The future legislation will facilitate the creation of new companies and provide a comprehensive response to the self-employed and SMEs. The government stressed that this is a key reform for economic reactivation and job creation.
The Council of Ministers analysed a report on the Draft Bill to support entrepreneurs and their internationalisation.
The Vice-President of the Government, Soraya Sáenz de Santamaría, explained that this legislation is comprehensive and complete, drafted by nine ministerial departments, that aims to boost entrepreneurial and business activity. It covers the incorporation of companies and their tax regimes, support for financing and relations with the public administration services. Moreover, it facilitates the resolution of conflicts through measures aimed at providing a "second chance". This new legislation tackles the whole cycle of activity of business owners from start to finish, and even allows starting out for a second time", she underlined.
Soraya Sáenz de Santamaría recalled that 99% of companies registered with the Social Security system have less than 250 workers, 87% have less than nine yet in total they provide work for 75.4% of all workers. "Under this new legislation, we are addressing this entire business fabric, which, furthermore, is a driver for growth and a platform for employment, both now and in the future".
The new legislation, according to the Vice-President of the Government, is also aimed at the more than three million self-employed workers in Spain, who "merit specific support and attention from the public authorities".
The strategic lines of action for the new legislation include fostering an entrepreneurial culture and initiative and facilitating the creation of business, establishing support from the tax and social security authorities and financing for entrepreneurs, developing business growth and new hirings, as well as the internationalisation of Spanish companies.
Main measures
After summarising the different measures of support for entrepreneurs implemented during the course of this legislature and their results, the Vice-President of the Government outlined those comprised by the new legislation.
As a key initiative for driving business activity, Soraya Sáenz de Santamaría announced the creation of the figure of the limited liability entrepreneur. This will mean that the self-employed will not have unlimited liability for business debts. Their primary residence will be exempt provided its value does not exceed 300,000 euros.
Furthermore, the concept of the limited liability capital growth company is created, which allows companies to be set up with share capital of less than 3,000 euros. Subsequent to its initial incorporation, the company will contribute 20% of its corporate profits until such time as the capital required by law is fully paid up.
In order to foster and speed up the incorporation of companies, the Vice-President of the Government announced that all bureaucratic paperwork will be centralised. "We are looking for businesses to be opened quickly, within 24 or 48 hours".
On this point, Soraya Sáenz de Santamaría referred to the agreement to implement the "Start up in 3" Project which will allow the necessary sworn declarations to the public administration services to be made via a one-stop electronic portal, in order to commence economic activity.
Fiscal support
The Vice-President of the Government highlighted that the self-employed and small- and medium-sized enterprises that are not subject to the module tax system and with turnover of less than two million euros will not have to pay VAT on invoices until they are actually settled. This measure will come into force on 1 January 2014. Almost 1.3 million self-employed and more than 1 million SMEs will benefit from this measure.
On another note, incentives will be offered if part of the company profits is reinvested in the business. In this way, companies with turnover of less than 10 million euros may deduct up to 10% of profits obtained in the tax year in which they are reinvested in economic activity. 200,000 self-employed and 185,000 SMEs may benefit from this.
Soraya Sáenz de Santamaría also highlighted the promotion of the figure of the business angel. These are individuals that invest in a company or business project of a third party. "If I decide to contribute capital and/or business knowledge to a new company, I can deduct 20% of my State Personal Income Tax quota", she said. Furthermore, all profits obtained from the activity are tax exempt if they are reinvested in other newly-incorporated companies.
In order to support funding for entrepreneurs, internationalisation covered bonds have been created that are assets secured by loans earmarked for the internationalisation of companies or for exports.
Other measures
The Vice-President of the Government pointed out that the new legislation also includes measures aimed at reducing the administrative burden of companies and at fostering access by entrepreneurs to public sector contracts.
Contact between small entrepreneurs will be facilitated in order for them to set up joint ventures. Furthermore, the thresholds for the classification requirements for access to contracts will rise from 350,000 to 500,000 euros for specific work contracts and from 120,000 to 200,000 euros for service contracts. Similarly, the system of collateral for public sector contracts will be adapted to the possibilities of the entrepreneur and the substantiating documentation necessary for entering into such contracts will be reduced. Soraya Sáenz de Santamaría stated that the public offer is thus extended through these measures, which translates into "better service at a lower price".
In order to drive the internationalisation of companies, a strategic plan will be approved, and the role of support bodies will be strengthened, particularly that of ICEX España Exportación e Inversiones [Spanish export and investment service].
On another note, in order to encourage the arrival of new investment and talent in Spain, the concession of residence permits to investors of significant economic amounts and highly-qualified professionals will be facilitated and speeded up.
When asked about the reasons why it has taken so long to tackle the Entrepreneur Support Act, Soraya Sáenz de Santamaría stressed that, in only a year and a few months, the current government has had to approve legislation to overcome a critical situation and that now, after a lot of hard work by the ministerial departments and now that the situation of the Public Treasury so allows, this measure has been implemented to come into effect in the second year of the legislature.
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