In order to promote gaining financing and know-how by newly created companies, a new tax credit has been recently introduced by Spanish Personal income tax regulations.
In PBS, we want to remind you today of the State tax credit applying to Spanish tax resident individuals. Taxpayers will need to check whether their respective Autonomous Community can offer more advantageous tax relief than the State regulations and choose the best option.
✔ Individuals investing (as of Sept. 29, 2013) in unquoted limited liability companies (such as Sociedad Anónima or Sociedad de Responsabilidad Limitada) can benefit from a 20% tax credit on the amount invested.
✔ The annual basis for this tax credit is subject to a threshold of 50,000 Euro, which means that maximum tax relief is 10,000 Euro).
✔ Moreover, the investment has to be made in small-sized companies, as their equity cannot exceed 400,000 Euro, at the beginning of the fiscal year in which the acquisition takes place.
✔ There are also limitations that need to be considered in terms of timing (as the investment must have a temporary nature, lasting between three to twelve years), of the activities undertaken by the target entity (it cannot be a mere investment entity) or the percentage of interest, on a stand-alone basis or with certain relatives, that cannot exceed 40%.
New regulations that we hope will motivate not only those directly benefiting from this tax relief but also to companies requiring financing and talent.