(Approved as a Draft Law by the Council of Ministers on Friday, May 24th, 2013)
The parliamentary procedure is now starting for it to be converted into a Law. It concerns a comprehensive and integral law, that encompasses the work of practically all the ministerial departments, which aims to facilitate all entrepreneurial and business activity: from the formation of a company and its tax system, to funding support and the need to make the relationship between businesses and Public Administrations more fluid, and, where applicable, to provide more facilities when solving business’ difficulties through different means associated with what is called a “second opportunity”.
It is one of the most important structural reforms of the Government’s reform programme. It complements Royal Decree Law of February 22nd, 2013 on measures for employment support for entrepreneurs and encouraging growth and creation of employment, through which certain measures were passed for support for entrepreneurs, announced by the president of the Government in the Debate on the State of the Nation.
The aim of the future Law is to support entrepreneurs and business activity, favour its development, growth and internationalisation and promote entrepreneurial culture and a favourable environment for economic activity. It has a wide and horizontal scope of applicability, as it considers entrepreneurs as all natural and legal persons who develop a productive economic activity.
SUPPORT FOR ENTREPRENEURIAL INITIATIVE
A series of measures are included in order to drive an entrepreneurial culture and facilitate the starting up of business activities.
Entrepreneurship in stages of education
In an educational environment, and in line with the Draft Organic Law for the Improvement in the Quality of Education, it will guarantee that the educational curriculum for primary and secondary school will incorporate skills in entrepreneurship. It will also better promote universities having an entrepreneurial culture and will make sure that teachers have training in entrepreneurship.
Limited Liability Entrepreneur
The Law creates a new commercial figure, the Limited Liability Entrepreneur (ERL, in Spanish), through which the liability that results from entrepreneurial debts will not affect the main residence of the entrepreneur, if the value is not above €300,000 euros. In order to duly protect the creditors and legal transaction security, appropriate registration publicity measures for limitation of liability are introduced.
However, limitation of liability will not be applied when it comes to Public Law debts, or when the entrepreneur has acted fraudulently or with serious negligence towards the compliance with third party obligations.
Limited Society of Subsequent Formation: a new company subtype
To reduce the initial costs of starting up a company, the creation of companies with less than €3000 euros of capital is allowed, with a system identical to limited liability companies, except for certain specific conditions aimed at protecting third party interests, amongst which the limits of remuneration of members and administrators is highlighted, as well as several liability of the members in case of liquidation.
Points for Attention for the Entrepreneur
With the aim of accelerating the start-up of activity of entrepreneurs, Points for Attention for the Entrepreneurs have been created. These will be one-stop shops through which the processes of starting up, putting into practice and ending a business activity may be carried out. The electronic Point for Attention for the Entrepreneur from the Ministry of Industry, Energy and Tourism will provide all services included within the Law. This point comes from the integration of the many one-stop shops that exist for the assistance of the start-up of state level activity. Advisory and Procedure Initiation Points, One-stop Business Shops and the One-stop Shop for the Services Directive. On the other hand, the entrepreneurs can be set up quickly, both limited liability businesses and, as in corporate form, through simplified models and telematic systems.
Second opportunity: extra-judicial payment agreement
In order to facilitate a second opportunity, an extra-judicial negotiation mechanism for business debt was planned, whether for natural or legal persons, similar to those that already exist in neighbouring countries. The process is very flexible and is substantiated, extra-judicially, in short time-frames before a mercantile registrar or a notary, although they may be limited to establishing a suitable and independent professional that encourages compromise and makes sure that the registration publicity and publication necessary to achieve the objectives desired for the arrangement are fulfilled.
It is planned that acquittance can be agreed upon of up to 25% of the credits and postponement of up to three years, except in the case of Public Law credits, where the unavailability of them only allows for a postponement of the payment. The loans and credits that have a special guarantee such as collateral will not be able, in the same way as with Public Law, to be affected by the extra-judicial agreement.
Lastly, and for the self-employed and the new Limited Liability Entrepreneur, an extension of one or two years is planned, of the time-frame in which one must mediate between the notification of the first attachment proceeding and the material realization of the auction, tender, or any other administrative means of disposal, when it affects the habitual residence of the self-employed person, in case of seizure proceedings due to tax debts or Social Security.
TAX AND SOCIAL SECURITY MEASURES FOR SUPPORT FOR ENTREPRENEURS.
Cashed VAT (IVA de Caja)
To ease problems of liquidity and access to credit of the businesses, a special cash basis regime is created, in the scope of Value Added Tax.
Taxpayers whose volume of operations does not exceed two million euros are able to use this regime. It is a regime whereby the tax payers can opt for a system that delays the amount due and the consequent declaration and deposit of the output tax in most of the commercial transactions until receipt of the total or partial amount charged to the clients.
However, tax payers will equally see a delay in the deduction of input VAT in their acquisitions until the payment is made to the providers.
Incentives for the investment of profits
Businesses with a turnover of less than 10 million may deduct up to 10% of the profits obtained in the tax period that is reinvested into economic activity.
Tax incentives for the quality of growth through business innovation:
Deductions allowed by I+D+i (research, development and innovation) that can be applied to an exercise can be recovered through a unique system in Spain for returns. This deduction is not subject to any limit of the whole payment of Corporation Tax and, where relevant, the deduction for I+D (research and development) shall be paid, with a maximum combined limit of three million euros a year, although with a discount rate in relation to the amount initially planned from deduction, as long as the I+D activities and job are maintained.
Tax incentives for the transfer of intangible assets (Patent Box)
The tax system applicable to income from certain intangible assets is modified. In this respect, the aim is that the incentive goes to the net value derived from the transferred asset and not the income from it. Furthermore, the application of the tax system is extended, for the acquired assets, under certain limitations, and for cases of transmission of the intangible assets.
Tax incentives for business angels.
With the aim of favouring new or recently created businesses with own funds coming from tax payers that, as well as the financial capital, can contribute their relevant business or professional knowledge for the development of a company in which they invest; “business angel”, or those that are only interested in providing capital; “seed capital”, a new tax incentive is established for Personal Income Tax.
- Deduction of 20% in the state fee for Personal Income Tax on the occasion of the investment made when entering the company. The maximum basis for deduction will be €20,000 a year.
- Total exemption from the value added when leaving a company, as long as it is reinvested in another new or recently created entity.
Social contributions to entrepreneurs with pluriactivity
In order to not excessively penalize those workers that pay contributions in the General Regime and that must also contribute to another Regime on a full-time basis as they carry out an alternative economic activity, Social Security fees are reduced so that the current penalization is relieved and pluriactivity is encouraged, stimulating new memberships for the Special Regime for Self-employed Workers.
MEASURES FOR FUNDING SUPPORT FOR ENTREPRENEURS.
The insolvency law is modified for pre-bankruptcy for the refinancing agreements with a dual-purpose: on the one hand, to more comprehensively and flexibly regulate the registration procedure for appointing experts; on the other hand, to include a more flexible and clear rule for calculating the majority of the subject that has subscribed to the agreement and necessary as a minimum legal requisite for the optional approval by the courts.
Additionally, the regulatory framework for internationalization documents is perfected, making the assets that may be used as coverage more clear. On the other hand, a new instrument has been created: “internationalisation bonds”. This aims to add more flexibility to the issuing of securities that have coverage of loans linked to internationalisation.
MEASURES FOR PROMOTING BUSINESS GROWTH.
Reduction of administrative burdens
Business climate will be revised in general by improving the regulation of economic activities. Also, it is established that, in order to reduce administrative burdens that entrepreneurs are faced with, Public Administrations must make sure they eliminate at least one administrative burden for every one that is introduced and always at an equivalent cost.
Statistical burdens are reduced in order to guarantee that entrepreneurs do not have to answer more than one survey for the National Institute of Statistics during the first year of activity, if there are less than 50 employees.
In terms of work, cases where SMEs can directly take on occupational risk prevention are expanded, for entrepreneurs with one workplace and up to 20 employees.
Additionally, the obligation for businesses to have, in every workplace, a visitor’s book available from the officials of the Inspectorate of Work and Social Security and the technical officials trained to carry out occupational risk prevention checks, is eliminated. Instead, the Labour Inspectorate will be in charge of keeping this information through electronic medium.
On the other hand, the possibility is created for entrepreneurs to telematically legalize their compulsory bookkeeping on the Mercantile Registrar.
In the area of service activities, the Law for urgent measures for liberalisation of trade and certain services of December 26th, 2012, has been modified in order to expand the maximum surface area threshold for the establishments that will be exempt from the municipal licence, as well as to extend the list of activities exempt from requesting a municipal licence.
When it comes to accounts, the need for economic-financial information from businesses is rationalized. The maximum thresholds for the formulation of an abbreviated balance sheet are raised, in order to expand the number of businesses that can formulate the abbreviated balance, report and statement of changes in equity and that are exempt from formulating the state of cash flow.
Elimination of obstacles for entrepreneurs to access public procurement
Firstly, in order to put small entrepreneurs that carry out the same activity in contact with each other, it is expected that there will be the possibility of business people being able to become a member of the Official Register of Tenderers and Classified Companies of the State.
Secondly, thresholds for the need for classification of work and service contracts are raised, which has been an obstacle for many businesses, especially smaller or recently created ones, as they are not able to fulfil all the requirements necessary in order to obtain the corresponding classification.
The threshold for the work contracts in particular is raised by €150,000, going from €350,000 euros to €500,000 euros, and by €80,000 for service contracts, going from €120,000 to €200,000.
Thirdly, it is expected that the security for work contracts can be made through a retention in price and that time-frames for the returning of securities, going from twelve to six months where the contracted company is a small or medium enterprise.
Lastly, with the aim of fighting against late payments, the delay period to request the termination of the contract is reduced from eight to six months for contracted companies who are SMEs. There is also another article included to establish higher controls over payments that the successful contractors must make to the subcontractors.
PROMOTION OF INTERNATIONALISATION FOR SPANISH BUSINESSES AND ECONOMY
Institutional framework and instruments for support for internationalisation
The institutional framework for promoting internationalisation is reinforced, as well as some of the main financial instrument for support for internationalisation.
On a biennial basis, the Ministry of Economy and Competitiveness will produce a Strategic Plan for the Internalisation of the Spanish Economy, which will include geographical and sectorial priorities and the action plans for the agencies involved in the field. A system of evaluation and control of instruments will be established that are part of the Plan. Results of these will be made public and may be used for future regulatory modifications and management.
On the other hand, the performance of the foreign and territorial network of the Ministry of Economy and Competitiveness is strengthened, as is the role of ICEX España Exportación e Inversiones (Spanish Institute of Foreign Trade, Exports and Investment) as a driving body for internationalization and competitiveness for Spanish businesses in every stage of the process.
In relation to reforms for financial instruments for support for internationalisation, the design of the Fund for Foreign Investment (FIEX), the Fund for Internalisation of Companies (FIEM) and the Reciprocal Interest Adjustment Contract (CARI), is to be improved.
Lastly, the necessary mechanisms will be developed for Spanish companies to have better access to projects open for competition for International Financial Institutions in other countries.
Talent attraction and investment: a new system for visas and residence permits.
The authorization of residence permits will be made quicker and easier, on grounds of economic interest, through a fast process, before just one authority, for natural persons that are qualified as:
- Investors that make significant economic investments or that are intended for entrepreneurial projects considered and accredited as of general interest; for example, for its impact on the creation of employment, or for its contribution to scientific and/or technological innovation.
- Entrepreneurs of an innovative activity with special economic interest. Priorities will be the creation of employment, as well as the professional profile of the applicant, the business plan and the value added to the Spanish economy.
- Highly qualified professionals:
- Managerial staff that are highly qualified or that form part of an entrepreneurial project of general interest.
- Postgraduates from prestigious universities and business schools.
- Professionals that want to carry out research, development and innovation activities in public or private entities.
- Intra-entrepreneurial transfer: people from overseas who want to move to Spain for work, professional reasons or for professional training, lasting the same amount of time of the transfer.
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