Trends in startup tax regulation and the main changes in 2025

Spain has worked to create a much better tax environment for startups, especially with the approval of the Ley de Fomento del Ecosistema de las Empresas Emergentes (known as the Startups Law), in force since December 2022. 

This legislation recognized startups as a specific business type for the first time and established a unique tax and legal framework, aiming to boost innovation, attract international talent, and foster investment.

In addition to this law, there are other complementary measures in the fields of tax, labour, and administration that currently shape the ecosystem:

• Reduced taxation and payment facilities.
• Incentives for private investment.
• Advantages in the taxation of stock options.
• Incentives for R&D&I.
• Simplification of procedures through digital platforms.

This combination of benefits makes Spain an increasingly competitive environment within the European landscape.

Main features of the current tax environment

The current tax environment for startups in Spain is characterized by:

• Promotion of entrepreneurship: tax measures aim to encourage the creation and consolidation of startups through tax reductions and facilities in meeting tax obligations.
• Attracting talent: improvements in the tax regime for equity-based compensation intend to facilitate the recruitment and retention of qualified professionals.
• Supporting investment: tax incentives for investors are designed to channel resources toward emerging companies, strengthening their capitalization and growth.

How the tax environment is changing towards 2025

The tax environment for startups in Spain is undergoing a progressive transformation in order to position itself as one of the most competitive ecosystems in Europe.

The implementation of the Startups Law marked a turning point, but looking ahead to 2025, new adjustments are expected both at the legislative level and in alignment with international trends in technological entrepreneurship. 

These changes seek to respond to the specific challenges faced by emerging companies during their development, internationalization, and scaling phases.

Legislative changes foreseen in the Startups Law for 2025

Although this law has already brought about a substantial improvement in tax matters, in 2025, adjustments are expected that aim to broaden its scope and address some of the weaknesses identified in its first year of implementation.

Some of the possible changes include:

• Extension of the reduced 15% corporate tax rate period, especially for startups in R&D-intensive sectors where profitability takes longer to achieve.
• Expansion of the definition of startup to include companies with more diverse business models or those undergoing strategic pivots, without losing access to tax benefits.
• Greater flexibility in the taxation of stock options, adapting the tax treatment to the employee’s actual liquidity, thus avoiding taxation on unrealized gains.
• Further simplification in ENISA certification processes, aiming to eliminate uncertainties arising from timelines and administrative procedures.
• Encouragement of cross-tax incentives for corporate venturing, promoting large companies to invest in or collaborate with startups by means of specific tax benefits.

Global trends in technological entrepreneurship taxation

Internationally, tax frameworks for startups are evolving towards greater competitiveness, focusing on facilitating private investment, reducing the tax burden in initial stages, and attracting global talent.

Some of the outstanding global trends:

• More aggressive tax incentives for private investors: countries like the UK or Ireland offer deductions above 50% and capital gains exemptions, which increases investment in seed phases.
• “Deferred” taxation on stock options: several countries are adopting models that allow employees to be taxed on shares only at the time of sale, not when they are received.
• Low or zero tax on reinvested earnings: Estonia, for example, applies a 0% rate on undistributed profits, which encourages sustainable growth.
• Simplified tax regimes for digital nomads and foreign startups: the increased mobility of workers and the rise of borderless companies has led countries like Portugal, Italy, or Georgia to create special tax regimes and tech visas.

Spain is beginning to integrate some of these practices, such as the new regime for impatriates, visas for digital entrepreneurs, and improvements in the taxation of stock options, but it still needs to advance in simplicity and regulatory predictability.

Factors driving the need to adapt the tax framework

Technological acceleration, the globalization of entrepreneurship, and the rise of digital business models are challenging traditional tax systems. 

Some factors demanding the evolution of the tax framework:

• Longer maturation cycles: many startups, especially in deeptech or healthcare, do not generate profits until 5-7 years have passed, making current tax incentives insufficient.
• Need to attract international capital: global competition for investment forces countries to offer more attractive and stable tax environments.
• Mismatch between taxation and actual liquidity: employees with stock options or founders with equity face tax obligations without having liquid income to pay them.
• Rise of remote work and transnational entrepreneurship: startups increasingly operate in several countries from day one, which requires more coordinated, flexible, and tech-enabled tax regimes.
• Demand for highly qualified international talent: tax frameworks directly impact the ability to attract and retain key profiles.

Adapting to the new horizon: emerging tax opportunities

The Startups Law has introduced a series of tax incentives aimed at strengthening the entrepreneurial ecosystem in Spain.

Key tax incentives included in the new legislation

One of the main benefits is the reduction of Corporate Income Tax. Certified startups may benefit from a reduced tax rate of 15% for the first four years in which they have positive taxable income, thus alleviating their initial tax burden and allowing them to reinvest more resources in their growth.

Postponement of tax debts is also made easier without the need to provide guarantees. In addition, startups are exempt from making installment payments of Corporate Income Tax during the first two years with positive taxable income, which further improves their liquidity.

Advantages in Corporate Income Tax and Personal Income Tax

Among the measures aimed at attracting and retaining talent, the increase in the tax exemption for the granting of stock options stands out. The tax exemption increases from €12,000 to €50,000 per year, encouraging employees to participate in the company’s equity and thereby strengthening their commitment and retention.

Investors also benefit, as the deduction for investment in newly created companies has been raised to 50% of the contributed capital, with a maximum base of €100,000 per year, thus encouraging more private investment in the startup ecosystem.

New benefits for investors and international talent

The law also strengthens the special tax regime for impatriates, known as the «Beckham Law», expanding its conditions to attract international talent to Spain with a favorable tax framework. Bureaucratic hurdles for foreign investors are also removed, as obtaining a NIE is no longer mandatory for investing in Spanish startups, significantly simplifying the process.

As for domestic entrepreneurs, certain registry fees for setting up new companies have been eliminated, helping to reduce initial costs. Self-employed individuals who also work as employees may benefit from Social Security contribution discounts during the first three years, providing significant financial relief during the most critical stages of the business.

How to take advantage of tax benefits in 2025

Law 28/2022 and other associated tax initiatives represent a key opportunity for entrepreneurs to optimize their tax burden and accelerate the growth of their companies.

Taking advantage of these benefits appropriately requires proactive tax planning, specialized advice and up-to-date knowledge of the regulatory framework. 

By 2025, the ecosystem is becoming more demanding, and only those companies that integrate taxation into their financial strategy will be able to maximize the available incentives.

Tips for implementing effective tax planning

Certifying startup status with ENISA as soon as possible

This step is the most important for gaining access to most tax benefits.

The process has become more agile, but it remains vital to prepare robust technical documentation to prove the innovative nature of the project.

You can read more about ENISA certification for startups here.

Designing a smart compensation policy

With the increase of the stock options tax exemption up to €50,000 per year, startups can implement more attractive equity incentive plans to retain talent without significantly increasing the employee’s tax burden.

Leverage R&D&I deductions

Carefully planning R&D expense documentation and keeping a clear audit trail is essential to apply tax deductions ranging from 25% to 42%, and even monetize them if the company is not profitable.

Optimize corporate structures

For internationalization, accelerated growth, or attracting foreign capital, companies should review their legal and tax structure to avoid double taxation, benefit from tax treaties, and access more favorable tax regimes.

Including taxation in the financial plan

Many entrepreneurs overlook the impact that proper tax planning can have on their financial runway. 

Integrating incentives from the start can improve burn rate ratios and facilitate new funding rounds.

Key Factors to stay competitive and compliant

• Anticipation: planning key tax decisions (such as issuing stock options or applying for deductions) 6 to 12 months in advance allows you to make the most of the benefits.
• Transparency and audit trail: especially for R&D&I deductions and equity management, having strong technical documentation and internal audits is essential.
• Ongoing training and updates: founders and finance teams must stay up-to-date with taxation for emerging companies since the legal framework is constantly evolving.
• Adaptability to the international ecosystem: knowing other countries’ tax practices allows you to compete on equal footing when scaling or internationalizing.
• Collaboration with expert advisors in the sector: specialization makes the difference. Firms with experience in startup taxation can prevent costly mistakes and maximize opportunities.

Medium-term projection of taxation for the entrepreneurial ecosystem

Spain is preparing for a new stage in startup taxation, with measures that promise to expand tax benefits, speed up procedures, and better adapt to different sectors.

The best way to make the most of incentives and ensure continued growth is to have the support of experienced professionals.

An advisor or firm with sector expertise can identify key opportunities, guide tax planning, and stay on top of every regulatory change, ensuring the startup evolves with a solid structure.