Legal and Tax Advice for Creating Startups in Spain

Startups represent a fundamental part of the business fabric around the world, and are characterized by their dynamism, innovation and growth potential. In an increasingly competitive scenario with a clear international vision, it is important to know the main legal and tax aspects so that the creation of the Startup stands out in its sector, the company is successful and can meet the objectives proposed by its founding partners. 

Given this scenario, it is productive and efficient to read this article carried out by experts in legal advice to Startups from Forcam Lawyers, which will inform you in a clear and didactic way about the main advice to follow both in legal and tax matters, in order to successfully create a Startup in Spain.

What are the best legal tips for creating a Startup in Spain?

1-Choose the appropriate legal structure

Defining the legal form of the Startup, although it may seem logical, can sometimes cause more than one headache for the founding partners, because depending on the business objectives, the available share capital, and the social structure that the Startup will have, it will be more convenient to choose a more complex corporate form, or a more accessible corporate form.

Among some possible corporate forms, we find the Limited Liability Company (S.L.), the Public Limited Company (S.A.), and in some cases it will be convenient to be a Self-Employed Company.

2- Establish the Bylaws, in the case of capital Companies

Furthermore, it is highly recommended to draw up a Shareholders' Agreement between the different founding partners (in the case that there is more than one).

The purpose of both documents is to regulate the professional relationships between the different partners, the organization and structure of the Company, corporate name, Administrative Bodies, the work or capital that the partners contribute to the company, the way of carrying out the purchase and sale of shares and/or stocks, establishing the financial and labor objectives in the short, medium and long term, clauses to avoid corporate conflicts or blockage of the Company in the future, clauses for the exit and entry of new partners, etc.

The reality is that both documents, both the Company Statutes in Spain and the Shareholders' Agreement, should be drawn up before the creation of the Startup, and it is recommended that they be drafted in a thorough and personalized manner by professionals. Once the Startup has been created, there may be modifications and even a new shareholders' agreement, but the ideal is to regularize the relationships between the partners as soon as possible.

3- Registration of the created Startup in the Commercial Registry

The objective is for it to be formally considered a legal entity. It is important that this procedure is carried out as soon as the Company is formalized.

To carry out this procedure, a certificate of corporate name must have been obtained beforehand, and of course, the Company must have been incorporated in a Public Deed before a Notary.

4- Register the Startup's trademark and patent

If you have created a trademark associated with the Startup, it is advisable to register it with the Spanish Patent and Trademark Office (OEPM). The objective of registering the trademark is to protect it from possible third parties who may use the same or similar brand name in the future.

The same occurs with the created patent, which is recommended to be registered with the OEPM. This will provide protection to the creative and innovative idea that you have created, and will give you the exclusive right to exploit the product or service in the markets for a certain period.

5- Regulatory compliance regarding data protection and privacy policy

Depending on the sector in which your company is located, certain sector regulations will apply, however, at a minimum, you will have to comply with the Data Protection Law (European Union) and with privacy policies.

6- Employment Hiring in the Startup

It is important to define the employment relationships in your new business, as well as the form of employment contracts, duration, number of workers, occupation, labor rights and obligations, etc. 

At this point you must choose the way to establish contractual relationships in the Startup (between the company and the workers). Depending on the type of business, you will be interested in one form or another, but you will always have to regulate these relationships by making contracts, whether they are labor (employment contract) or commercial (contract with freelancer).

What are the best tax tips?

7-Tax obligations

Depending on the type of corporate structure chosen, or as a self-employed person, different tax rates will apply. However, the most common taxes will be corporate tax, VAT, personal income tax, and the filing of forms with the Tax Agency in the case of carrying out operations in the EU and abroad outside the EU. 

8-Tax incentives for Startups

There are many countries that offer tax incentives or subsidies for newly created companies, such as the deduction for investment in R&D or tax credits for technology companies. 

In Spain, for example, you have many deductions available, such as in matters of technological innovation or for hiring research staff, etc.

9- Keep rigorous and transparent accounting from the beginning

It is essential to reduce tax expenditure and to avoid tax problems. Good business accounting will allow you to control cash flow, the correct billing system to manage income and expenses, etc.

10-Remuneration of founding partners

Although this topic is rarely discussed, it is important to establish an appropriate remuneration based on the capital contributed, or the work carried out in the company.

It is advisable not to withdraw large amounts from the company's cash flow in the early stages of the business, since what you are interested in at the beginning is to reinvest the profits obtained in new business opportunities, so that the Startup takes off and achieves the objectives proposed by the founding partners.

And if you do so, before processing it, carry out a detailed and personalized study of the different remuneration options that exist in Spain, depending on the tax structure of the company.

It is important to have professionals specialized in the creation of Startups in Spain 

The success of a Startup does not only depend on the great ideas and the hours dedicated to the business, but also on how the legal and tax aspects are managed.

Having a law firm specialized in legal advice to Startups will help you to ensure that your business is well structured from the beginning, both in legal and tax matters, two very important axes to achieve the success of the Startup. 

At Forcam Lawyers we optimize businesses at a national and international level, thanks to having an extensive team of corporate lawyers (legal, tax, labor, commercial) who provide personalized solutions based on the needs of each company.