Investors and business angels. What are the benefits of having them?
Business angels are investors who, by providing capital and added value to management, help to promote business projects that have the potential for growth in their early stages of life.
Business Angels, when investing their own money in your company, become shareholders of the company. In addition, they provide management experience, as they normally invest in sectors they know, and you can also benefit from their personal network of contacts.
What are the advantages for you of having an investor?
The main advantage is that they invest their own money, and because of this, the term of permanence in the companies is longer than other forms of financing.
Unlike other sources of finance, they are willing to invest in the early stages of the company, at times when businesses have very limited resources and the level of solvency is reduced.
On the other hand, they accept a lower return than would have to be achieved with other similar financial sources.
What are the advantages for the investor?
Tax incentives for Business Angels
Law 14/2013 on support for entrepreneurs and their internationalisation establishes a new tax incentive in personal income tax for those who contribute their own funds, financial capital, or their business or professional knowledge suitable for the development of the company in which they invest.
A deduction will be made from the state income tax liability on the investment made in the new or recently created company. In addition, in the subsequent divestment, which must take place within a period of between three and twelve years, the capital gain obtained, if any, is declared exempt, provided that it is reinvested in another new or recently created entity.
Business Angels en el IRPF
An investor may deduct 30% of the amounts invested during the year in the acquisition of shares or holdings in a newly incorporated company or in a capital increase in a commercial company. The maximum amount of this deduction is EUR 6,000. In the case of a joint tax return, this limit applies to each of the taxpayers making the investment.
The deduction will be 50%, with a limit of 12,000 euros in the case of companies created or owned by universities or research centres, if the investment was made on or after 31 January 2014.
Requirements to be met by my company in order for an investor to be able to take the deduction
Form of the company. The entity must be in the form of a Public Limited Company, Limited Liability Company, Worker Owned Limited Company or Worker Owned Limited Liability Company and must not be admitted to trading on any organised market. This requirement must be met for all the years that the investor holds the share or participation.
Personal and material resources. The company must carry out an economic activity that has the personal and material means to carry it out. For example, it may not have as its activity the management of movable or immovable assets, in any of the tax periods of the entity concluded prior to the transfer of the shareholding.
Shareholders’ equity . The amount of the entity’s equity may not exceed 400,000 euros at the beginning of the tax period in which the taxpayer acquires the shares or holdings.
Group of companies . If the entity is part of a group of companies, irrespective of residence and irrespective of the obligation to prepare consolidated annual accounts, the amount of own funds shall refer to all the entities belonging to that group.