Government policy

Spanish Association of Startups 'Requests More Ambition' From Spain's Prime Minister

Some in the startup community believe the Prime Minister's recent announcement about a new legal framework for startups is little more than a publicity stunt.
Spanish Association of Startups 'Requests More Ambition' From Spain's Prime Minister
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6 min read
This story originally appeared on Novobrief

The Spanish Association of Startups says that the announcements made by Spain's Prime Minister Pedro Sanchez to create a legal framework for startups are a good first step, but that "more ambition" is needed.

At the close of South Summit last week Spanish Prime Minister Pedro Sanchez announced that the Spanish government would create a new legal framework for startups that included tax incentives, a more connnected network of accelerators and incubators, and more.

Related: New Report Finds 22 Percent of Spanish Startup Founders Are Women

However, many in the Spanish startup ecosystem believe that this announcement was little more than a publicity stunt made by Spain's newly appointed prime minister, after the previous one was ousted in a vote of no-confidence at the end of May.

According to the Washington Post, "The Sanchez government is likely to be a weak one, however. Sanchez lost two general elections for his party in 2012 and 2016. He heads a bloc of only 84 in the 350-seat parliament -- the smallest representation the Socialists have had in Spain's democracy."

Now, the Spanish Association of Startups is calling on Sanchez to go deeper on his promise to support Spanish startups.

Sanchez legal framework proposal for startups is "first step in right direction," but ...

Carlos Mateo, president of the Spanish Association of Startups, sees the PM's proposal as "a first step in the right direction, but which still has a long journey."

"The Spanish Association of Startups wants to say that talking about the 'Entrepreneur Nation' is good as a first strategic approach, but it is necessary to deepen and expand on the concrete measures announced by the President of the Government, Pedro Sanchez, during the closure of the South Summit," wrote Mateo.

Mateo referred to "Entrepreneur Nation" in the context of Sanchez's remarks at South Summit saying that Spain was a nation of entrepreneurs and startups.

"However, some actions of the government in other important matters cause us concern, because they go in the opposite direction to making Spain an entrepreneurial nation," wrote Mateo.

"Such is the case of the announcement by different members of the Government to make Spain the first European country to have a digital rate that is already generating uncertainties among Spanish entrepreneurs and national and international investors.

"It is equally worrisome that the same government is positioning itself in Europe with the toughest lines defending clearly anti-innovation standards such as the Copyright directive."

Spanish Association of Startups calls for all actors to work together.

Mateo asked that the government modify "its position in all the anti-innovation norms and measures it promotes and supports" and to convene "a 'working table' with all the actors of the innovation ecosystem to implement a nationwide startup model" that is "credible, consensual and appropriate to the characteristics of the Spanish reality."

According to Mateo, "The Secretary of State for the Digital Advance declared four months ago that the government was going to promote a project for 'Entrepreneur Nation.'

"We have felt identified with this idea, among other things because as an Association we have been asking for it for a year.

"In the past year the Association has presented some measures and proposals to the main political forces grouped around a Law to promote startups that, in turn, were accompanied by the idea of ​​promoting an ambitious 'Startup Nation' project for the next decade."

Related: Boom or Bubble? The 3 Issues That Block Spain's Startup Sector From Sustainable Growth.

Spanish government needs to do more than just recognize unique characteristics of startups.

As one of the Spanish Association of Startups' main concerns, Mateo reminded the Spanish government that the proposals of the Association first have to do with "the recognition of the uniqueness of what a startup is."

This is something that Prime Minister Sanchez touched upon last week at South Summit, saying that the government will create "a legal framework that recognizes the unique characteristics of startups."

However, Mateo retorted, "The recognition of the uniqueness of the startup is necessary, but not sufficient.

"To face the challenges we have, we must promote the measures that we have proposed to all parties and that the government knows how to reduce drastic bureaucratic burdens to create and grow a startup in our country."

Mateo then listed the following reform measures:

  1. The elimination of the shares of corporate self-employed workers in the first moments of the life of the startup in which it does not invoice.
  2. The improvement of the tax treatment of investments by business angels.
  3. The support both for the recruitment of international talent through a visa for entrepreneurs, and the retention of talent in our startups with the improvement of the taxation of the remuneration of skilled workers through participation in the social capital.
  4. To reform the set of public aid to support the entrepreneurs who have the most difficulties.

Spain's self-employed demand government reforms.

The line between "self-employed" and "entrepreneur" can be a fuzzy one. According to Bizfluent, "The definitions of self-employment and entrepreneurship overlap at times, but there are a number of instances in which self-employed individuals are not technically entrepreneurs."

That being said, a study conducted by Muno on Spain's self-employed revealed the main areas of government reform when it comes to the self-employed law:

  • To be quoted for real income for social security
  • To make pension and work compatible even if there are no contracted workers
  • Improvements in sick leave
  • Reduction of household expenses for working at home
  • Deduction for food regardless of payment method
  • Unemployment benefits
  • Application of flat rate benefits to all (not only new self-employed)

The main claims of the self-employed to the government, according to this survey, are that the social security contribution is made by real income, have an unemployment benefit, apply the flat rate to all the self-employed and improve the conditions of sick leave.

(By Tim Hinchliffe)

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