ECONOMIC STIMULUS PLAN AND SUPPORT FOR THE ENTREPRENEUR

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1 ECONOMIC STIMULUS PLAN AND SUPPORT FOR THE ENTREPRENEUR «The Government is going to undertake a second generation of reforms that will be useful and, once again, create growth and employment» 20 February 2013

2 Fiscal support to entrepreneurial initiative Application of cash VAT for SME's A special VAT regime is created, of a voluntary nature, that will permit to avoid the payment of VAT until the invoice has been collected, replacing the traditional criteria of accruement (turnover) with charging and collecting for all of the SME's operations. It will apply to SME's and self-employed not subject to modules with a volume of business below 2 million Euros, as established by European regulations. The SME's clients and suppliers should use the cash criteria. This measure will apply from 1 st January Almost 1,300,000 self-employed and more than 1 million SME's will benefit. Encouragement to reinvestment profits in economic activity Businesses with a volume of business below 10 million Euros may deduct up to 10% of the full Company Tax quota of profits obtained during the taxable period which will be reinvested in economic activity. Fiscal Incentives for the quality of growth through business innovation It is permitted that R&D&I deductions that could not be applied to a financial year can be recovered by means of a single system of returns in Spain. It will be the only fiscal tax incentive that is not conditioned on the existence of the Company Tax quota, but will be linked to the creation or maintenance of employment.

3 Fiscal support to entrepreneurial initiative Reduced taxation for newly created companies and self-employed during the first two financial years of activity. Newly created companies will be taxed at a reduced rate of 15% during the first two financial years in which they obtain positive results. The self-employed that start economic activities may apply a reduction of 20% to the net performance that they obtain during the first two years in which they obtain positive results. Channeling resources towards entrepreneurial activity The private investor that participates temporarily in new or recently created companies providing either financial capital only (seed capital) or financial capital accompanied by his or her business or professional know-how for the development of the activity of the company in which he or she is investing, ( business angel ) will have a double fiscal incentive: a) A deduction of 15% on the state quota of IRPF (Personal retention) on the occasion of their investment upon entering the company, functioning in a similar way to the deduction for a usual dwelling. b) A partial exemption of the capital gains (50%) upon leaving the company, as long as this is reinvested in another newly or recently created company. The investment must be temporary, so the shares should be transmitted between the third and the ninth year of ownership of the holding.

4 Fiscal support to entrepreneurial initiative Encouragement of self-employment under the self-employed workers regime The unemployed who decide to establish themselves as self-employed workers may benefit from the complete exemption of IRPF (personal retention) on unemployment benefits when the payment of the benefit is in the form of a single payment (up to now they were only exempt up to 15,500 ) 3

5 45,000 million euros financial support por millones de euros 32,000 million euros support for bank financing ICO Mediation Lines, with a provision of 22,000 million Euros. Impulse for the business strategy aimed at SME's by sanitised banking entities, 10,000 million Euros. Public systems of endorsements and guarantees for bank financing that will enable the mobilisation of 1,720 million euros. Reinforcing the CERSA capital. Creation of a new line of CESCE guarantees for SME's. Impulse for disintermediation of banking and risk capital, mobilising funds of 2,176 million euros. Constitution of a Fund of Funds entrusted with tendering and awarding investments amongst risk capital managers in areas and sectors linked to internationalisation and improvement of competitivity. Creation of the National Network of Company Incubators Reinforcement for programmes of participative loans in companies. Impulse for business angels or informal investments Improvement of access to funds for the implementation of Spanish SME's abroad.

6 45,000 million euros financial support por millones de euros Facilitating access to capital markets to mobilise 3,300 million euros Flexibilisation of access to the Mercado Alternativo Bursátil (MAB). Creation of the Alternative Fixed Income Market (MARFI). Creation of a mediation line for company bonds and notes to facilitate the setting up of the MARFI. Securitisation Fund loans to SME's With a provision of 3,000 million euros to guarantee emissions of securitisation funds for loans to SME's. Extension of the Providers Payment Plan With a provision of 2,684 million euros. Local entities in the Basque Country and Navarra included in the model of participation of State taxation and certain local entities other than municipalities, may adhere. Also include obligations with outstanding payments deriving from public service management contracts, under the concession modality, for invoices prior to 31/12/11. Measures to fight bad payments in commercial operations A payment period of 30 days is established for all private operations, extendable at most to 60 and interests for delays are increased. At the same time, the Public Administrations in their Adjustment Plans should establish a path of reduction of

7 45,000 million euros financial support por millones de euros their debts with suppliers, which will be very closely watched. Law regulating electronic invoicing in Public Administrations 5

8 Stimulation of entrepreneurial activity Encouragement of an entrepreneurial culture and initiative at different educational levels Minimum contents at the different educational levels to encourage the development of creativity, teamwork and the entrepreneurial spirit. Measures for the permanent training of teaching staff. Flat rate of 50 for Social Security contributions For those under 30 years and newly self-employed who start an activity on their own for the first 6 months. Subsequently, during the following six months, a reduction of 50% of the minimum base contribution will be applied and, during the next 18 months, a reduction and a bonus of 30% which is extended in the case of women to the age of 35. Reconciliation of the unemployment benefit with the start of an activity on one's own account. During a maximum of 9 months the receipt of unemployment benefit will be compatible with enrolment in the Special Regime of Self-employed Workers, in the case of those below 30 years. Extension of the possibilities of capitalising the unemployment benefit to initiate an entrepreneurial activity The beneficiaries of unemployment benefit below 30 years may capitalise up to 100% of their benefit to make a provision towards the social capital of a mercantile company, as long as a professional or labour connection of an indefinite nature is established. Likewise the possibility is opened up to the capitalisation of the unemployment benefit being used to acquire assessment, training and information services, as well as to cover the costs of setting up a new company. 6

9 Stimulation of entrepreneurial activity Facilitating the creation of companies Creation of the figure of an entrepreneur with limited liability, by means of which individuals may see their liabilities for debts deriving from their professional or business activity limited, with certain goods such as dwellings or private vehicles not being affected. Facilitating the second business opportunity Establishment of an agile, simple and cheap mechanism which will open up to citizens, individual entrepreneurs and smaller companies an alternative route to legal bankruptcy and which will be more flexible, more extensive and more adapted to the needs of these collectives than the refinancing agreements. Improvement of the security network for self-employed people below the age of 30 to facilitate a second opportunity, enabling them to restart the collection of the unemployment benefit after carrying out an activity on their own account if before the fifth year they come off the self-employed regime. Speeding up the dealings for the creation of companies Speeding up the municipal dealings for exercising economic activities by means of the reform of the Local Administration. Launch of the Start it in Three portal, which enables entrepreneurs to more easily and accessibly handle the municipal dealings required for the start of economic activities subject to responsible declaration or communication. 7

10 Employability Improvement of the employability of young people Development of stimuli so that young unemployed may obtain the Obligatory Secondary Education qualification, improving their capabilities and improving their possibilities of access to the job market. Training programmes will be extended where they are aimed at obtaining professional certificates and have a commitment to contracting. Stimuli to the contracting of young people until the unemployment rate falls below 15% Reduction of the companies' contribution to Social Security by 75% for companies with more than 250 employees and by 100% for the rest, for contracting persons below 30 with no prior work experience on a part-time basis with training, where these are in sectors with no demand for employment or where they have been unemployed for more than 12 months. Reduction of 100% of the companies' contributions to Social Security for common contingencies during the first year when an umemployed person under 30 is provided with an indefinite contract. The selfemployed and companies with up to 9 workers can benefit from this scheme. First young job contract, temporary for six months, with incentives to turn it into an indefinite contract. Incentives to practical contracts for first jobs, so that those young people who have finished their training period may have a first working experience linked to their qualification. 8

11 Employability Improvement in labour mediation Impulse Autonomous Regions with public-private cooperation for mediation in the field of public employment services. Authorisation for Temporary Employment Agencies to formalise contracts and apprenticeships, thus making use of synergies and as many Temp Agencies that are already providing training services. An only Employment Portal that facilitates the search for employment and which will house all the useful information to guide young peolple and put at their reach all the tools that will help them search for a job or will help them start a business activity. 9

12 Competitivity Law of Guarantee of Market Unity The imminent approval of the Law will enable any product or service produced under the scope of any Autonomous Region regulation to be offered throughout the national territory without the need for additional dealings. Operators will only need the licence issued by an Autonomous Region and may operate throughout the national territory. All the Public Administrations will share a single electronic data base to exercise the tasks of control and supervision. The Council for Market Unity will take on the General Administration and the Autonomous Regions to ensure compliance with the regulation. A procedure is established for the speedy resolution of conflicts with the participation of the future CNMC. Measures to reduce and simplify administrative loads Adoption and implementation of the seventh Agreement for the reduction of administrative loads. With a time horizon of 2 years. It will enable citizens and business to save more than 1,000 million Euros in direct and indirect time costs deriving from administrative dealings, which to date they had to use up in administrative paperwork and bureaucracy. In-depth reform of different strategic economic sectors Energy Sector Railway infrastructures Transport and logistics Urban rehabilitation, regeneration and renewal 10