Since the Startup Law came into effect in 2022, the growth of startups has been significant: Between 2022 and 2025, startup employment rose by 46% and the average startup lifespan reached three and a half years, according to the National Forum for Emerging Companies.

These figures point to positive growth in the ecosystem since the law was passed. The legislation appears to be helping achieve its goals of promoting the creation of technology-based startups and attracting investment. Furthermore, this legislation supports other key aspects of the employment landscape, such as remote work from Spain.

In this guide, we outline the key changes introduced by this law and how they could impact your business.

Key takeaways

• The Startup Law is a regulatory framework that provides tax and administrative support primarily to innovative, digitally-based companies.
  
• Startups benefit from various tax incentives, such as a reduced corporate tax rate and the deferral of tax payments, provided they hold certification from Enisa as an emerging company.
  
• The Startup Law benefits not only startups but also companies with innovative or scalable business models, as well as specific groups such as highly qualified foreign nationals, self-employed entrepreneurs who also work as salaried employees, and investors.
  

What is the Startup Law?

The Startup Law—officially titled the Law on the Promotion of the Emerging Company Ecosystem—is a set of regulations promoted by the Spanish government that’s enjoyed the support of the majority of the Congress of Deputies since the bill was passed in 2021.

The Startup Law is a legal reform carried out as part of the Spain Entrepreneurial Nation Strategy, whose main objective is to modernize the Spanish economy. To achieve this, it establishes a series of support measures—including tax incentives and administrative benefits—aimed primarily at innovative, digitally-based companies.

What’s considered a startup?

Although the term “startup” is commonly used to describe young businesses with growth potential, the law establishes a specific definition for a startup. Its activity must be based on an innovative project and a scalable business model—that is, one with the capacity to grow and expand its operations.

It’s important to note that, to qualify for measures aimed at startups, having an innovative idea or growth potential is not enough. A company must also meet legal requirements and obtain certification from Enisa—a public entity under the Ministry of Industry and Tourism. We outline the requirements below.

Key incentives under the Startup Law

The Startup Law encompasses a wide range of measures that translate into significant incentives—covering taxation, administrative matters, access to funding, and talent attraction—such as the simplification of certain administrative procedures and easier access to financing for startups in Spain.

Here is a summary of the main incentives under the law:

Tax incentives

• Reduction in corporate income tax (IS): During the first tax period with a positive tax base and the three subsequent periods, startups pay corporate tax at a rate of 15% instead of the standard 25% (provided they retain their status as a startup).
  
• Debt deferral: Startups can request—without the need for guarantees or late-payment interest—a deferral of their corporate income tax liabilities for the first two tax periods in which they record a positive tax base. In the first tax year, the deferral is for 12 months; in the second, for 6 months.
  
• Protection against losses: Startups are not required to dissolve due to losses incurred during the first three years following their incorporation, even if their net equity falls to less than half of their share capital.
  
• Acquisition of own share capital: Startups incorporated as limited liability companies (SLs) can purchase up to 20% of their share capital to implement a compensation plan and award equity stakes to their directors, employees, or other collaborators.
  
• Granting of equity stakes: Startups can pay a portion of their employees’ compensation in the form of equity stakes in the company, if permitted by their bylaws.
  
• Tax-exempt equity grants: The granting of shares or equity stakes to employees of startups can be tax-exempt up to €50,000 per year, provided legal requirements are met.
  
• Reduction in personal income tax (IRPF): Managers of alternative investment funds, venture capital funds, social entrepreneurship funds, and long-term investment funds benefit from reduced personal income tax rates; specifically, the amount derives from performance fees—which are classified as employment income—is reduced by 50%.
  
• Savings on self-employment contributions: Individuals enrolled in the Special Regime for Self-Employed Workers (RETA) due to having effective control of a startup—while simultaneously working as an employee for another employer—can benefit from a 100% rebate on their self-employment contributions during the first three years of activity.
  
• Investment deductions: Individuals who invest in startups are entitled to an IRPF deduction of 50% of the amount invested, up to a maximum tax base of €100,000 (i.e., a maximum deduction of €50,000).
  

Administrative incentives

• Streamlined company incorporation: The incorporation process can be handled electronically via the Information Center and Network for Business Creation (CIRCE) using a Single Electronic Document (DUE). When standard bylaws are used and the requirements are met, registration should be completed within six business hours.
  
• Flexibility in public contracts: Startups benefit from simplified access to public contract opportunities (with manageable solvency requirements and a specific focus on innovative and precommercial public contracts), and receive payments in installments as they complete various phases of a project.
  
• Testing in regulated sectors: Startups operating in a regulated sector, such as the energy industry, can apply for a temporary testing license to validate the safety and viability of their innovative projects.
  
• Foreign investments without a Foreigner Identity Number (NIE): Foreign nationals wishing to invest in a Spanish startup can do so using a Tax Identification Number (NIF), as the Startup Law eliminates the previous requirement to obtain an NIE.
  

Incentives for obtaining grants

• Up-to-date information: The Startup Law ensures the publication of up-to-date information on grants for startups in Spain at Entrepreneurship Service Points (PAEs) and on the National Entrepreneurship Office (ONE) Platform.
  
• Reduction of guarantee requirements for obtaining aid: Startups can opt for a reduction in the required guarantee to obtain public funding, provided they accept a proportional decrease in the amount of the subsidy or advance payment.
  

Incentives to attract foreign talent

• Extension of residence permit duration: Highly qualified professionals and foreign entrepreneurs can obtain three-year residence permits in Spain. Additionally, foreign nationals who complete undergraduate or graduate studies in Spain can reside in the country for an additional two years to look for work or start a business.
  
• Special visa for foreign remote workers: Remote workers who do not reside in the EU and who wish to carry out professional activities while in Spain (commonly known as “digital nomads”) can apply for a special one-year visa.
  
• Option to work remotely for Spanish clients: Foreign self-employed remote workers who provide professional services to international clients can also work for Spanish companies, as long as that work does not exceed 20% of their total professional activity.
  
• Flat-rate personal income tax: Certain relocated workers, remote workers, entrepreneurs, company directors, and qualified professionals can opt for the special regime under Article 93 of the Personal Income Tax Law: the general tax base is taxed at a rate of 24% on income up to €600,000 per year and at 47% on income exceeding that amount.
  
• Social Security registration using a passport: Highly qualified professionals or foreign entrepreneurs can register with Social Security using their passport during their first six months of residence in Spain.
  

Requirements to benefit from the Startup Law in Spain

Depending on the measure you want to take advantage of, you must meet specific requirements. The conditions established by the Startup Law for each use case are detailed below:

Requirements to qualify for measures aimed at startups

To benefit from the tax and corporate benefits set out in the Startup Law, it’s necessary to obtain certification as an “emerging company” (startup), which is issued by Enisa through a one-stop shop.

These are the requirements companies must meet to obtain certification:

• Be established in Spain, whether through a registered office, headquarters, or a permanent establishment within Spanish territory.
  
• Be a newly created company or have been in operation for less than five years. This threshold is extended to seven years for startups in the energy, industrial, or biotechnology sectors, those with proprietary technology developed entirely in Spain, or those operating in emerging sectors.
  
• Have been formed from scratch or through the restructuring of other companies that also qualify as startups.
  
• Have an innovative and scalable project—that is, one that stands out from the competition and has a high probability of exponential growth.
  
• Do not engage in any activity that causes significant harm to the environment.
  
• Demonstrate that at least 60% of employees hold an employment contract formalized in Spain.
  
• Do not exceed €10 million in annual revenue.
  
• Neither distribute dividends nor be listed on the stock exchange.
  
• Founders and directors must be up-to-date with their payments to the Spanish Tax Agency (AEAT) and Social Security. Furthermore, they must not have criminal records for certain crimes—such as financial crimes or corruption—or be barred from receiving grants from public entities. Individuals holding 5% or more of the share capital must not have a record of noncompliance with these rules.
  

Requirements to qualify for measures aimed at individuals

The Startup Law includes other measures aimed not at companies, but at individuals connected to the entrepreneurial ecosystem. Since each one is designed for a specific profile, we’ve compiled a list of the requirements that must be met for each measure, along with the target audience for each:

• Self-employment contribution waiver for entrepreneurs with multiple professional activities: To qualify for a 100% waiver of self-employment contributions, an individual must combine salaried employment with the management of a startup as a self-employed person.
  
• Digital nomad visa for foreign remote workers: The requirements for obtaining this special visa include working remotely from outside the EU and relocating to Spain to perform remote work for foreign companies or clients, as well as holding a university degree or demonstrating at least three years of professional experience.
  
• Special residence permit for foreign entrepreneurs: Foreign nationals wishing to carry out an innovative project of special economic interest in Spain can apply for the corresponding authorization. The procedure varies depending on whether they are currently outside Spain or legally present in the country.
  
• Administrative simplification for foreign investors: Any foreign national wishing to invest in a Spanish startup can apply for a Tax Identification Number (NIF) online without first obtaining a Foreigner Identity Number (NIE).
  
• Flat 24% IRPF rate for individuals relocating to Spain: To benefit from this tax incentive, the individual must have lived in another country for at least five years and then relocated to Spain to found a startup or work for one.
  
• IRPF savings for investors: To qualify for the investor income tax deduction, investors must acquire up to 40% of the share capital of a company that is no more than five to seven years old—regardless of whether or not the company is certified as a startup—and hold the investment for three to 12 years.
  

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FAQs about the Startup Law in Spain