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UPDATE: When will Spain’s new startups law come into force?

Now that the Spanish Parliament has finally approved the country's new startups law, when can foreign entrepreneurs and digital nomads expect the legislation to actually come into effect?

Dawn view of Toledo
Sunrise in Toledo, central Spain. A new dawn is starting for remote workers in the country thanks to the new startups law. But when will it come into force? Photo: Bearphotos/Freepik

Many remote workers have been waiting with bated breath to find out when they may be able to come and work in Spain by taking advantage of the country’s new startups law.

After a 16-month-long legislative road, Spain’s much anticipated Ley de Startup was finally approved in the Spanish Parliament on Thursday November 3rd, 2022.

Simply put, the law aims to attract international investors, digital nomads and new companies to Spain with visa incentives, tax breaks, fewer bureaucratic hoops and other benefits.

READ MORE: 15 things you need to know about Spain’s new startups law

Originally proposed back in 2019, the law has received 271 amendments during its journey through the Committee on Economic Affairs and Digital Transformation, the Spanish Cabinet and now the Spanish Parliament.

The last step before it comes into force is for it to be ratified by the Senate. Given the support the bill has already received from most political parties, this looks very likely to go ahead without issues in the coming weeks.

So when will the legislation be published in Spain’s state bulletin BOE and therefore come into force?

The Spanish government’s aim is for the startups law to come into effect on January 1st, 2023. 

MPs belonging to Spain’s right-wing popular party were outliers by not voting in favour of a law which received widespread support across the country’s political spectrum during Thursday’s parliamentary session. 

They argued that the law could have been more far reaching, but there are also reports that some MPs mistakenly voted against the legislation.

What seems clear is that after so many amendments and a long wait for the legislation to finally come to fruition, it seems unlikely that any politician will want to put a spoke in the wheel of a bill that’s been described as “pioneering” and necessary. As a member of centre-right party Ciudadanos put it, the law is “a bit late”.

The startups bill also includes a clause which says that the new fiscal measures will apply in the June 2024 annual tax declaration which deals with tax from 2023, a point which again suggests that Spanish authorities will do their best to ensure the startups law is up and running on January 1st of next year.

The Spanish government initially said the law would come into force in the second half of 2022, but consistent changes have delayed the launch. 

Back in October, Prime Minister Pedro Sánchez admitted there were obstacles faced by entrepreneurs and reiterated his commitment to “change laws where there are inefficiencies” and to “eliminate barriers”, as well as to adapt rules so that Spain can compete internationally.

“I am aware that there is still a lot to do”, he said, whilst at the same time acknowledging that the law does not achieve 100 percent of its objectives.

Member comments

  1. I’d love to know if the new visas either for startups or digital nomads will accumulate towards citizenship.

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‘Spain must invest in Spaniards rather than turning to migrants’: EU work chief

The European Commission’s head for jobs and social rights has said Spain “must first find a solution for young people, women and the elderly” with regard to its labour market and “see later if they need immigrants”.

'Spain must invest in Spaniards rather than turning to migrants': EU work chief

The European Commissioner for Jobs and Social Rights Nicolas Schmit recently took part in a summit on job security in Bilbao, where he spoke with Spain’s Labour Minister and Second Deputy Prime Ministers Yolanda Díaz about the state of affairs for workers in the country. 

When discussing potential solutions to Spain’s high unemployment rate, Schmit explained “I would not exclude immigration, but when I analyse the data, I see youth unemployment of 30 percent, more than double the European average”.  

“The priority for Spain must be to invest in its people,” Schmit continued.

“They must first look at their labour market and find a solution for young people, women and the elderly. They will see later if they need immigrants”.

Despite high unemployment levels which currently amount to three million people, Spain has worker shortages in a wide variety of sectors. 

READ ALSO: The ‘Big Quit’ hits Spain despite high unemployment and huge job vacancies

The Spanish government recently changed its immigration laws to make it easier for employers to hire non-EU citizens for sectors with shortages, from waiters to plumbers, whereas previously recruiters were required to prove that they couldn’t find an EU candidate for the job and the skills shortage list was limited and outdated. 

READ MORE: How spain is making it easier for foreigners to work in Spain

In 2023, Spain’s Ministry of Inclusion, Social Security and Migration wants to hire 62,000 third-country workers to cover an array of construction and trades jobs, something the country’s Labour Ministry has not agreed to yet. 

READ ALSO – EXPLAINED: Spain’s plans to recruit thousands of foreigners for construction and trade jobs

The government also recently passed its new startups law to attract foreign investors, digital nomads and talent to the country.

Could Spaniards not be trained to do these jobs as Schmit alludes to? Currently, low wages and unstable working conditions are dissuading many locally trained professionals from staying.

This includes almost 20,000 doctors who have moved abroad in recent years as salaries in other European countries are significantly higher than in Spain, with a newly qualified doctor’s salary only around €1,600 gross per month.

Staff shortages in the health sector are not helped by the fact that foreigners with non-EU qualifications wait for several years for their qualifications to be recognised in Spain through an unnecessarily laborious administrative process known as homologación. This applies to a number of regulated fields, from engineering to dentistry, all of which face shortages. 

READ MORE: How Spain is ruining the careers of thousands of qualified foreigners

Spain’s Socialist-led government has partly addressed some of its labour market issues by reducing the rate of temporary contracts and increasing the minimum wage (SMI), but voices within the opposition have accused Sánchez’s administration of “dressing up” the dire reality.

When asked about the rise in minimum wage, Schmit said that he believes “it will not mean significant changes for Spain, which already has a tradition of updating the minimum wage on a regular basis… but the government must take into account factors such as the cost of living and the economic context”.

“Spain must question whether the SMI allows for a decent life or creates poor workers. Its economy cannot be supported by low wages and low productivity,” he continued.  

When asked if salaries and inflation have to go hand in hand, Schmit argued “wages must be set by collective bargaining. We are experiencing very high inflation because of the explosion in energy and food prices. If there is a large lag between wages and inflation, there will be an impact on demand and the risk of recession will increase”.

With regards to pensions, Schmit explained: “I don’t think that pensions are very high in Spain and if you leave a gap between the rise in benefits and inflation, you can create a situation of poverty among the elderly. Spain has a disadvantage in that it has one of the fastest-ageing societies… The solution is to modernise the economy to make it more productive and attract more people to the job market”.  

Despite these issues, the commissioner acknowledged that the Spanish labour market has surprised many with its resistance this year. “Employment will remain strong if there is no deep recession,” he said.  

“The national plan for access to European funds has a good combination of measures to invest in green energy, digitisation, education and public employment services… Spain experienced its economic miracle due to the real estate boom, which exploded, and now it has to transform to go in the right direction”.

According to a report carried out by human resources company Hays on work trends in Spain in 2022, 77 percent of Spaniards surveyed said they would change jobs if they could. Furthermore, 68 percent of them confessed that they are actively looking for another job and the main reason they argue is to get a better salary. 

According to Eurostat data from January 2021, 37 percent of Spain’s workforce is overqualified, 17 percent higher than the EU average.

READ ALSO: Why more people than ever in Spain are overqualified for their jobs