The government of Spain recently enacted a law which is commonly known as the “Entrepreneurs Law.” The main objective of the law is to promote self-employed business owners and small to medium enterprises (SMEs) to expand their business operations into Spain.

According to the law companies created on or after 1 January 2013 will be taxed at a reduced Corporate Income Tax (CIT) rate of 15% on the first €300,000 of taxable profits; and 20% on any excess unless subject to other tax regimes. The new law may also allow companies to benefit from a 60% reduction in the taxable base if income is earned through the transfer of certain intangible assets such as patents, drawings, or certain other forms of intellectual property, subject to certain conditions. Companies carrying out R&D and technically innovative activities may under certain conditions be able to apply for a reimbursement if there are unused tax credits.

 For SMEs a new tax deduction has been introduced which will allow reinvestment of profits in certain assets. By the new law, the deduction for hiring employees with disabilities has been increased to €9,000 or €12,000 (from €6,000), based on the degree of disability and in addition, there is no longer a requirement to hire full time employees with an indefinite contract. Self-employed business owners and SMEs may defer payment of VAT until relevant invoices are paid. This new scheme will be implemented from 1 January 2014.

Self-employed business owners and SMEs may defer payment of VAT until relevant invoices are paid. This new scheme will be implemented from 1 January 2014.

The new law may also allow companies to benefit from a 60% reduction in the taxable base if income is earned through the transfer of certain intangible assets such as patents, drawings, or certain other forms of intellectual property, subject to certain conditions.