Time to jump on the alternative investment bandwagon!

Startup investment benefits from attractive tax incentives

It’s that time of the year again, the moment when investors receive a letter or a call from their financial institution or manager. Most of the time, the letter informs that the current account has received some financial flow that, in many cases, the investor did not count on. For example, those shares the investor bought one day and then forgot.

If we analyze the information provided by the entity carefully, we can see that the gross amounts paid by the companies to the investor are subject to high withholdings for Personal Income Tax (IRPF in Spain). These amounts are not usually very abundant, so reinvesting them in traditional investment vehicles may not be the best option.

However, small amounts are very suitable for building an alternative investment portfolio. The magic of equity crowdfunding that Fellow Funders professes is that you can start investing in high-growth companies with small amounts of capital, resulting in a greater possibility of portfolio diversification and, therefore, better risk management and return on assets.

Taxation is key

Nowadays, alternative investment usually mainly focuses on recently created companies or startups. These companies, like other financial practices, carry a risk when investing. However, Spanish law contemplates a series of tax incentives for this type of investment to mitigate this uncertainty.

These deductions are included in IRPF and, although the diverse autonomous community may establish specific deductions for the same concept, there is a general state regulation. The legislation establishes a deduction in a quota of 30% on the amounts used in the subscription of shares in newly created entities, limiting to 60,000 EUR per year.

In other words, an investment of 10,000 EUR in startups will imply a tax saving of 3,000 EUR in the personal income tax return. However, the investment must meet a series of requirements of the Fellow Funders Tax Incentives Guide. One of them is, for example, that the invested company must be less than three years old to be considered a newly created company.

In addition, the law contemplates the tax exemption in the IRPF of the capital gains generated in the transfer of these participations, as long as the amount generated is reinvested in other startups. In any case, you can either consult the complete law here or contact Fellow Funders. We will be happy to help you.

An eye on the future

The startup ecosystem has grown and gained professionalism from a decade ago, so regulation must adapt to the new times. To this end, the Spanish government is working on a startup law, which draft version was approved last November.

This new regulation contemplates even more attractive tax incentives for investors. The deduction percentage will increase from 30% to 40%, so is the deduction limit, from the current 60,000 EUR to 100,000 EUR per year. Moreover, the period to qualify a company as a startup will be increased from three years to five years.

Do not hesitate and start building your alternative investment portfolio today! Investing in equity crowdfunding will help you to complement your traditional investment portfolio and obtain interesting tax incentives. As far as we are concerned, Fellow Funders strives every day to offer rigorous, diverse, and potential projects. We look forward to seeing you on our platform!

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