How does the process work in Capital Cell?

For your investment in a Spanish startup to be deductible, you must be a direct partner in the company (both for state and regional deductions). Since you are many investors, we are obliged, in order to ensure the good governance of the company, to ask you to sign a power of attorney before a notary in favor of Capital Cell. In this way, we will represent all the investors and we will ensure the fulfillment of all the necessary corporate formalities.

The process to follow is as follows:

1. Invest in a round that allows for deduction
2. Choose "Direct investment" and complete the process.
3. Receive the instructions by email. Also when the round reaches 80% we will notify you to go to the notary.
4. Sign the Power of Attorney before a notary (cost: €65–120, to be paid by each investor at the notary's office)

To this end, we have enabled two options: in-person signature or online signature via videoconference.

– In-person signature

We have contacted several notaries. When you make an appointment, tell them that you are coming on behalf of Capital Cell and providing them with the details of the company you are investing in, they will have the document ready for you. You can consult the list of notaries here. 

If you wish to process it at another notary office of your choice, you must:

• Make an appointment at the notary's office to sign a power of attorney and send them the text of the power of attorney, the company details, and your personal details. You can download the text of the power of attorney at this link: Power of attorney document and the company details here.
• At the notary's office they must fill in the power of attorney with your personal data and the data of the company.
• Once signed, we need you to send us a copy of the document to confirm your investment with deduction. The document we need is the authorized electronic copy with csv code, which the notary shares with you through the citizen's folder, or you can ask them to send it directly to us atlegal@capitalcell.net.

– Online signature via videoconference

• Through the notary portal: www.portalnotarial.es
• Duration: 10 minutes
• Price: 65€
• Steps to follow:

1 Register at www.portalnotarial.es

Without a digital certificate:how to do it

With a digital certificate:how to do it

2 Make an appointment with Carlota Royes at the notary's office by email: croyes@notariado.org or by phone: 936317030 / 934881622. Simply tell them that you want to sign the power of attorney for Capital Cell by videoconference and the name of the company in which you are investing.

3 Go to www.portalnotarial.es to start the video conference.

Using a computer: instructions

With a cell phone: instructions

4 The notary's office sends us the power of attorney.

Once the capital increase is completed, the company will confirm to which year you will be able to apply the deduction. At the beginning of that year it will inform the Treasury through form 165 of the partners that have Invested and will send you a certificate accrediting your investment. In this way the deduction will appear in the draft of your income tax return.

Why do I have to sign the power of attorney and invest more than 3,000 euros?

Most of our investment rounds are done through an investment vehicle that brings together all investors. This is a common practice in crowdfunding rounds since the entry of many direct investors complicates the governance of the company and may even represent a blockage for the future entry of large investors (investment funds, etc...). The downside is that inexplicably the Spanish regulations do not allow then to apply the tax deduction, even if the company meets the legal requirements.

Most Biotech companies refuse to allow direct investment, as it is well known in this sector that having many direct partners can block the future entry of investment funds. But since the 2022 law increased the tax relief to 50%, a figure too juicy to give up, we ask companies eligible for tax relief to allow direct investment in the company, provided that the investor signs a power of attorney to avoid such blocking problems.

In addition, for efficiency and practicality, the minimum investment to allow direct entry is 3,000 euros.

State Deduction

With Law 28/2022, of December 21, on the promotion of the startup ecosystem (also called 'Startup Law'), the deduction for investment in startups in Spain increases from 30% to 50%. 

Here we explain how to take advantage of the great benefit of this deduction, to increase the return on your investments with Capital Cell.

In order to be able to apply the 50% tax deduction, the following requirements must be taken into account:

• You pay taxes in Spain, on which you can apply the deduction.
• You invest as an individual (the deduction does not apply to companies).
• You will have to maintain the investment for 3 years (if the company is sold earlier, the deduction must be returned) and up to a maximum of 12 years.
• The maximum investment is €100,000, which allows a deduction of €50,000. 
• From €100,000 of investment onwards, regional deductions may be applied, as both are not cumulative.

To the investment of which companies is it applicable?

The law defines what are emerging companies, and it will be the state agency ENISA (Empresa Nacional de Innovación, S.A.) the one that evaluates that the requirements to be considered "emerging" are met. Thus, we will talk about companies that already have or are in the process of obtaining the 'ENISA Seal'.

The requirements to be considered an emerging company are as follows:

• Company incorporated within the last five years or within the last seven years if it is a biotech company.
• Not having arisen from a merger, spin-off or transformation of companies that are not emerging companies.
• Not distributing or having distributed dividends.
• Not listed on a regulated market.
• Have a registered office, head office or permanent establishment in Spain.
• At least 60% of the workforce must have an employment contract in Spain.
• Develop an innovative entrepreneurial project with a stable business model.

ENISA list of certified companies: Link

In addition to the ENISA Seal, this additional requirement:

• The company's equity may not exceed €400,000 at the beginning of the tax period in which the shares are purchased.

Regional Deductions

Madrid

Link Tax Agency Spain

For investment in the acquisition of shares and equity interests of new or recently created entities

The limit of 6,000 euros per year.

• 30% of the amounts invested during the fiscal year

The limit of 12,000 euros per year.

• 50% of the amounts invested during the year in the acquisition of shares, participations and corporate contributions as a result of agreements for the incorporation or capital increase of labor corporations, labor limited liability companies and cooperative companies.
• 50% of the amounts invested during the fiscal year in the case of companies created or participated by universities or research centers.

Requirements

• It may not exceed 40% of the entity's capital stock or voting rights on any day of the calendar year.
• Such shares must be maintained for a minimum of three years.
• That has its registered office or tax domicile in the Community of Madrid.
• To carry out an economic activity.
• It has at least one person hired under a full-time employment contract and registered with the general social security system.
• The entity must have been incorporated within the three years prior to the capital increase.
• The average workforce of the entity during the two fiscal years following the fiscal year of the increase is increased with respect to the average workforce it had in the previous twelve months by at least one person with the above requirements, and that such increase is maintained for at least another twenty-four months.

Catalonia

Link Tax Agency of Catalonia

Link Tax Agency Spain

For investment by an angel investor for the acquisition of shares or equity interests

Limit of 6,000 euros.

• 30% of the amounts invested during the year in the acquisition of shares or equity interests as a result of agreements for the incorporation of companies or capital increase in limited liability companies.

Limit of 12,000 euros

• 50% of the amounts invested during the fiscal year in the case of companies created or participated by universities or research centers.

Requirements:

• Corporation, Limited Liability Company, Labor Corporation or Labor Limited Liability Company.
• It must have its registered office and tax domicile in Catalonia.
• It must carry out an economic activity. For this purpose, it must not have as its main activity the management of movable or real estate assets, in accordance with the provisions of Article 4. Two. a) of the Law of the State 19/1991, of June 6, of the Tax on the Patrimony.
• It must have at least one full-time employee with a labor contract and registered in the general social security system.
• It must have been incorporated within the three years prior to the date of this increase and cannot be listed on the national stock market or the alternative stock market.
• Annual turnover must not exceed one million euros.
• The taxpayer may be a member of the board of directors of the company in which the investment has been made, but may not perform executive or management functions and may not maintain an employment relationship.
• The shares acquired must be held for three years.
• Maximum limit of 35% of capital participation by the investor