As we said in previous occasions, at Fellow Funders we would like to make investing in startups closer to individual investors. I’d be from a professional point of view and following high-quality standards used by the big investors. Today, we are going to talk about one of main aspects of our model: Tax Incentives in the Equity Crowdfunding.
The Personal Income Tax Law – shares in newly created entities
The Personal Income Tax Law establishes a deduction in installments of 20% of the amounts used in the subscription of shares in newly created entities, with a limit of €50,000 per year. However, it is also worth mentioning that different Autonomous Communities in Spain have introduced additional regional deductions to encourage investment in newly created entities (such as Startups based on new business models).
If any type of regional deduction is taken for the same concept, the state deduction base should be reduced, i.e. state and regional deductions cannot be taken on the same amount.
Therefore, a €10,000 investment in the share’s subscription in a Startup would involve a €2,000 tax saving in the state Personal Income Tax return. Depending on the Community, it would be possible to additionally apply an autonomous return achieving up to €3,000 of total tax saving. *
The minimum requirements are:
- The investment in the entity must occur within the first three years.
- The investment must be maintained for a minimum term of 3 years.
- It cannot be a control investment.
- The company must carry out economic activities.
- The amount of the company’s equity cannot exceed €400,000 at the time of the investment.
- The company must prove compliance with the requirements with a certificate.
It also establishes the exemption from personal income tax on capital gains generated in the transfer of shares in these entities, provided that the amount obtained is reinvested in shares of other Startups. In the case of partial reinvestment, the exemption will be partial.
Investing in start-up companies means assuming uncertainty about future profitability and even the capital itself. Thanks to tax incentives for this type of investments we can mitigate this uncertainty.
Consult your tax advisor to find out about regional deductions in force in your region.
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Fellow Funders is listening to you!
Facing the petitions of some of our investors at FELLOW FUNDERS, we have decided to implement a set of changes in our platform which we will be unveiling in the next days.
The first change we have included at FELLOWFUNDERS.ES is the possibility to make investment reserve.
From now on, when an investor wishes to invest in a project, they can do it as before by transferring the funds effectively by wire transfer or credit card to your escrow account (unavailable except for use at the time of subscription of the new shares) or you can make an Investment Reserve.
This Investment Reserve gives you the preferential right to invest in shares of the company without having to make any prior disbursement. When the total investment in a project reaches a minimum of 75%, the investor will receive an email and within a maximum period of 72 hours must transfer the funds by bank transfer. If this transfer is not made, the investor will lose his preferential acquisition right and his Investment Reserve will be cancelled.
We hope that this new investment opportunity in our platform likes our users and investors.
Fellow Funders invites Masqueunaradio to tell us their project and how they work!