Europe sets homework for Spain’s future Start-up Law
The Spanish Prime Minister, Mr. Pedro Sánchez, made an announcement on February 11th. He said that, “imminently”, his Government would begin to process the so-called Start-up Law (Emerging Companies’ Ecosystem Law in its formal name).
Today is March 19th and “imminent” seems to be, well, relative. Nothing has begun to be processed and the Start-up Law is still sleeping in some ministerial drawer. But we are used to it by now. The Government has been announcing the new law since 2018. Then it forgot about it, remembered it in September 2020 when it announced that it would begin to be processed in December and, as we already know, announced it again in February 2021. Promises, promises…
However, not everything is wrong about these delays. It has given other administrations time to advance ideas on how to help start-ups. The latest to do so is the European Union (EU). On the occasion of today’s Digital Day on March 19th, 24 European countries (including Spain) have launched an initiative to help startups grow. The initiative takes the form of a Declaration (of course; this is Europe) on the EU Startup Nation Standard (here).
The interesting thing about this declaration is that the signatory countries (Spain among them, I insist) are committed to taking a series of decisions to favour the birth and development of startups.
Among these decisions, it is worth highlighting the fact that they are calling for European rules to be applied all across the EU. Literally, an “EU-wide reference point” is announced. This reference point would be a kind of umbrella under which all national start-up regulations should fit. A sharing of best practices at the European level is also announced, as well as the creation in 2021 of a Start-up Nations Hub to assist in the exchange of these best practices and the monitoring of their application.
The best practices are quite substantial. They envisage:
- The creation of companies in one day at a cost of no more than 100 euros.
- The granting of visas to attract foreign talent in no more than one month.
- Authorization for start-ups to grant stock options without voting rights, and also for capital gains tax to be levied at the time the money is paid, not before.
- The approval of specific regulations for start-ups to reduce their bureaucratic burden, the easing of their compliance burden and the promotion of sandboxes.
- Promoting facilities for startups to bid for public tenders, in particular for innovation initiatives.
- Making European recovery and resilience funds available to Venture Capital (VC) firms through the European Investment Bank (EIB) and national promotional banks (such as ICO in Spain). Incentives for capital raising for VCs (e.g. through Pension Funds) and tax incentives for Business Angels are also mentioned.
- The promotion of social inclusion and diversity policies.
- The implementation of 100% digital communication channels with public administrations.
These measures are a benchmark for the long-awaited Spanish Startup Law. And they are not really revolutionary. In fact, they are measures that, to a large extent, have been called for in Spain for several years now (just take a look at this document from the Spanish Association of Capital, Growth and Investment -ASCRI- from 2018).
In short, Europe has just given Spain some substantial homework. A Spanish Start-up Law which (when it is finally approved) does not take into account these European recommendations would be born lame. Moreover, it would be doomed to see its shortcomings exposed by the future “European reference point” and by the Best Practices Hub that will be born this year.
In other words, Spain has supported the EU Startup Nation Standard and has thereby, in essence, given itself homework. Let us hope that the “imminent” Startup Law does not make Spain fall into an inconsistency between what it supports in Europe and what it approves within its own borders.