax Regime and the Startup Law

digital nomad in spain

On October 14th 2022, the Spanish government changed lives with a new startup law, titled the “Proyecto de Ley de fomento del ecosistema de las empresas emergentes.”  

The law goes by multiple titles. Undoubtedly, The Beckham Law (yes, that Beckham), the Startup Law are the most commonly used in English. This law makes it financially beneficial for startup companies and international remote workers in Spain under a special tax regime.

For many, The Startup Law is attractive for two main reasons. Firstly, it provides greater legal coverage. Secondly, it provides added economic support to technology-based startups and remote workers.

In a nutshell, it is an exciting long-term idea, because it also benefits the country. Individuals who qualify for a visa under The Startup Law get to live, laugh and love in Spain, while Spain gets a new framework for a business ecosystem. A system that could be capable of becoming the engine of modernization for the Spanish economy.

Does the Startup Law Apply to Entrepreneurs and Digital Nomads?

Yes. One major focus of the Startup Law is to attract and retain talent in Spain. While Spain has no trouble attracting interested foreigners, bureaucratic legalities can often make obtaining a residence visa difficult. 

The Startup Law, and all its related benefits, attempt to ease these bureaucratic burdens. Entrepreneurs and digital nomads coming to work in Spain now have clearer visa pathways to do so. At the same time, they have access to added benefits and low costs of opening a business. Along with the tax incentives!

The law extends to “international remote workers” otherwise known in Spain as Digital Nomads. In fact, as a result of the Startup Law, there is even a specific Spain Digital Nomad visa pathway. The Nomad Visa is an easier way to work here than trying to obtain Spain’s Work Visa.

When considered alongside the implementation of the law “Crea y Crece” to ease company formation, the Startup Law puts Spain at the forefront of growth and talent in the digital economy.

What does the Startup Law change?

In short, your time and money. The Startup Law project modifies Article 93 of Spain’s Personal Income Tax Law, improving it so that the “Special Tax regime [is] applicable to employees transferred to Spanish Territory”, adapting the conditions to the remote work of employees, as seen in a comparison below:

Conditions Before and After The Special Tax Regime

Article 93 IRPF before Startup LawArticle 93 IRPF after Startup Law
Non-Tax Resident in Spain in the previous 10 Fiscal YearsNon-Tax resident in Spain in the previous 5 Fiscal Years
Spanish Labor contract or Letter of assignment to a Spanish entitySpanish Labor contract or Letter of assignment to a Spanish entity
 ___Remote working contract
Status of Company Director owning less than 25% of the businessStatus of Company Director owning less than 25% of the business or;
___ The Company is considered to be an “Emerging company”
Not applicable for the self-employedNot applicable for the self-employed

The BIG TAKEAWAY is this. The Startup Law establishes a reduced tax rate of 15% for startups that are taxpayers of Corporate Tax. It also offers reduced tax rates on the Income Tax of non-residents who obtain income through permanent establishment in Spain. 

The reduced tax rate of 15% for startups is applicable during the first tax period that the tax base turns out to be positive. It continues this way for the next three consecutive years. In this time period, companies will continue to be taxed at 15% as long as it maintains the status of an “emerging company.

Last but not least, there is a rise for dividends, interest, and capital gains from 19% to 26%.

How Long Can I Stay In Spain?

If you are able to obtain a visa under the Startup Law, you typically can live and work under it for up to 5 years. However, the time period is granted on a case by case basis, and will be clearly indicated with the approval by Spanish Tax Authorities, and is often renewable. The process for application of this tax regime is established by the Ministerio de Hacienda y Función Pública (Ministry of Finance and Civil Service) .

Lexidy Can Help You Benefit from the Startup Law

In conclusion, there is no reason to work from home forever if you are an entrepreneur or digital nomad. Lexidy Law Boutique will ensure you reap all the benefits of the Startup Law in Spain. 

From immigration to corporate to tax to language and housing, we can guide you to success in Spain every step of the way.

Psst. Need a place to stay once you’re in Spain? We have you covered with our real estate department.

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