The new Law 28/2022, of December 21, on the promotion of the startup ecosystem (better known as the Startup Law) establishes that accreditation as a startup will be carried out by the National Innovation Company (hereinafter, “ENISA”). This accreditation will be necessary in order to take advantage of the tax benefits established by law.
The requirements for accreditation as an emerging company are as follows:
- To be a newly created company or a company that has not been registered in the Commercial Registry for more than 5 years, or 7 years in the case of the biotechnology, energy or industrial sectors, among others.
- Not having arisen from merger, spin-off, transformation, concentration or segregation operations, with the exception of those arising from other start-ups or spin-off technology-based companies originating in public universities.
- Not to distribute or have distributed dividends since the incorporation of the company.
- Not listed on a regulated market.
- To have a registered office or permanent establishment in Spanish territory.
- At least 60% of the workforce must have an employment contract in Spain.
- Develop an innovative entrepreneurship project with a scalable model.
The application of the tax benefits derived from the accreditation as an emerging company terminates in the following cases:
- Failure to comply with any of the above requirements.
- When the company reaches the age limit to become an emerging company, which is 5 years, in general cases, or 7 years for those belonging to the biotechnology sector, since its incorporation.
- Extinction of the company before the end of 5 or 7 years from its creation.
- Acquisition by a company that is not accredited as an emerging company.
- Have an annual turnover of more than 10 million euros. It is not specified, but it is understood that this figure, in the case of a group of companies, refers to the group’s turnover.
- Develop an activity that generates significant damage to the environment.
- To have partners who directly or indirectly hold at least 5% of the capital stock or whose directors have been convicted by a final judgment for any of the aforementioned crimes.
The term to determine the startup character will be 3 months after the company has submitted all the information related to the application for accreditation, including any additional information that may have been requested based on the analysis carried out by ENISA. Positive administrative silence is established in the event that no response is received after said period.
This 3-month term shall be applicable as from six months after the date of entry into force of this Law. In other words, taking into account that the entry into force is expected at the beginning of the year, the 3-month period will apply as of July 1. Consequently, if a company applies for accreditation as an emerging company during the first half of 2023, the deadline for ENISA to respond would be 30-09-2023.
In connection with the requirement that a 60% of the workforce has an employment contract in SpainHowever, it is not established whether those companies that do not have employees are excluded from the application of this Law, for which reason it will be subject to what is specified in the regulations or to the interpretation made of said provision.
The question also arises as to what is the time frame of application of such benefits, in particular for those companies that are not newly created, but that were incorporated less than 5 (or 7) years ago, that have had a positive accounting result previously and have already been taxed at 25% corporate income tax; or if the effects of the tax benefits of this Law are applied in the fiscal year in which the startup character is requested or in which ENISA accredits it.
For questions related to this or other matters of tax, accounting or legal relevance, do not hesitate to contact us at GM Tax Consultancy.
