Startup Law Spain: A Practical Guide for Foreign Founders

The Spain Startup Law is a legal framework that defines what a startup is in Spain and offers specific tax, immigration and administrative benefits to eligible companies. For foreign founders considering Spain as a base for their tech or innovation-driven project, this law combines reduced tax rates, simplified incorporation procedures and new residence permits into a single coordinated system. If you are thinking about launching or relocating your startup to Spain, understanding how these pieces fit together is now more important than it has ever been.

What Is the Spain Startup Law?

The Spain Startup Law refers to Law 28/2022, officially titled “Ley de Fomento del Ecosistema de Empresas Emergentes” (Law for the Promotion of the Ecosystem of Emerging Companies). This legislation came into force in late 2022 with a clear set of objectives: to boost innovative companies, attract international talent and investment, and reduce the bureaucratic barriers that traditionally made Spain a slower destination for entrepreneurs compared to other European hubs.

From the perspective of Benavides Asociados, the Spain Startup Law works as a coordinated package of tax, legal and immigration rules rather than a single isolated measure. The law does not just lower your corporate tax bill. It also changes how stock options are taxed, how investors get deductions, how fast you can incorporate a company, and what type of visa you can apply for if you are a non-EU founder or remote worker.

Main goals of the law

The Spain Startup Law was designed around four core pillars:

• Tax incentives: Reduced corporate tax rates for qualifying startups, improved treatment of stock options for employees, and higher deductions for private investors who back Spanish startups.
• Reduced red tape: Faster company formation processes, lower notary and registry fees, and the ability to incorporate with reduced capital requirements.
• Talent attraction: New residence permits for entrepreneurs, investors, remote workers and highly skilled professionals, including the much-discussed digital nomad visa.
• Stronger innovation ecosystem: Official certification by ENISA (the national innovation agency) that labels a company as a startup and unlocks access to all these benefits.

Who Qualifies as a Startup in Spain?

Not every new company qualifies as a startup under Spanish law. The Spain Startup Law sets clear thresholds to separate genuine innovative ventures from traditional small businesses. To be eligible, your company must meet all of the following requirements:

• Less than five years old (or less than seven years for biotech, energy or industrial companies with long development cycles).
• Annual revenue under €10 million in the most recent fiscal year.
• No distribution of dividends to shareholders since incorporation.
• Not publicly traded on any stock exchange.
• Headquarters or permanent establishment in Spain, with a significant portion of your workforce (employees or founders) based in the country.
• Innovative and scalable business model: This is the subjective requirement. Your project must demonstrate technological innovation, a scalable structure, or a clear differentiation from traditional business models in your sector.

In practice, Benavides Asociados often describes the Startup Law as a bridge between innovative founders and the Spanish tax and legal system. The law tries to be precise with numbers like age and revenue, but innovation is harder to pin down on paper.

Typical eligibility checklist

You are likely to qualify if:

• Your company develops software, hardware, digital platforms, biotech solutions or any tech-enabled product or service.
• You have raised or plan to raise external funding from angels, VCs or accelerators.
• Your business model is designed to grow fast and serve markets beyond Spain.
• You have not yet distributed profits to shareholders and do not plan to do so in the short term.
• Your team includes founders, developers, or specialists working primarily from Spain.

However, there are grey areas. Companies that have been restructured from older entities, projects that look more like consulting firms than scalable ventures, or businesses that undergo significant changes in ownership after obtaining startup status may face questions during the certification process or later audits. The innovation criterion, in particular, is not always a yes-or-no question. ENISA evaluates your project’s potential, but there is still debate among practitioners about how far these incentives really go when the business model sits on the edge between traditional and innovative.

Key Tax and Legal Benefits Under the Spain Startup Law

Most summaries of the Spain Startup Law focus on the lower corporate tax rate and the digital nomad visa. That is fair, but it is also incomplete. The law touches multiple areas of taxation, and the real value often emerges when you combine several benefits at once.

Reduced corporate tax and deferred payments

Qualifying startups benefit from a 15% corporate tax rate (Impuesto sobre Sociedades or IRNR for non-resident entities) instead of the standard 25% rate. This reduced rate applies during the first four years in which the company generates a positive tax base, not just the first four calendar years of existence. If your startup operates at a loss in year one and two, the 15% rate starts counting when you turn profitable.

Additionally, the law allows startups to defer tax payments without interest or guarantees during the first two years of positive taxable income. This is a meaningful cash flow advantage in the early stages when liquidity is tight and time is tight as well.

Stock options and employee incentives

One of the most significant changes introduced by the Spain Startup Law is the improved tax treatment of stock options and other equity-based compensation for employees. Under the new rules:

• The tax-exempt threshold for stock options received by employees increases to €50,000 per year (up from €12,000 under the previous regime).
• Employees can defer the tax impact until they sell the shares or until a liquidity event occurs, rather than being taxed immediately upon exercising the options.

This makes it far more attractive for startups to use equity as part of their compensation packages, especially when hiring international talent who expect this type of structure. From Benavides Asociados’ point of view, the real challenge is not accessing the benefits once, but staying compliant year after year while your startup grows or pivots. Stock option plans must be documented carefully, and the tax treatment depends on how the plan is structured and whether the company maintains its startup certification over time.

Investor deductions and international capital

Private investors who back Spanish startups certified under the Startup Law can now deduct 50% of their investment from their personal income tax (IRPF), up to a maximum investment of €100,000 per year. This is a substantial increase from the previous limits and makes Spain significantly more attractive for business angels and early-stage VCs.

For international investors, the mechanics are more complex. Non-resident investors do not benefit directly from Spanish IRPF deductions, but the existence of these incentives creates a stronger domestic investor base and signals that Spain is serious about supporting the startup ecosystem. If you are raising capital from abroad, this can still matter during negotiations, as it affects the valuation environment and the appetite of local co-investors.

Official guidelines from ENISA, tax rulings and recent commentaries from Spanish tax advisors show that the interaction between these deductions and anti-abuse rules is still being tested. At Benavides Asociados we have worked with founders who underestimated how documentation requirements for investor deductions can create friction during a funding round if not handled early.

Personal tax regimes for foreign founders and talent

Foreign founders and employees relocating to Spain may qualify for the Special Tax Regime for Displaced Workers (often called the “Beckham Law” after its most famous early beneficiary). Under this regime, eligible individuals pay a flat 24% tax rate on Spanish-source income for up to six years, rather than being subject to Spain’s progressive income tax rates that can reach 47% or higher in some regions.

To qualify, you generally need to:

• Not have been a tax resident in Spain during the previous five years.
• Move to Spain due to an employment contract, director appointment, or entrepreneurial activity.
• Perform most of your work in Spain.

The Spain Startup Law explicitly connects this regime to startup founders and key employees, making it easier to justify the relocation and access the flat tax rate. For a founder moving from London, Berlin or San Francisco, the difference between a 24% flat rate and the standard progressive system is significant, especially in the first profitable years.

Spain wants to attract global talent; the tax office also wants its share, obviously. The flat rate sounds generous, but it only applies to Spanish-source income. If you continue to receive income from abroad, the tax treatment depends on the nature of that income and any applicable tax treaties. This is where planning becomes essential rather than optional.

We have an article in which we talk specifically about the Beckham Law:  2026 Guide to Tax Benefits for Expats and Professionals

Administrative Shortcuts: From Incorporation to ENISA Certification

Faster company formation and less red tape

The Spain Startup Law introduces several practical changes to the company formation process:

• Single-step incorporation: You can now set up a limited liability company (Sociedad de Responsabilidad Limitada, or SRL) through a unified electronic procedure that combines notary, registry and tax filings in one go.
• Reduced fees: Notary and registry fees for startup incorporations are capped at lower levels than for traditional companies.
• Lower capital requirements: While the standard minimum capital for an SRL is €3,000, the law allows for more flexibility in how and when this capital is contributed.
• Temporary suspension of dissolution rules: Startups are exempt, for a limited period, from the mandatory dissolution process that normally applies when a company’s net worth falls below certain thresholds due to accumulated losses.

These changes do not eliminate paperwork entirely, but they do compress the timeline. In practice, Benavides Asociados has seen the incorporation process for a startup-certified company take as little as two to three weeks when all documents are ready and the founders have their tax identification numbers (NIE or NIF) already in place.

How the ENISA startup certification works

ENISA, Spain’s national innovation agency, is the body responsible for certifying whether a company qualifies as a startup under the law. The certification process works as follows:

1. Application: You submit an online application through ENISA’s platform, providing information about your business model, team, market, financial projections, and innovation credentials.
2. Evaluation: ENISA assesses your project based on several criteria, including technological innovation, scalability, market potential, team experience, and alignment with the legal requirements (age, revenue, dividends, etc.).
3. Decision timeline: ENISA has three months to issue a decision. If they do not respond within that period, the application is automatically approved under the principle of “positive administrative silence” (silencio administrativo positivo).
4. Ongoing compliance: Once certified, your company must continue to meet the eligibility requirements. ENISA can audit your status at any time, and losing your certification means losing access to all the associated tax and legal benefits.

In simple terms, the Spain Startup Law turns Spain into a testbed where innovative founders get time, tax relief and easier paperwork to prove their idea works. ENISA’s startup certificate is essentially a yes-or-no label that tells the Spanish system: this company is innovative enough to deserve special treatment.

From Benavides Asociados’ experience, the three-month deadline is often respected, but the quality of your application matters. Founders who submit vague descriptions or fail to demonstrate clear innovation may receive requests for additional information, which extends the process. On the other hand, well-prepared applications with detailed business plans, evidence of prior traction or funding, and a clear articulation of the innovation element tend to move faster.

Immigration and Remote Work: Visas Linked to the Startup Law

Entrepreneur and startup-related residence permits

The Spain Startup Law creates or reinforces several residence permit categories for non-EU nationals:

• Entrepreneur visa: For founders of innovative projects who plan to establish and run their startup in Spain.
• Investor visa: For individuals investing in Spanish startups or innovation-related projects.
• Highly skilled professional visa: For employees joining a certified startup in roles that require specialized expertise.

These permits allow you to live and work in Spain legally, and they are generally faster to obtain than traditional work permits. The permits are initially granted for up to three years, with the possibility of renewal, and they allow family members to join you under the same residence framework.

One practical advantage is that these visas are tied to the startup ecosystem rather than to a single employer, which gives founders and early employees more flexibility if the project pivots or if they decide to move to another certified startup.

Digital Nomad Visa and remote workers

The digital nomad visa introduced alongside the Spain Startup Law allows remote workers and freelancers to live in Spain while working for foreign clients or employers. Key features include:

• Duration: Initial permit for up to one year, renewable for up to five years.
• Income requirements: You must demonstrate stable remote income from sources outside Spain. The law sets minimum income thresholds (generally around 200% of the Spanish minimum wage).
• Tax treatment: Remote workers under this visa can benefit from the flat 24% tax rate on Spanish-source income under certain conditions, though most of their income will be foreign-source and taxed differently depending on tax treaties.
• Limits on Spanish clients: You cannot derive more than 20% of your income from Spanish clients while on the digital nomad visa, as this would blur the line between remote work and local employment.

The digital nomad visa is often misunderstood. It is not a free pass to work remotely from Spain without any tax or legal obligations. You still become a tax resident if you spend more than 183 days per year in the country, and that triggers reporting and payment obligations. What the visa does is create a legal framework that acknowledges remote work as a valid reason for residence and provides some tax predictability through the flat rate regime.

For founders, the digital nomad visa can be a stepping stone. You can move to Spain, test the environment, and then transition to an entrepreneur visa once you are ready to incorporate a Spanish startup. Benavides Asociados has guided founders who run their global operations from Pollensa while hiring locally in the Balearic Islands, and the visa pathway often evolves over the first year as the business model becomes clearer.

Practical Scenarios for Foreign Founders and Investors

On paper, everything fits nicely in a flowchart. Real founders rarely live in flowcharts. Here are three scenarios that illustrate how the Spain Startup Law works in practice, along with the friction points that often emerge.

Scenario 1 – Moving your startup to Spain

You are a SaaS founder based in London or Berlin. Your company is two years old, generates €500,000 in annual recurring revenue, has six employees, and you want to relocate to Spain to take advantage of the tax benefits and lifestyle.

Step-by-step summary:

1. Choose your structure: Decide whether to incorporate a new Spanish entity or establish a branch of your existing company. Most founders choose a new SRL because it provides a cleaner separation and easier access to the Startup Law benefits.
2. Obtain NIE numbers: You and any co-founders need Spanish tax identification numbers (NIE) before you can proceed with incorporation.
3. Incorporate the company: Use the fast-track incorporation process introduced by the Startup Law. Prepare your bylaws, capital contribution, and shareholder agreements.
4. Apply for ENISA certification: Submit your application with a detailed business plan, financial projections, and evidence of innovation. Wait up to three months for approval.
5. Register for tax purposes: Once certified, register your company for corporate tax (Impuesto sobre Sociedades) and VAT (IVA). Ensure your tax residence is correctly established to benefit from the 15% rate.
6. Plan stock options and compensation: If you have employees or plan to hire in Spain, structure your stock option plan to comply with the new rules and maximize the tax-exempt thresholds.
7. Handle immigration: Apply for entrepreneur or highly skilled professional visas for yourself and your team. If family members are relocating with you, include them in the application.

The law defines clear thresholds for age, revenue and innovation. In day-to-day practice, however, innovation is not always a yes-or-no question. ENISA may ask for clarifications if your business model is not obviously tech-driven. Additionally, coordinating the timing of incorporation, tax registration and ENISA certification can create short periods where you are operating in a grey zone. At Benavides Asociados we have seen founders launch operations before their certification is finalized, which can create complications if the certification is delayed or denied.

Scenario 2 – Investing in a Spanish startup from abroad

You are a business angel based in Switzerland or the US. A Spanish startup you know from an accelerator is raising a seed round, and they are certified under the Spain Startup Law.

What to consider:

• Tax ID requirements: You will need a Spanish tax identification number (NIE) to complete the investment and sign the shareholders’ agreement. This can take several weeks if you are not already registered in Spain.
• Investor deductions: As a non-resident, you do not benefit directly from the 50% IRPF deduction available to Spanish investors. However, if you have any Spanish-source income or if you plan to structure part of your investment through a Spanish holding company, there may be indirect benefits.
• Due diligence: Verify that the startup’s ENISA certification is active and that the company is complying with all the ongoing requirements (no dividends, revenue under €10 million, etc.). Losing certification mid-round would change the tax treatment retroactively in some cases.
• Coordination with your home country: Check how your investment will be treated for tax purposes in your jurisdiction. Many countries have tax treaties with Spain, but the interaction between foreign capital gains tax and Spanish withholding rules is not always straightforward.

A business angel from London investing €80,000 in a Spanish startup. The startup is certified and offers favorable terms, but the angel must obtain an NIE, open a Spanish bank account or arrange a wire transfer, and coordinate with their UK accountant to report the investment. The process takes longer than a typical UK-to-UK angel investment, and the legal documentation may require translation or bilingual review. Benavides Asociados has worked with several cross-border investors who underestimated the administrative overhead and ended up delaying closing dates by a few weeks.

Scenario 3 – Remote founder building from Mallorca

You are a remote founder running a global operation with one key client in the US, a small distributed team, and you want to live in Mallorca while building your company.

Setup:

• You apply for a digital nomad visa to establish legal residence in Spain.
• You incorporate a Spanish SRL and apply for ENISA certification to access the Startup Law benefits.
• You hire two local employees in Mallorca (a developer and a marketing specialist) and keep three contractors working remotely from other countries.
• You continue serving your US client while developing a SaaS product that you plan to launch within 12 months.

Tax and legal implications:

• Personal tax: You qualify for the flat 24% rate on Spanish income under the displaced workers regime. Your income from the US client may be treated as foreign-source income depending on how the contract is structured and where the services are performed.
• Corporate tax: Your Spanish company benefits from the 15% corporate tax rate once it generates positive taxable income. In the first year, if the company operates at a loss, no corporate tax is due.
• Payroll and social security: Your two local employees must be on Spanish payroll, with social security contributions calculated according to Spanish rules. This is not optional, even if you are a small startup.
• Accounting and reporting: You need a local accountant to handle monthly VAT returns, quarterly corporate tax estimates, and annual financial statements. Spanish accounting rules differ significantly from those in the US or UK, especially around invoicing, expense deductions, and documentation requirements.

What makes this complex: On paper, the Spain Startup Law looks perfect for this scenario. In reality, the mix of corporate tax, personal tax and social security rules forces you to make a few uncomfortable choices in the first year. Do you pay yourself a salary from the Spanish company, or do you keep most of your income flowing directly from the US client to your personal account? How do you allocate expenses between your personal activity and the company? How do you document the difference between your role as a freelance consultant to the US client and your role as founder of the Spanish startup?

There is still debate among practitioners about how far these incentives really go when the business model sits on the edge between consulting and product development. Benavides Asociados has guided founders in this exact situation, and the key is to establish clear internal controls from day one: separate bank accounts, detailed time tracking, written contracts that define each income stream, and regular coordination between your personal tax filings and the company’s accounting.

A practical way to remember this is: the Spain Startup Law gives you the tools, but it does not make the decisions for you. You still need to design a structure that reflects the economic reality of your business and that can withstand scrutiny if the tax office or ENISA comes asking questions two years down the line.

This article might interest you: How to Declare Rental Income in Spain as a Non-Resident: Complete Guide

Common Pitfalls and How to Avoid Losing Your Startup Status

The Spain Startup Law is generous, but it is not unconditional. Losing your startup certification means losing all the associated benefits, sometimes retroactively. Here are the most common mistakes founders make:

• Distributing dividends too early: Many founders assume they can pay out small dividends once the company is profitable. Under the Startup Law, any dividend distribution disqualifies you immediately. If you need to extract cash from the company, consider structuring it as salary, bonuses, or loans instead.
• Exceeding revenue or age limits without restructuring: If your annual revenue crosses €10 million or your company reaches five years of age (seven for certain sectors), you lose your startup status. There is no grace period. Plan ahead by forecasting your revenue growth and considering whether to split the company, create a new entity for a new product line, or transition to a standard tax structure before you hit the limit.
• Ignoring ongoing compliance and reporting: ENISA can audit your certification at any time. If your business model has shifted significantly, if you have changed control or ownership structure, or if you are no longer meeting the innovation criteria, ENISA may revoke your certification. This is not theoretical. At Benavides Asociados we have worked with founders who underestimated how fast they could lose their startup status after a change in ownership.
• Failing to maintain proper documentation for stock options: The improved tax treatment for stock options depends on detailed documentation. If your option plan does not comply with the legal requirements, or if you cannot prove the valuation of shares at the time of grant, employees may face unexpected tax bills and the company may face penalties.
• Misunderstanding tax residence rules: Moving to Spain does not automatically make you a tax resident, and being on a digital nomad visa does not exempt you from Spanish tax rules if you spend more than 183 days in the country. Many founders assume they can split their time between Spain and their home country without consequences. In reality, tax residence is determined by multiple factors, including physical presence, economic ties, and family location. If you are not careful, you may end up being considered a tax resident in both countries, which creates double taxation risks that require treaty planning to resolve.

Each of these risks connects directly to the need for coordinated fiscal, legal and accounting planning. The Startup Law is a powerful framework, but it assumes you will manage the details correctly. Most founders cannot do this alone, especially when they are also building a product, raising capital, and hiring a team.

How Benavides Asociados Can Help You Benefit from the Spain Startup Law

Benavides Asociados is a tax, legal and accounting firm based in Mallorca, with deep experience supporting international founders, investors and remote professionals who choose Spain as their base. When it comes to the Spain Startup Law, the firm’s approach is built around four key areas:

• Corporate structure design and incorporation roadmap: Choosing the right legal structure from the start, preparing all documentation for fast-track incorporation, and ensuring the company’s bylaws and shareholder agreements are aligned with your growth plans and the requirements of the Startup Law.
• Tax planning for founders, employees and investors: Structuring personal tax residence, applying for the displaced workers regime, designing stock option plans that maximize the €50,000 exempt threshold, and coordinating investor documentation to unlock the 50% IRPF deduction for local angels.
• Accounting systems and reporting adapted to startups: Implementing monthly accounting processes that track revenue, expenses, payroll and VAT in compliance with Spanish rules, while providing the financial visibility you need to manage cash flow and prepare for funding rounds.
• ENISA certification and immigration support: Preparing detailed applications for ENISA certification, coordinating with Spanish immigration authorities for entrepreneur visas, digital nomad visas and highly skilled professional permits, and providing ongoing compliance monitoring to avoid losing your startup status.

Setting up a startup under the Spain Startup Law is not just about paying less tax; it is about making hundreds of small decisions that will affect your company for years. If you are planning to build or relocate your project from Mallorca, Pollensa or any other part of Spain, the team at Benavides Asociados can help you connect the legal, tax and accounting pieces so they actually work together, not against you. Book a free consultation with our experts and get a concrete, step-by-step plan for your next moves in Spain.