Entrepreneurs and investors in Start-ups, can be favored in their income tax return (IRPF) with tax benefits. These consist in the deduction of part of the invested money.
In order to do so, certain requirements must be met.
National Incentives for Start-ups.
Incentives at the Time of Investment (Deductions)
They will benefit from the personal income tax deduction for investment in new or newly created companies (Start-ups) in Article 68.1of Personal Income Tax (IRPF):
- The deduction is 30%. Limit on the maximum annual deductible base of €60,000. Therefore, the maximum deductible is €18,000, in any case.
- It can be invested at the time of incorporation or in a capital increase carried out in the following 3 years.
- It requires maintaining the investment for a period of more than 3 years and less than 12 years. And in a percentage of participation equal to or less than 40%. Including that of spouses and relatives up to 2nd degree in a straight line or collateral.
- Incompatibility with the autonomic deduction. The amounts to which the regional deduction has been applied shall not form part of the deduction base.
The company (Start-ups) in which the investment is made must meet a series of requirements:
- That the own funds of the company in which the investment is made do not exceed €400,000 at the beginning of the tax period in which the taxpayer acquires the shares or holdings.
- They cannot be listed companies, including those of the Alternative Stock Market (MAB).
- The entity whose shares or holdings are acquired must be entities with the legal form of S.A., S.L., S.A. Laboral, S.L. Laboral. The company must carry out economic activity, which excludes patrimonial entities. Shares may not be held by companies in which activity was previously exercised.
- For the deduction, a certificate issued by the entity whose shares or holdings have been acquired certifying compliance with the aforementioned requirements is required.
Incentives at the time of the Divestment (Exemption from profit)
- Article 38.2 Law IRPF: Capital gains generated when transferring shares or holdings on which the previous deduction of article 68.1 IRPF had been made will be exempt, provided that the total amount obtained in the transfer is reinvested in shares or holdings of other start-ups, once or successively, within 1 year from the date of sale of the shares or holdings.
- Partial (proportionate) exemption may be granted if the reinvestment is not total.
- On this reinvestment it will be possible to reapply the incentive at the time of the investment. But only on additional invested amounts that exceed the amount obtained in the transfer and that was exempted according to the incentive of the divestment.
Incentives from the Community of Madrid
- Deduction of 20% (30% as from 1 January 2019) of the investment in the incorporation or capital increase of companies in the form of S.A., S.L., S.A. Laboral and S.L. Laboral, domiciled in Madrid and with a limit of €4,000 (€6,000 as from 1 January 2019) per year.
- In this case, it will not only be enough to contribute money. In addition, the investor must also provide business or professional knowledge appropriate for the development of society.
- The participation of taxpayers and family members up to 3rd degree may not exceed 40% of the capital. It must also be maintained for a minimum period of 3 years.
- However, it is incompatible with the deduction of 20% for investment in companies of the Alternative Stock Market (MAB).
If you need help in the creation of this type of companies (Start-ups) or in the management of these benefits, do not hesitate to contact us, we will be happy to help you.
Arrabe Integra
Tax Consulting Dept.