There are numerous success stories of startups in Spain, whose businesses began as an idea that then went on to solidify until reaching an enviable capitalisation.
Something that characterises start-ups from other corporate models is their link to innovation and technological development.
These projects must have a maximum of creativity as they seek to integrate into the market as a useful and novel offer.
If you are thinking of making an investment or setting up a new business, it is worth knowing the latest updates on the Startups Act and the requirements for setting up this business model.
What is the Startups Law?
Before telling you about the requirements for a startup in Spain, you should know the basic principles of the Startups Law.
Formally known as the Law for the Promotion of the Startup Ecosystem, its development is aimed at promoting the development of an entrepreneurial ecosystem that is rooted in technological advances in Europe.
The measures contained in the startup law include a series of tax, labour, civil and commercial regulations.
In this judicial management, there is also an intention to facilitate corporate management at an international level, positioning Spanish talent across borders.
When analysing the taxation of start-ups, some measures can be seen that allow some taxes to be deducted in specific cases, with the intention of safeguarding the commercial balance of newly established companies.
In addition, the characteristics that a business project must have in order to be considered a start-up are covered by this law.
In this way, the requirements for a start-up company also relate to the fulfilment of the profile expected in this type of project.
What are the requirements for a start-up company?
The new law on startups in Spain integrates a fairly clear definition of what is actually considered to be a startup company, giving a glimpse of the basic requirements for its incorporation.
If you are thinking of setting up a new company and want to focus the project within a startup model, it is worth taking a closer look at what is set out in this legislation.
Here are some of the requirements for a startup company as set out in the new Startups Law.
Maximum age
Only companies that have been in existence for no more than 5 years are considered as startups, taking as a reference the date issued in the Commercial Register or in the competent register of cooperatives, as the case may be.
Newly created companies can be considered as startups as long as they meet other requirements that I will share with you later on.
And in the case of companies dedicated to sectors such as biotechnology, energy or industrial projects, their age is valid up to 7 years, being the only exception so far.
No dividends
If you have a company that has been incorporated for several years but its age is still within the framework allowed to establish itself as a startup, there are still some considerations regarding the requirements.
You should note that cases where there has been a distribution of dividends or receipt of returns (if it is a cooperative) are not accepted.
Workforce
The way in which the workforce operating within the company is constituted will also determine whether it can be considered as a startup or not.
The new Startup Law establishes that at least 60% of the permanent staff must have an employment contract in Spain. This does not mean that there cannot be some international professional relationships, but it cannot exceed the percentage described above.
The legal framework for the development of start-ups is quite flexible with remote working methodologies, but there are some conditions imposed in this respect that must be met to avoid setbacks.
Registered office
Another requirement for a start-up in Spain has to do with the constitution of the registered office.
For a start-up project to be considered as such, the registered office must be in Spain. In the case of foreign entrepreneurs, proof of permanent establishment in Spain must be issued.
Innovative potential
In addition to the requirements for a start-up company that have been described so far, there is a consideration that is implicit in the nature of the business.
This is the factor that differentiates an ordinary company from a Startup, and that is that the business model must be entrenched with technology and must demonstrate innovative potential.
The purpose of startups is to take advantage of the latest innovations in IT and technology with the intention of promoting visible solutions in a fresher way.
This corporate model is key to achieve the development of the country, and at the same time to contribute to the constant technological evolution in which society currently finds itself.
| Requirement | Description |
|---|---|
| Maximum age | Start-ups must not be older than 5 years, unless they are in specific sectors which allow up to 7 years. |
| No dividends | No dividends must have been distributed or returns received in the case of cooperatives. |
| Work template | At least 60% of the permanent staff must have an employment contract in Spain, with certain conditions for remote working. |
| Head office | The registered office must be in Spain, and certain formalities must be fulfilled for foreign entrepreneurs. |
| Innovative potential | Start-ups should demonstrate innovative potential and be focused on novel technology and solutions. |
Creating a startup in Spain: legal procedures
Now that you know what the main requirements for a startup in Spain are, I will share with you some of the legal processes you need to carry out for its incorporation.
Legal form
First of all, the entrepreneur must set himself the task of defining the legal form through which he will carry out his operations.
In making this decision, he/she will be determining aspects such as the necessary share capital and the agreements attached to the distribution of profits.
A startup can operate through limited companies, public limited companies, cooperative societies or civil societies.
It is worth getting professional advice as, depending on the type of company you choose, you will have to set up your capital and other key aspects for the operation of the business.
Company registration
On the other hand, in the creation of a startup you must select a name that defines very well the intention of your business and then register it in the Commercial Registry.
Once you are present at this institution, the database will be searched to verify that the name you have decided to choose is not already working for another business. But in general it is a procedure that can be completed in a short time.
In fact, nowadays the registration of the Startup name can be carried out through an online process. If you want to do it this way, make sure you do it on the official portal of the Commercial Register.
Articles of association
This is one of the requirements for a start-up company in Spain when it has decided to link up as a company.
In this context you will need to write the articles of association that outline the concept of your business, and then present them to a notary so that they are duly signed.
It is worth getting advice as this is a changing requirement depending on the nature of the business.
Incorporation
This is one of the requirements for a start-up company in Spain subject to the company form, entrepreneurs will have to present a public deed of incorporation of the business.
This document must also be signed by each of the founding partners and must then be presented before a notary to obtain the notary’s signature.
| Legal Process | Description |
|---|---|
| Legal form | The legal form of the company must be defined, considering aspects such as the necessary share capital. |
| Commercial Register | Choose a name that defines the intention of the business and register it in the Commercial Register. |
| Articles of association | Write the articles of association outlining the business concept and file them with a notary. |
| Incorporation | Submit a public deed of incorporation of the business signed by the founding partners. |
Procedures and requirements for an emerging company in finance
Now that you know what the requirements are for an emerging company in Spain that allows defining a business model within the composition of Startups, I will present some processes that are mandatory in tax matters.
NIF
If as a founder you are registered as self-employed you can use your NIF, although this only applies to Spanish citizens.
If you are going to create a startup based on a company, the definition of this collection must be requested as a company NIF, which will be acting as a provisional agent.
Census of businessmen, professionals and retainers
Another requirement to create a Startup is to register for the Tax Economic Activities or, depending on the case, register in the census declaration.
To do this you must request the formal form 036 or 037 and mark those items that define the activity that your Startups will develop.
Registration in the Commercial Registry
Depending on the case, you can do this in the Commercial Registry of Self-Employed Workers, although it will depend on whether the nature of the business is constituted as a company or if it depends on self-employed workers.
This is another process in which it is advisable to have some professional advice that can help you clarify your main doubts regarding the expediting and safer execution of this formality.
| Tax Procedure | Description |
|---|---|
| NIF | Founders can use their NIF if they are registered as self-employed, or request a company NIF. |
| Census of entrepreneurs, professionals and retainers | Register for the Tax on Economic Activities and request formal form 036 or 037 depending on the activity. |
| Registration in the Commercial Registry | Register the company in the Commercial Registry of Self-Employed Workers or in the appropriate one according to the nature of the business. |
What are the requirements to open a Startups?
The first thing you should do if you want to develop a startup is to verify that your business model really fits within that methodology.
To do this, I recommend that you check the requirements for a startup that were defined throughout this post.
The rest of the process is based on processes that help formalize the constitution of the Startups, presenting some variations depending on the characteristics of the business.
If you need more guidance or advice for entrepreneurs in Barcelona, do not hesitate to contact us. We are here to help you on your path to business success.
FAQs
What is a startup?
An emerging company, also known as a startup, is a business organisation that is in its initial stages of development and seeks to offer an innovative product or service to the market. These companies typically seek rapid growth and often have limited resources in their early stages.
Do I need to have a work team to start a startup?
Not necessarily, but it is highly recommended. A strong team can provide complementary skills and diverse knowledge that are essential to the success of a startup. However, some startups start as individual projects and then grow as they raise funding.
How can I finance my startup?
There are various financing options for startups, such as angel investors, venture capital, government grants, and loans. The choice of financing source will depend on the stage of development of your company and your long-term objectives.
What tax advantages exist for emerging companies in Spain?
In Spain, there are specific tax advantages for startups, such as reductions in corporate tax and tax deductions for investments in R&D. These advantages are designed to encourage innovation and growth of startups.
How can I protect the intellectual property of my business idea?
To protect the intellectual property of your idea, you may consider applying for patents, trademark registrations, or confidentiality agreements with employees and collaborators. It is also important to keep a detailed record of the creation and development of your product or service.
