Spain: Tax benefits for investment in Startups
There is no doubt that the entrepreneurial ecosystem is a booming sector, so investing in newly created companies can become a powerful engine to stimulate our economy. Precisely in order to encourage investors to allocate part of their assets to incipient business projects, the State has provided a series of tax benefits. From January 1, 2018, people who invest in newly created companies can deduct 30% of the amounts invested up to a limit of 60,000 euros per year, that is, from this year, investors can deduct up to a maximum of 18,000 euros per year in your income statement (Law 6/2018).
Requirements for investors In order for tax benefits to be applied, a series of requirements must be met by the investor and by the invested company.
In relation to the investor:
- You must be a resident of Spain;
- You must not own (together with your spouse and certain relatives) more than 40% of the share capital of the startup in which you invest;
- You must not have an employment relationship with the startup;
- You must acquire the shares of the startup at the time of incorporation or in a subsequent capital increase carried out within 3 years following the incorporation, maintaining the participation for a period of more than 3 years and less than 12;
- You cannot acquire shares in a startup through which the same activity that the investor had previously carried out through another ownership is carried out.
Requirements that are required of the startup in which it is invested:
- Revestir form of Stock Company or Limited Liability, including labor companies;
- Being a company incorporated in the last three years, with a registered office and tax address in Spain;
- Not be admitted to trading on any organized market, including the Alternative Stock Market, and this requirement must be met during all the years of holding of the shares;
- To carry out an economic activity that has the personal and material means that are necessary for its development;
- Have own funds that do not exceed the amount of 400,000 euros at the beginning of the tax period in which the investment was made.
Other conditions Tax benefits may not be applied in the following cases:
- When the company in which it is invested has as its main activity the management of movable or real estate assets.
- When the company in which it is invested has been established exclusively to finance startups, except for those investors who acquire a stake equal to or greater than 5% of the startup's share capital, maintaining said stake for a year, or in those cases where those that the joint venture vehicle is set up in order to manage participation (to attend meetings or councils, for example).
Likewise, another tax incentive must be taken into consideration in personal income tax: the exemption in the reinvestment of the profits from the transfer of shares or participations in startups to which the deduction provided for in article 68.1 of the Personal Income Tax Law had been applied. . This implies that the capital gains obtained as a result of the transfer of the acquired shares on which the 20% deduction in personal income tax would have been applied, are excluded from tax, when the amount is reinvested in the entrepreneurial ecosystem. Required documentation In order for the investor to be able to enjoy the aforementioned deduction, it will be necessary to obtain a certification issued by the startup whose shares have been acquired, in which it must be indicated that the indicated requirements have been met. Simultaneously, the startup in which the investment has been made must submit to the State Tax Administration Agency, electronically, form 165 relating to the informative declaration of individual certifications issued to partners or participants of newly or recently created entities, a presentation that must be carried out in the month of January of each year in relation to the subscription of shares in the immediately preceding year.