A useful explanation for the crappy Spanish economy

Not a whole explanation but still useful:

even if they get legal status, they have to register as self-employed and pay a statutory monthly “quota” of €300, regardless of income, which they do not earn enough to pay.

That’s €3,600 a year in tax from Day I of self-employment. No, that’s not the assumption of what your income or profit is, that’s the payment you must make. Thus all of the lower end of the Spanish economy is off the books, not on.

Idiocy, of course it is.

11 thoughts on “A useful explanation for the crappy Spanish economy”

  1. If it wasn’t so tragic, it’d be amusing.
    I’m sitting in an economic wasteland. There’s been enormous changes. And changes bring opportunities. I thrive on change. I reckon I come up with two or three things a day it’d be possible to make money on. It’s just not worth bothering, legitimately. The initial expense & time & effort dealing with the bureaucracy. It’s not worth the risk. Doesn’t mean they won’t happen. But they’ll happen in the black economy so the dissemination of the wealth creation will be narrow & the tax revenue will be missed.
    Like I said. Supercharged idiocy

  2. The French system has always been the same – cough up your social costs before you’ve earned a cent. About ten years ago they introduced the auto-entrepreneur, which allowed small operators to start up without the same burden.

  3. I dunno. Charging illegal immigrants $300 a month seems a pretty civilised way of reducing arrivals…

  4. A logical extension of the view held by all tax collectors: an honest person works for a company that does his tax for him, the only reason for being self employed is to defraud the tax collector. So, collect the tax up front.

  5. Anne-Elisabeth Moutet has a good piece today on Unherd which is a fun and interesting read.

    I particularly liked the closing lines:

    As we hashed it over, it became obvious that two entire philosophies were clashing: British pragmatism against French theory; British nimbleness against French top-down hierarchy. “Business in England starts when 20 shopkeepers get together in a café near the docks, and decide to finance a ship to the West Indies,” he said: “They find a captain, networks, information, insurers. In France, you go to the King; he gives you letters of marque against a cut in your profits; all is done in his name. Nothing has really changed: today, most large cross-border deals need the approval of the Direction Générale du Trésor at the Ministry of Finance.”

  6. ‘I dunno. Charging illegal immigrants $300 a month seems a pretty civilised way of reducing arrivals…’

    You have a point, BIT. But you wouldn’t want to carry it too far. You’ll remember Valens and the Battle of Adrianople.

  7. BiS is right. More so down where he lives. Up here in the Basque Country things run better, the economy is industry and service-based, not tourism, agriculture and holiday home construction and companies are better run.

    With sky-high unemployment South of Madrid particularly among the young, they introduced a €50/month startup for freelancers. But it’s irrelevant. Overall, most people want a job with benefits. It’s a mindset.

    Bureaucracy is asphyxiating and everything takes ages and you have to set up right or the whole thing bites you in the bum later. Everything is rule-based. And boy get it right.

    I’m fighting a rearguard action against the Social Security for closing down my company over 2 years ago. They might get me, their argument is factually and morally wrong but I mis-named an amount I loaned to my company in the accounts (yeah that’s it, because the law is so convoluted, so I did something wrong and I am personally liable for some post-closure costs) and they are gung-ho, they need cash.

    Like BiS I see enormous opportunities everyday. And they will grow. But with this government (and even centre-right governments when we have them) which looks on business people as exploiters and crooks it just isn’t worth it. Due to my age I can retire on half pension and continue to work as a freelance as much as I want paying less than half the monthly SS minimum (the €300 is the minimum and they are going to mandate higher scales if you have one good year!). Was doing great before Covid and by May I will be happy again.

    I had a major project, with everybody on board: know-how free from a UK company, suppliers in all key areas, skilled staff at all levels locally, all the services I needed from business friends who are top in their trade (at supportive prices), the government willing to make grants, loans and even take part of the capital. I looked at it and just couldn’t be bothered. you work harder complying with the rules (which you can’t possibly know in their entirety) than working on your business.

    But as Matt Ridley says in his blog, China has become the great innovator (‘cos it doesn’t just copy now) because the government sat back and let the little and big people rip. No rules, no control and get rich. Read his conclusions about why China will cease to be the great innovator at https://www.rationaloptimist.com/8697?title

    Spain will never get out of this mindset. They even think innovation is a top-down thing and that the government can mandate it. We have Innobasque here, another sinecure for people in the revolving-doors loop where they do lots of events and publish pretty projects, get paid at top rates, but we ain’t got no Amazon yet from their programmes.

    If you are successful in Spain, you have to put up with the sort of sh*t that Amancio Ortega (top 5 world’s richest man)of Inditex/Zara fame has to, when his foundation goes round our devolved health system and modernises at considerable cost (hundreds of millions) all the cancer-detection and treatment hi-tec machinery. Spain is now state-of-the-art, but you should have heard the opprobrium poured upon him.

    And despite this, we still get innovators who have set up big companies. Mainly in the IT/social media/web-based or bio-med industries.

    Imagine if they made it easy.

Leave a Reply

Your email address will not be published. Required fields are marked *