Oct 15

New “Entrepreneur Support Act”. Law 14/2013

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images (2)Businessmen and the self-employed who undertake a business venture in Spain have reason to rejoice. The highly anticipated “Entrepreneur Support Act” has finally arrived, a legislative reform that promises to revitalize those sectors of the Spanish economy most affected by the economic crisis and facilitate both the day to day existence of entrepreneurs who are already in business as well as those who would like to start one up.

For too long, those who create the most jobs in this country have pointed out the great difficulties that exist in establishing oneself as self-employed or in creating a viable company. These obstacles are of many kinds, although overwhelming tax burdens and bureaucratic red tape figure highly on the list of complaints.

For this reason, the Spanish Parliament has given special attention to areas such as VAT, the protection of home ownership against liability, facilitating the creation of companies or the encouragement of foreign investment through easily obtainable residence permits. All these measures promise to unleash a vast entrepreneurial potential that probably will make its impact on the Spanish economy in the coming years.

In short, the most relevant aspects of the “Entrepreneur Support Act” are as follows:

1) Limited Liability Entrepreneurs.- Law 14/2013 recognizes the vulnerability of entrepreneurs´ homes, and therefore protects them against the claims of creditors up to the amount of 300,000 euros. However, as it stands, the new figure of the “ERL” (emprendedor de responsabilidad limitada) excludes cases of fraud or grave negligence.

2) Culture of Entrepreneurship.– Both in school and in the University, the law aims to promote attitudes and skills that will create the next generation of entrepreneurs. Take special notice of the so called the “mini company” which will allow students to learn how business activities take in a practical environment.

3) Residence Permits for Foreigners.- Existing administrative obstacles for investors or businessmen from non- EU countries that wish to install themselves in Spain have been simplified. This measure seeks to attract talent and investment from outside our borders. Also, advice will be provided to those entrepreneurs who would like to benefit from some kind of subsidy from international institutions.

4) Inclusion of More Companies in Public Contracts.- In response to the often excessive conditions that companies must meet to qualify for an administrative contract, the Government has sought to open this possibility to a larger range of companies. For this reason, the previous classification of companies in public competitions for contracts will only be required  for those contracts which exceed 500,000 euros, while it will also seek to establish unions of companies that can compete more successfully in these competitions.

5) Simpler Creation of Companies.- The creation of businesses using electronic means has been promoted and a series of simpler forms have been envisaged, streamlining the creation of companies to the point that it should be possible to complete the entire process in under 48 hours. The law also seeks to encourage employers to try again after a first business failure, introducing a series of measures and settlement agreements with creditors.

6) Delayed Payment of VAT.- Both the self-employed and businesses may not have to pay their VAT to Treasury until the bill in question has finally been paid by the consumer.

7)Gradually Established Limited Companies.- Before the reform, the law called for an initial outlay of 3,000 euros for the creation of a Sociedad Limitada. With the new law, the initial outlay will be reduced, allowing for subsequent contributions of 20% of the profits to make up the rest.

8) 50 Euro Flat-Rate: New self-employed workers can enjoy a bonus of 80% in the payment of their Social Security during the first 6 months of their activity, while there will also be financial bonuses for the disabled.

9) Tax Supports.- All kinds of tax incentives have been envisaged, whether they be with regards to the investment of profits, research, development and technological innovation activities, with regards to income from certain intangible assets or for the creation of employment for workers with disabilities.

For any doubts or queries, do not hesitate to leave a comment or to get in contact with us at mathos@rodriguezbernal.com.

Article published by Mark Athos Franklin, native English lawyer at the Rodriguez Bernal law practice.

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