As the name suggests, the Law Creates and Grows It aims to streamline and facilitate the creation of businesses. In addition, it serves as an effective tool against late payments and all obstacles that hinder the growth of small and medium-sized enterprises.
Anyone who wants to start a business or if you already manage one, you should take an interest in this law, which also includes the implementation of electronic invoicing—a change that will affect small and medium-sized businesses and the self-employed.
What is the "Create and Grow" Act?
Immersed in the Recovery, Transformation, and Resilience Plan, "The Law to Create and Grow" is one of the reforms that will provide the greatest boost to Spain's small and medium-sized enterprises.
Improving the Business Climate and to boost national entrepreneurship are the clear objectives that these regulations aim to achieve. Specifically, the most notable measures are those that facilitate the creation and development of businesses, those aimed at eliminating late payments, the reduction of bureaucratic red tape, financial support for the development of small and medium-sized enterprises (SMEs), and, finally, mandatory electronic invoicing.
When did the "Create and Grow" law take effect?
The Law Creates and Grows It was approved on September 29, 2022. However, most of the provisions contained in this law took effect 20 days after its publication.
However, there are two exceptions to this effective date, as set forth in its Eighth Final Provision, which are as follows:
- The legal framework for crowdfunding, which takes effect on November 10, 2022.
- Electronic invoicing, for which the regulations have yet to be approved.
Objectives of the "Create and Grow" Act
The legal framework provided by the Law Creates and Grows It is established with the goal of to help spur the creation of new businesses and position themselves as allies of small and medium-sized businesses and as supporters of their growth.
Specifically, the Objectives of the "Create and Grow" Act are as follows:
- A more streamlined business startup process: focusing on faster channels, online tools, more cost-effective procedures, and shorter processing times.
- Ending late payments in business: preventing companies that fail to meet payment deadlines from accessing public subsidies and blacklisting them. Also, promoting the use of electronic invoicing.
- Removing Legal Barriers: Expanding Opportunities to Work Without a License and Encouraging Inter-Agency Collaboration.
- Facilitating financing: expanding the possibilities of venture capital or encouraging the use of alternative financing methods such as crowdfunding.
- Implement electronic invoicing for small and medium-sized businesses and the self-employed.
Specific Measures Under the "Create and Grow" Act
Measures to Promote Business Growth
- Forming a Limited Liability Company with €1 in share capital. Currently, the minimum is €3,000. However, companies are required to set aside a legal reserve equal to 20% of their profits until the share capital reaches €3,000.
- Faster, simpler, and fully online business formation. The procedures for incorporating a business and taking its first steps can be completed through CIRCE (Business Formation Information and Network Center).
- Notaries must be available through the Electronic Notarial Agency in order to reduce the time it takes to start a business. Similarly, they may not reject any business formation procedure initiated through CIRCE.
Measures to Combat Late Payments
- All transactions between self-employed individuals and companies must be recorded on an electronic invoice. The “Create and Grow” law aims to promote digital transformation and streamline access to information regarding installment payments.
- Companies that fail to meet payment deadlines will be barred from receiving public subsidies. They will also be prohibited from conducting business with the government.
- The State Observatory on Private Delinquency will be established to effectively monitor payment defaults and to promote best practices.
- Creation of a blacklist for companies and self-employed individuals with unpaid bills that are 60 days past due.
Measures to Strengthen Funding
- Introduction of a legal framework for alternative financing methods, such as crowdfunding, to comply with European regulations.
- Expanding access to venture capital firms for other types of companies.
- Recognition of debt funds as a measure to curb corporate debt and promote growth.
Starting a business will be easier and faster
The Create and Grow Act marks an important milestone in the Spanish business landscape, promoting innovation, entrepreneurship, and sustainable growth. This legislation provides small and medium-sized enterprises (SMEs) with a more favorable environment in which to conduct their business, with measures ranging from tax incentives to the streamlining of administrative procedures.
In addition, it promotes the investment in research and development, which will contribute to the competitiveness of Spanish companies in a constantly evolving global market. At the same time, it seeks to boost job creation by supporting entrepreneurs and facilitating investment in new companies. While the implementation and impact of the Crea y Crece Act may take time, its goal is clear: to pave the way for solid and sustainable business growth in Spain, strengthening the country’s economy and creating new opportunities for entrepreneurs and workers alike.
As this legislation evolves and adapts to the the changing needs of the business environment, it will be essential for small and medium-sized businesses and entrepreneurs to take advantage of the opportunities it offers in order to thrive in an ever-changing market.
