Are you a young entrepreneur? How to benefit from new tax incentives

Fiscal benefits are available for businesses hiring young people as well as any young person considering self-employment under new measures announced earlier this year by the government.

taxbreaksspainA total of one hundred measures were announced with the aim of tackling the persistent and growing problem of youth unemployment which risks substantially increasing the structural level of unemployment in Spain which would reduce the economic growth rate for years to come.

Eighty-five of the measures have medium or long term goals while fifteen are mainly fiscal incentives that, at a cost of €3.5 billion (32% from European Funds), it is hoped will jump-start the initiative and create more employment in the short-term. Below is a list of some tax incentivess that will, no doubt be of interest not just to young people but also businesses who also stand to benefit:

Reduction in Social Security Contributions

Tarifa Plana: Every self-employed is required to make social-security contributions towards health-cover and future pension entitlement. The current minimum payment that a self-employed person may register for is approximately 250€ per month.  A new minimum social security contribution will be applied to anyone under the age of thirty who registers as self-employed either for the first-time or who has not been registered during the five years prior to registration and who does not have any employees.

The minimum contribution will be set at €50 which is an 80% reduction from the standard rate and which will be applied for a period of six months. The following six months will see a reduction of 50% (making the contribution approx. 125€) of the typical quota while a 30% deduction will apply for a further 18 months, which will see the contribution set at around 180€ per month.

For those under thirty (or if a woman under the age of 35) that are already registered as self-employed, they shall benefit from an extension of the existing 30% deduction for an additional period of 15 months.

Anyone under the age of 35 who has a disability to a degree greater than 33% (as legally defined) they shall benefit from an 80% reduction of the typical contribution for 12 months and a 50% deduction for the following four years.

Continuation of Unemployment Benefits

Those under the age of 30 who are in receipt of unemployment benefits will continue to be able to receive those benefits after registering for self-employment for a maximum period of nine months.

Use of Unemployment Benefits to invest in a business

Those young people receiving unemployment benefit may utilise up to 100% of all of their entitlement in advance to invest in a new business. The funds may be used to manage costs related to setting-up a company, training, and information.

New Funding Sources for New Businesses         

There will be an increase in the number and type of funding available for new businesses such as seed capital and micro-credits.

Resumption of Unemployment Benefits after Period of Self-employment

Anyone who sets-up their own business and registers as self-employed will be permitted to receive unemployment benefits again in the future should they de-register within a period of five years from the date that the self-employment started.

‘Generations’ Contract

To additionally assist with the reduction in the numbers of long-term unemployed who may have considerable experience in the field, any person under thirty who provides an indefinite contract to any person over the age of forty-five who is in a situation of long-term unemployment will obtain a 100% deduction of Social Security contributions due to be paid on behalf of an employee.

Self-employed Partners

Should a cooperative or a company owned at least 51% by the employees employ a ‘socio trabajador’  i.e. a self-employed person employed by a who offers their time and expertise in their field to the business, under the age of thirty and unemployed, then a discount of €800 annually shall be applied towards the social security contributions.

Image by Stuart Miles

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