Government approves proposed Startups Law. Stock options with new rules

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Source: aicep Portugal Global

With this new law, Portugal now has “one of the most competitive regimes in Europe,” says the Portuguese government.

The government approved this Thursday as a proposal for the so-called Startups Law. The concept of startups and scaleups, changes in the taxation system for stock options and reinforcement of the tax incentive system for research and business development are some of the proposals present in the law that will be submitted to Parliament.

The proposal approved this Thursday in the Council of Ministers “defines, for the first time, the legal concept of startup and scaleup, as well as its recognition process,” aiming to promote the “national entrepreneurship ecosystem and the definition of specific investment policies,” the government said in a statement.

“This Bill recognises a special framework for these companies, which are characterised by an innovative business model, fostering a growth-oriented economy founded on digitalisation and innovation,” it justifies.

Changes to stock options

Among the proposed changes is an old ambition of the startup ecosystem: a new taxation regime for stock options.

“Given the specificities of startups and scaleups, this draft law changes the taxation regime of option plans for employees of startups and companies in the innovation sector, called stock options, ensuring that taxation will occur when the income is effectively realized,” says the government.

“Portugal will thus have one of the most competitive regimes in Europe, ensuring efficient conditions for the establishment and maintenance of startups and disruptive companies,” guarantees the government.

The draft law “also reinforces the system of tax incentives in research and business development (SIFIDE II)”, intending with this to “promote and encourage companies’ investment in R&D.”

It had been known since August that the government, together with Startup Portugal, was working on a new Startups Law to be presented as early as 2022, as António Dias Martins, executive director of Startup Portugal, had advanced in an interview with ECO.

In October, the Minister of Economy, António Costa Silva confirmed the government’s intention to close this issue before the end of 2022.

“We want to have one of the most competitive laws (of startups) in the European market and perhaps also in the international market,” promised António Costa Silva, Minister of Economy and Sea, on the sidelines of the meeting with the Web Summit organisation.

“We intend it to be an attractive law aligned with market trends,” he said. “A law that can give much more strength to the ecosystem of startups that we have, also look at the issues of funding and the financing model of startups and the technological ones and also from a tax point of view, on important elements. One of them has to do with stock options, the way they are going to be treated,” he continues.

“We think we can offer a law that not only consolidates the system but also can attract more companies from abroad,” he adds.

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