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Business Angels in Spain: Deductions, Requirements

The patrons exist for a long time, especially linked to cultural and scientific works. They were in charge of supporting artists and scientists through monetary contributions and materials, as well as protection thanks to their influence, in exchange for simple recognition or moral and intellectual satisfaction.

At present there still exists patronage of this type, very linked to scholarships and social works, although it is not always easy to get. For this reason, other forms of investment have been raised for new entrepreneurs, such as the figure of the Business Angel.

Next, we will explain what they are, what tax benefits they have in their IRPF, the requirements and especially what deductions are established in Barcelona and the rest of Catalonia.

What the Business Angels are?

A Business Angel is a person who provides financing to a start-up, usually in exchange for a shareholding. In addition to financial capital, he also contributes by providing his experience to guide the entrepreneur and his contacts.

That the business prospers will interest both parties, since the Business Angel has shares that it expects to generate a profit in the future, so the success of the start-up becomes its main objective. Do not confuse them with mere speculators, since they are completely involved in the project and their investments are temporary, giving way to new investors after a few years if necessary.

Business Angels invest in companies that are in the development and expansion phase and usually maintain anonymity before third parties.

Deductions from the Business Angel

Bussines Angels can deduct 30% of the capital invested in the IRPF quota, with the maximum contribution entitled to a deduction of 60,000 Euros. That is, the maximum that can be deducted each year is 18,000 Euros (30% of 60,000 Euros).

To benefit from this deduction both the entity and the investor must meet a series of requirements:

Requirements to be met by the entity

  • The entity has to take the form of a limited company, anonymous labour, limited or limited work not admitted to trading on organized markets during all years of ownership of the action.
  • Carry out an economic activity that has sufficient material and personal resources for the development of it. It can not be a mere property or real estate management company.
  • Equity must be less than 400,000 Euros at the beginning of the year in which the shares are acquired (if the entity is part of a business group, this limit will refer to the group of entities belonging to that group).

Requirements to be met by the taxpayer (Business Angel)

  • The Business Angel has to maintain in its own the shares or participations in a period greater than 3 years and less than 12.
  • The shares or participations acquired must be due to the incorporation of the company or a capital increase carried out in the following three years following said incorporation.
  • The shares acquired by the taxpayer, together with those of any relative up to the second degree can not exceed 40% of the company’s capital stock.
  • That there are no shares or participations of an entity through which the same activity had previously been done through other ownership.

Deductions of Business Angel in Barcelona (Catalonia)

In some Autonomous Communities, the conditions of deductions for investment in newly created entities may vary. For example, in Catalonia there are these variations:

  • The deduction percentage is maintained at 30%, with a maximum deduction amount of 6,000 Euros.
  • The maximum number of shares acquired by the taxpayer together with those of family members up to the third degree is 35% of the total of the company.
  • The entity must have the nature of SA, SRL, SAL or SRLL.
  • The entity must have a social and fiscal address in Catalonia.
  • The operations in which the deduction is applicable must be formalized in a public deed.

Whether you plan to invest in a newly created entity or if you are a start-up and need legal advice in Spain, contact our tax advisors in Barcelona for an entrepreneur and startup consultancy. We inform you and manage your tax affairs in a professional and personalized way.

 

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