Spain’s 2022 Startups Law (Ley 28/2022) turned a modest incentive into one of Europe’s strongest. Since 1 January 2023, Spanish tax residents investing in new or recently created companies can deduct 50% of the amount invested from their state income tax (IRPF), on a base of up to €100,000 per year — a maximum saving of €50,000 annually. Before the reform the figures were 30% and €60,000; the upgrade was deliberate policy to pull private capital into the startup ecosystem.
The conditions, in outline: the target must be an unlisted Spanish company (SA, SL, SAL or SLL forms), and the shares must be subscribed within five years of the company’s constitution — extended to seven years for certified ’empresas emergentes’ in fields such as deeptech, energy and industrial technology. The investor, together with close family, must generally stay below 40% of the capital — though founders of certified startup companies are exempt from that ceiling, a notable improvement for those reinvesting in their own ventures. The minimum holding period is three years; sell earlier and the deduction is repaid with interest.
Two features make Spain unusually attractive. Several autonomous regions layer their own deductions on top of the state one (on different amounts — the two cannot double up on the same euros), and gains on these shares can be exempt entirely if reinvested into another qualifying company — a built-in incentive to keep capital circulating in the ecosystem.
The boundary, once again: Spanish residency and Spanish company forms. A Spanish resident backing a UK venture claims nothing under this regime — the case for any cross-border investment must stand on the venture’s own quality and governance.
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