TAX INFORMATION:

Law 14/2013 of 27 September on "Measures to support entrepreneurs and stimulate economic growth and job creation" („de medidas de apoyo al emprendedor y de estímulo del crecimiento y de la creación de empleo“) came into force on 29 September 2013.
This law is intended to promote and support the development of entrepreneurs and the setting-up of businesses in Spain through tax credits.
The law brings about changes to Corporate Income Tax, Value Added Tax (VAT) and Personal Income Tax. Here is a short summary of the main changes:

Value Added Tax - Cash basis special rule

A cash basis special rule will enter into force on 1 January 2014. From this date, SMEs and sole traders may apply to defer VAT payment until the date of payment of their invoices.
Tax payers whose turnover does not exceed two million Euros shall be entitled to benefit from this rule. This rule may also only apply to individual operations, and all or part of the payment may be deferred. However, any unpaid VAT must have been paid by 31 December of the current year. This rule should give small companies a greater degree of flexibility during the year, and shall remain valid for three years.

Income tax
Newly established companies

The law to support companies and their internationalisation also partly supplements the Corporate Income Tax Law (TRLIS). A company created after 1 January 2013 can expect a reduced tax rate on profits. A 15% tax rate will be applied to the company's taxable income up to €300,000, and any remaining profit shall be taxed at 20%.

Tax credit for the investment of profits

Companies with a turnover of less than ten million shall receive tax credits for investments applying to the entire tax due for the year in which the investment is made. Companies taxed at a rate of 25-30% may receive tax credit for up to 10% of re-invested profits, and companies taxed at a rate of 20-25% tax may receive tax credit for up to 5% of re-invested profits. The re-investments concern investment properties and plant and equipment used for economic activities.
Formalities: In addition to fulfilling certain conditions, the annual accounts (cuentas anuales) must also include information about the benefits of the investment. Failure to comply with the rules, including the formalities, will mean that the taxpayer will lose the right to apply this tax credit.

Tax credits for research and development

Companies which, from 1 January 2013, are taxed at the general tax rate of 35%, achieve sales of less than 10 million Euros and receive tax credits for research, development and technological innovation, may be entitled to a super-reduced tax rate of 20% under certain conditions. However, the amount of the reduced tax rate may not exceed 3 million.

Personal income tax

Payment of tax credits for investments in start-ups has been in force since 29 September 2013.

A tax credit of 20% of the amount arising from equity capital is granted for start-ups (maximum amount 50,000 per year).

Investment conditions:

The start-ups must have one of the following company structures: joint stock company, limited liability company, worker-owned joint stock company (Sociedad Anónima Laboral) or worker-owned limited liability company (Sociedad de Responsabilidad Limitada Laboral).

The amount of the company's equity capital must not exceed €400,000 at the start of the tax period in which the investment is made.

The tax payer must hold shares in the company for at least three years and less than twelve years.

The tax payer's direct or indirect holding may not amount to more than 40% of the company's nominal capital or 40% of the voting rights.