Investing in entrepreneurial projects doesn’t just drive economic impact — it can also unlock significant tax benefits. If you’ve supported a newly formed or early-stage company, now is the time to check whether you qualify for one of the most powerful deductions in Spain’s personal income tax (IRPF).
📌 Up to 50% tax deduction on your investment, with an annual base limit of €100,000
📌 Only available if specific requirements are met by both the investor and the company
📌 Not compatible with regional tax deductions, so it’s essential to choose the right one
What is this deduction and how does it work?
This is the deduction set out in Article 68.1 of the Spanish IRPF Law, aimed at boosting investment in early-stage companies.
It allows private investors to deduct up to 50% of the invested amount in their IRPF tax return, with a maximum base of €100,000 per year.
In practice, an investment of €100,000 could yield a €50,000 deduction, provided that your state IRPF liability is high enough to absorb it. If not, the unused deduction cannot be carried forward to future years.
Requirements for the company receiving the investment
To be eligible for the deduction, the company must meet the following conditions:
🔹 Be incorporated as an SA, SL, SAL or SLL
🔹 Be tax-resident in Spain and not publicly listed
🔹 Engage in a genuine economic activity, with its own staff and resources
🔹 Hold less than €400,000 in equity at the start of the tax year when the investment is made
🔹 Issue individual investment certificates to the investors and file Form 165 with the Spanish Tax Agency in January of the following year
Requirements for the investor
The individual investor must also meet a series of conditions:
🔸 The investment must be made upon incorporation or via a capital increase (including through debt conversion) within 5 or 7 years of incorporation
🔸 The investment cannot be made through a purchase of shares
🔸 The total shareholding of the investor — together with their spouse and relatives up to the second degree — must not exceed 40% of the company’s capital at any point during the holding period
🔸 The investment must be held for a minimum of 3 years and a maximum of 12 years
🔸 The company must not be continuing a previously carried-out activity under a different legal form
🔸 By year-end, the investor’s net worth must be greater than at the start of the year, by at least the amount invested — this ensures the funds come from income generated during the same tax year and not from previous years
What if you live in another region?
IRPF is a partially devolved tax, which means Spain’s Autonomous Communities can set regional deductions.
➡️ Regions like Catalonia, Madrid or Valencia offer similar incentives, though requirements and percentages may differ
⚠️ These cannot be combined — you must choose between the state deduction and the regional one, depending on your investment amount, taxable base and place of residence
Why is it important to review this in detail?
This incentive can provide a highly relevant tax optimisation opportunity for private investors and business angels. But applying it correctly requires precision, both in the structure of the investment and the supporting documentation.
At Across Legal, we help our clients:
✅ Verify legal and tax compliance of the investment
✅ Coordinate with the company to ensure correct documentation
✅ Assess whether the state or regional deduction is more advantageous
✅ Avoid technical errors that could invalidate the deduction or trigger future tax issues
📩 If you’re considering investing — or have already invested — in a newly formed or early-stage company, make sure you maximise the available tax incentives.
At ACROSS LEGAL, we can help you assess eligibility, avoid mistakes and apply the IRPF deduction with full legal and fiscal assurance.
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