Supporting new Entrepreneurs

The Official Bulletin has published Law 11/2013, of July 26, of Support to Entrepreneurs and implementing Growth and Job Creation Measures

To make it possible, the strategy displayed by the law involves a series of measures intended to promote the ability of young people to obtain employment, whether through self-employment or through entrepreneurial actions, which are classified according to their impact and their development along time.

The strategy aims at serving as a channel of participation for all public and private companies and institutions and all kinds of organizations willing to assist them to achieve their goals.

Measures are taken to encourage the creation of new companies and businesses either through  self-employment or the creation of legal entities by people under 30 years of age, including (i) the application of a reduced start-up fee, (ii) making a new venture compatible with the unemployment subsidy; and (iii) expanding the alternatives to capitalize the total unemployment compensation to which the individual may be entitled; that is, the possibility of receiving all the proceeds from the unemployment compensation in a single payment, which proceeds must be applied to the new venture.

In line with the above measures, chapter II sets a more favorable fiscal framework by reducing the tax burdens applicable to the first two years of any new activity by the entrepreneurs encompassed by the law. By way of example, the law provides for a reduced tax bracket of 15 per cent up to the first € 300,000 of taxable income, and 20 percent for the excess over that amount, assessable and payable as of the first year when the activity becomes profitable.

Further to the above corporate tax practices, should an entrepreneur decide not to incorporate its business but to undertake it as an individual, the Personal Income Tax Regulations provide for an additional reduction of 20 per cent on the net profits of any new economic activity, applicable as of the first two fiscal years in which the activity shows profits.

We shall be pleased to expand or comment on these new regulations.