In this article, we are going to walk you through the main stages of the process of obtaining a startup certificate in Spain. We will show you what being declared a startup means under the new Startup Law, approved in December 2022.
What is the new Startup Law?
Law 28/2022 of December 21, better known as The Startup Law, is a new regulation enacted by the Spanish government to facilitate the creation of emerging companies focused on new technologies and innovation.
It aims to attract international talent and stop the departure of highly qualified workers, encourage the development of new technology companies, increase investment in innovation, facilitate the path to residency for foreigners who work digitally or internationally in the country, and position Spain as reference of entrepreneurship in Europe.
To this end, the legislation provides new benefits to startups.
What are the benefits of the new Startup Law?
Benefits for startups include:
- Tax incentives
- Favourable regulations
- Elimination of bureaucratic obstacles
- Flexibility of business procedures
How to obtain your Startup Certificate
One of the bills of the law was to precisely define the characteristics of a startup so that only those that are genuine startups can access the benefits. In July 2023 the Spanish government finally established the procedure of getting a corresponding certification as a startup.
The Spanish government has created the National Innovation Company (ENISA) from which entrepreneurs will have to request a certificate to prove the status of their company as a startup, and receive an evaluation of whether the company complies with the established standard, based on innovation and scalability.
Entrepreneurs must file the application online through a rather simple, though some time-consuming, and free procedure.
Step 1: register on Enisa’s client portal
First, you must register on the ENISA client portal where you will submit your application documentation.
Step 2: enter applicant information
After registering on the portal, you must enter the details of the applicant company, its address, its legal representative, and those of a contact person. They will ask you to provide supporting documents with the data entered.
It is important to highlight some of the documents that you will have to include below:
- Tax identification number (NIF) of the company.
- Public deed of constitution.
- Closed annual accounts for the last financial year, or presented in the Commercial Registry or approved and signed by the administrative body.
- Certificate of being up to date with payments with the Tax Agency.
- Certificate of being up to date with Social Security payments.
- Compulsory declaration for compliance with the requirements of articles 3 and 6 of Law 28/2022, of December 21. Here you can download the compulsory declaration form (in Spanish).
Step 3: state the company group
If the applicant company is part of a group of companies, it will have to provide the information of the dominant company, similar to the requests for the applicant company: the NIF, data on the constitution of the group, etc.
The business group will have to complete its own compulsory declaration form.
The quality of innovation and scalability of the group must also be proven separate from the applicant company’s evidence.
If the applicant company is not part of a group of companies, you may skip this step.
Step 4: enter the business plan
There are two important elements that are necessary conditions for ENISA to grant startup certification:
The startup must develop an innovative entrepreneurship project, and that must have a scalable business model.
ENISA considers that evidence of innovative entrepreneurship is demonstrated if one or more credit policies have been signed with ENISA in the last three years, and that evidence of a scalable business model is demonstrated as long as one of the policies is in force and there are no outstanding issues related to it.
If your company does have a credit policy with ENISA, declare it in a suitable way in the online application, and it is very likely that ENISA will provide a response of approval.
If not, you will need to demonstrate the degree of innovation and scalability by your own merits.
Degree of innovation
According to the Startup Law, a company develops an innovative entrepreneurship project when its purpose is to solve a problem or improve an existing situation through the development of new or substantially improved products, services, or processes compared to the state of the art and that carries a risk of technological, industrial or business model failure.
There are two ways to satisfy the requirement: objective tests and discretionary tests.
If a business plan meets an objective test, it counts as a direct approval factor for innovative entrepreneurship. Only one of the objective criteria below needs to be met to pass the innovation test:
- That the applicant company has been a beneficiary of public investment, financing or aid for the development of R&D&I or innovative entrepreneurship projects in the last three years, subject to the appropriate use of the funds.
- That the company has a justifying report issued by the Ministry of Science and Innovation, regarding its high degree of innovation.
- That the company proves that it enjoys bonuses in Social Security contributions for having hired research personnel.
- That the company has an Innovative SME Seal granted by the Ministry of Science and Innovation.
- That the company has a Young Innovative Company Certification issued by AENOR (EA0043) or an Innovative Small or Micro Business Certification issued by AENOR (EA0047) or Certification in accordance with the UNE 166.002 standard – R&D&I management systems.
If it meets the test, declare so in the certification application by checking the corresponding box and attaching the supporting document or link.
If none of the aforementioned criteria are met, the certifying entity will have to use its discretion to evaluate the quality of an innovative entrepreneurship if it matches any of the following aspects:
- The presence of technological innovation, whether in development or in operation, protected by industrial property rights (brands and trade names are excluded) of software or know-how protected and related to the business model of the applicant company.
- Example of justification: an optional report from the Spanish Patent and Trademark Office (OEPM) for the evaluation of this aspect. You request it directly from the OEPM.
- Use of own technology
- Example of justification: financial document that demonstrates that R&D&I expenses represent at least 15% of total expenses during the two previous years, or if the company has not yet completed two years, of the previous year.
- The presence of innovation in company processes
- Example of justification: analysis that demonstrates an increase in production or service capacity after implementing a new or significantly improved production method.
- The presence of innovation in the company’s products or services
- Example of justification: Introduction of a new product or service in the market of a territory or sector.
- The presence of innovation in the company’s business model
- Example of justification: a marketing plan that demonstrates the salient characteristics of the company and its products or services.
If appropriate, add supporting documents in the space indicated.
Degree of scalability
To demonstrate the scalable business nature of the company, ENISA will assess the degree of scalability of the applicant company, in accordance with the Startup Law and the criteria set forth therein:
- Degree of market attractiveness
- ENISA will carry out an evaluation of market conditions. Supporting documents can be added for a positive analysis.
- Phase of the life of the company
- ENISA will assess the company’s development status. In the event that the company’s products or services have begun to be marketed, you may fill in a table where information about the products or services on the market can be stated.
- Business model
- Provide the annual forecasts for the next four years, and answer and justify the questions regarding the Startup’s business model.
- Fill out a table indicating the competing companies and their impact on the market.
- Fill out a table indicating the experience of each member of the company’s management team.
- Supplier contract
- ENISA needs to know the funds of any type of investment in favour of the company. State information about each partner participating in the startup.
- If applicable, enter information about the company’s key clients and summarise the relationship with customers, their size, origin, duration of contracts, etc.
ENISA has published a guide for the entire certification process on its website. There are instructions for navigating the portal.
Step 5: decision on your case
The process has a deadline of three months from the date on which the complete application is entered in the electronic registry to decide the case and notify you, and lack of response from the administration implies that the application has been approved.
If ENISA approves the application, the corresponding startup certificate will be issued. The date of certification will be the date from which the startup can benefit from the new-found advantages of its status.
If, according to ENISA, reputational, regulatory, ethical or speculative risks arise, ENISA may deny the application.
Step 6: keeping and renewing the status of startup company
ENISA will monitor and control compliance with the requirements. The corresponding Business Registry will be informed of the status of the company.
The startup is obliged to communicate to ENISA any change that entails non-compliance with the requirement.
If the company at any time fails to comply with any requirement required for certification, Enisa will initiate a procedure to revoke the certification. The loss of status will be effective when you are notified of the resolution of the loss of status.
An appeal against the ENISA resolution can be filed before the corresponding administrative and/or judicial bodies.
Have any questions on the process of obtaining Startup Company Certification?
This article has shown you what the new Startup Law is and what its benefits are, how the startup certification application is submitted to ENISA and what the decision method is.
If you have any questions about this procedure, contact our lawyers who can help you in your case.
We will be happy to assist you.
Written in collaboration with Edwin Roberts.