Startups must register with the Mercantile Registry to apply the reduced Corporate Income Tax rate

Access to the reduced tax rate provided for in Law 28/2022 for the promotion of the startup ecosystem requires compliance with an indispensable administrative formality. The Directorate General of Taxes (DGT) has clarified the exact moment at which an entity can begin to benefit from this tax measure.

What the DGT has ruled

The query analyzed whether an entity could apply the reduced Corporate Income Tax (IS) rate in tax periods where it already materially met all the requirements of the law, but whose ENISA certificate and subsequent registration had been obtained later due to administrative processing times.

The Administration's criterion is categorical: startup status is proven through registration in the Mercantile Registry or the Registry of Cooperatives. This act constitutes a necessary and sufficient condition to access the benefits of Law 28/2022. Consequently, mere compliance with the material requirements does not allow for the use of the reduced rate retroactively before formal registration occurs.

What this means for you

If your entity meets the criteria of Law 28/2022, you must take into account that the tax benefit is not automatically activated by meeting technical or economic requirements. There is a time lag between the moment a company becomes a "startup" and the moment the regulations allow it to apply the reduced tax rate.

This lag exists because registration is the element that provides legal certainty and officially proves the status to the Tax Administration. Therefore, any attempt to apply the reduced rate in fiscal years prior to registration will be subject to correction by the Public Treasury.

What should be done

To optimize the entity's tax management, it is fundamental to:

• Process the ENISA certificate as quickly as possible.
• Proceed with the registration of the startup status in the Mercantile Registry immediately after obtaining the certification.
• Evaluate each particular case to determine the exact fiscal year in which the reduced tax rate can begin to be applied.