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Spain passes startups and digital nomad law

The Spanish Parliament has given the green light to a new startups law which will bring tax benefits and other perks to entrepreneurs, remote workers and digital nomads who want to live and work in Spain. 

spain startups law economic affairs minister nadia calvino
Spain's Economic Affairs Minister Nadia Calviño says the new startups law will put Spain at the forefront of the current global digital transformation. (Photo by Michal Cizek / AFP)

It’s been in the pipeline for 16 months, but on Thursday evening Spain’s Parliament finally approved its highly anticipated startups law, or Ley de Startups.

The legislation had already been greenlighted by Spain’s Commission for Economic Affairs and Digital Transformation, which made 271 amendments to the initial draft bill, as well as the Spanish Council of Ministers.

Its approval in the Spanish Parliament is a crucial step for the law to come into force, which is expected to be in January 2023, once the Senate has processed its parliamentary implementation.

The law was given the thumbs up in the Spanish parliament by 177 MPs, with 75 abstentions (by far-right party Vox and Catalan parties Junts and ERC) and 88 votes against (mostly from MPs belonging the right-wing PP who called for the law to be more far reaching).

This majority is expected to guarantee the legislation is ratified without trouble in the Senate in the coming weeks.

READ MORE:  When will Spain’s startups law actually come into force?

“It’s one of the most enjoyable moments I’ve experienced in the Parliament,” joked Economic Affairs Minister Nadia Calviño about the support the “pioneering” legislation has received from across the country’s political spectrum.

“It’s a law that will allow Spain to be at the forefront in the push and promotion of talent in this rapidly growing digital economy”.

Spain already attracts many foreigners from around the world thanks to its great climate and famed quality of life, but up until now it hasn’t been legally possible for many remote workers or digital nomads to work here without the correct visa or complex paperwork.

In 2015, Spain ranked among the worst OECD countries to start a business in, so the hopes are that the new law will change this reputation. 

The startups law will be open to anyone from the EU or third countries, as long as they haven’t been a resident in Spain in the previous five years, and it will allow workers to gain access to a special visa which can be renewed for up to five years. 

EXPLAINED: 15 things you need to know about Spain’s new law for startups and digital nomads

It will give startups and investors a reduction in Corporation Tax from 25 to 15 percent during the first four years and will also allow digital nomads and other remote workers to pay Non-Residents Tax (IRNR) than the regular income tax Spanish residents pay (IRPF), and at a reduced rate of 15 percent rather than 25 percent. 

The law also includes a new visa that will allow digital nomads to stay and work in Spain for a period of one year. Once it has expired, they will be able to extend it by requesting a residence authorisation as a remote worker for a further two years and then extend it again, up to five years.

What hasn’t been confirmed yet are the exact conditions and requirements digital nomads will have to meet, such as the minimum amount they’ll have to earn or the type of qualifications they might have to have. 

Some experts believe that the government will set this at around €2,000 per month.

It’s also not clear yet whether digital nomads will have to pay social security and be eligible for state health care or if they’ll have to get private health insurance to meet the requirements for the visa.

READ ALSO: Everything there is to know about Spain’s new digital nomad visa

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WORKING IN SPAIN

‘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

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