Spain’s Entrepreneurs Law To Fuel International Investment

Spain Entrepreneurs Law To Fuel Growth

Spain’s Entrepreneurs Law To Fuel International Investment

Spain is betting on entrepreneurs to drive a return to economic growth, and the government is keen to give them all the help they can.

Nearly two years after the ruling Popular Party announced plans to provide a lifeline to small firms struggling to survive the economic crisis, the Entrepreneurs Law is finally up and running. In a nut shell, the new law offers small and medium-size enterprises (SMEs) incentives for reinvesting profits, amends existing patent laws and provides research and development tax breaks.

The main objective is to encourage SMEs and self-employed business owners to expand their operations in Spain and create a new industrial business fabric.

The law has also been designed to encourage international investment by creating an attractive and beneficial environment for companies to set up shop in Spain.

SUPPORT FOR SMALL BUSINESSES

Spain’s SMEs account for around 70 per cent of the economy, so maintaining their competitive advantage in the economic crisis is a challenge for the government. These small businesses rode the crest of the wave of the country’s decade-long economic boom, which began in the mid-1990s. Many benefited from government subsidies, and bank credit flowed.

But once the crisis began to bite in Spain, financing dried up for these firms. A lack of funds put the brakes on their investment and expansion plans, while rigid labour laws made it difficult to downsize their workforce to cut costs.

Urgent measures were required, and the new Entrepreneurs Law is the most far-reaching ever introduced in Spain. Apart from benefitting existing SMEs, it will make it easier to set up a business in Spain by cutting a lot of red tape, which will have huge ramifications for years to come.

FOREIGN INVESTMENT INCENTIVE

So what are the key points of the Entrepreneurs Law?

For SMEs:

• A reduced corporate income tax rate for companies created on or after January 1, 2013

• A new tax deduction that will allow reinvestment of profits in certain assets

• Research and development and technical innovation tax credits

For start-ups:

• Lower registration contributions

• Streamlining of bureaucracy to set up a company

• Tax benefits for angel investors who finance Spanish start-ups

There is also a new system of VAT payment deferral to help cash-strapped small businesses. But perhaps the most important aspect of the new law are measures aimed at attracting foreign investors and entrepreneurs to Spain. The law will allow non-EU residents to obtain residency in Spain, facilitating increased business activity on the part of Asian and Russian investors with deep pockets.

For information on Spain’s Entrepreneurs Law, contact corporate law firm Argali Abogados.

 

 

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