How to certify your company as a 'startup' (Spain's Startup Law) and pay 15% tax

"Startups pay 15% tax." The message has caught on, and it is half true. Spain's so-called Startup Law reserves that rate —and other tax benefits— for emerging companies, but it does not give them away: you have to earn them before ENISA, the public body that certifies who qualifies. Between the headline and the benefit there is, therefore, a procedure that decides everything, and one best understood with a single idea in mind: emerging-company status is proven, not filled in; and it is maintained, not obtained and forgotten. Let us look at what is required, what is gained, how the procedure works and, above all, what criteria the decision-maker applies.

What an emerging company is, and why certification is the key

The framework is set by Law 28/2022 of 21 December, fostering the ecosystem of emerging companies, developed as to certification by Order PCM/825/2023 of 20 July. The certifying body is ENISA (the National Innovation Company). Without its certification you cannot access any of the incentives; once obtained, it is valid before every public administration.

The requirements to be an emerging company

Cumulatively: be no more than five years old since incorporation (seven in strategic sectors); not be listed and not have distributed dividends; have its registered office or permanent establishment in Spain; have at least 60% of its workforce on Spanish employment contracts; an annual turnover not exceeding EUR 10 million; not arise from a merger or spin-off (unless from other emerging companies); and be innovative and scalable. These last two traits are what ENISA assesses, and it is worth understanding how.

Innovative and scalable: what ENISA actually evaluates

Contrary to what is often read, the innovative character is not reduced to the 15%. Article 4 of the Order allows several alternative routes, and proving one is enough:

• That R&D&I expenditure represents at least 15% of total expenses (the best-known route).
• Having received public funding for R&D&I in the last three years, without revocation.
• Holding the Innovative SME seal, certifications such as Young Innovative Company (AENOR EA0043) or UNE 166.002, or a reasoned report from the Ministry of Science and Innovation.

If none applies, ENISA assesses the existence of protectable technological innovation —patents, software, know-how— or other innovative elements (art. 4.4).

For scalability, article 5 looks at defined factors: the market (traction and demand growth), the stage of the project (from prototype to minimum viable product and commercialisation), the business model (the ability to grow in users, operations or revenue without a proportional rise in costs), competition and differentiation, the team and the client base. There is also a route of direct approval for those holding an ENISA credit facility in force and without incidents (art. 5.3).

What certification earns you

• Corporate income tax at 15% in the first year with a positive tax base and the three following years (against the general 25%). Note the nuance: the 15% does not run from incorporation, but from the first profitable year.
• Deferral of corporate income tax debt in the early years, without guarantees, and exemption from instalment payments.
• Stock options: the amount exempt from personal income tax on the award of shares to employees rises from EUR 12,000 to EUR 50,000 per year, and tax on the excess is deferred until sale, IPO or ten years.
• Investment deduction: the investor may deduct 50% in their personal income tax, on a maximum base of EUR 100,000 per year.
• International talent: the inbound-expatriate regime (the "Beckham law") is relaxed, with taxation at 24% up to EUR 600,000.

How it is being applied: the decision-maker's criteria

Beyond the theory, it is worth knowing how those who apply the rule interpret it, because that is where the grant or the refusal is decided:

• In certification (ENISA). Article 6.2 of the Order allows refusal where the business model raises "reasonable doubts as to potential reputational, regulatory, ethical or speculative risks" —which, in practice, excludes purely speculative projects or crypto-asset ventures without substance. And the innovation must be real: a balance sheet limited to share capital, with no actual activity or investment, will rarely pass the assessment.
• In the tax benefits (Directorate-General for Taxation, DGT). The DGT is already shaping the scope of the benefits in binding rulings (for example, V2032-24): on stock options, it has held that the exemption requires the award to fall within the company's general remuneration policy and to further employee participation, and that it cannot be conditioned on professional category. A decisive criterion when designing the incentive plan.

The procedure, step by step

The procedure is entirely online and free of charge (arts. 6 and 7 of the Order):

1. The company files its application on ENISA's electronic portal, with a responsible declaration and supporting documentation (deed of incorporation, tax ID, accounts and a project memorandum).
2. ENISA assesses the innovative and scalable character.
3. It has a maximum of three months to decide and, under article 8, positive administrative silence applies: once that period lapses without an express decision, the application is deemed granted.

And a point almost no one mentions: emerging-company status is not permanent. Articles 10 and 11 provide for its loss when the requirements cease to be met; ENISA may open a loss-of-effects procedure, with a prior hearing, and the benefits are lost from the moment of non-compliance, not from the decision. Hence the second half of our opening idea: the status is maintained, not forgotten.

How we handle this at RCM Legal

At RCM Legal we first assess, frankly, whether your project genuinely meets the requirements —and, above all, whether it can prove its innovation and scalability through one of the article 4 routes. We prepare the application with the documentation that best supports it, we monitor the maintenance of the status so that you do not lose the benefits unexpectedly, and we coordinate the tax side —corporate tax, stock options and the investment deduction— in line with the DGT's case law, so that the promised 15% becomes real savings. If you are launching a project built to grow, tell us about your case and we will tell you what to expect.