Editor’s note: This article was first published in January 2015; the €260 monthly fee, the quarterly filing rules and the claims about economic recovery describe Spain at that time. The rules for self-employed contributions have changed since, with reduced flat rates for new self-employed people and a later income-based system.
While we sell the rest of the world an image of economic recovery and a boom in job creation, many Spaniards probably believe the message, but abroad nobody is buying it. Spain is constantly cited in the international press as an object of criticism and ridicule. Some time ago, even Forbes was laughing at the measures Spain had taken on renewable energy (an engine of economic growth and job creation in many countries).
In that Forbes article, titled “Out of ideas and in debt, Spain taxes the sun“, the reporter could not understand how the Spanish government could do something as stupid as its renewables policy.
We are also criticised for low wages, which in Spain are bordering on labour slavery. Clearly, many of us have written that, given the lack of jobs and the dreadful working conditions, the most viable way out is to create your own job: in other words, starting your own business, also known as becoming self-employed (an autónomo).
But the government is still not helping on this front. Being a business owner in Spain means getting kicked and tripped up at every turn rather than receiving support.
It starts with the red tape that makes setting up a company an endless process, continues with the supposed grants for entrepreneurs, which sometimes arrive after the company has already closed for lack of funds, and goes on to the high cost of setting up a company compared with other countries. And now, inevitably, a new piece in Forbes magazine exposes how much more it costs to be self-employed in Spain than in neighbouring countries.
Spaniards may find it perfectly normal to pay a fee of €260 a month (the Social Security contribution for the self-employed, whether you make or lose money in your business) and to file quarterly VAT and income tax (IRPF) returns. But the truth is that it is not normal at all; in fact, in many countries people can’t believe it.
The daylight robbery suffered by Spain’s self-employed
To understand the dreadful conditions for the self-employed in our country, we only need to remember that in France a self-employed person pays nothing during their first year in business, and after that pays according to their turnover.
In the United Kingdom, the self-employed pay an ANNUAL (not monthly) fee of between 13 and 58 euros, and they don’t have to file quarterly VAT returns: they pay it at the end of the tax year based on their income.
In Portugal there is no self-employed fee, while in the Netherlands they pay only €50 a year.
By comparison, Spain clearly comes off very badly when it comes to the conditions for becoming self-employed.
And to some extent, this creates what the government calls the underground economy
I heard on television that a high percentage of the self-employed don’t even make €1,000 a month. Being your own boss and not even reaching mileurista level (the Spanish term for someone earning around a thousand euros a month) must be an unpleasant feeling for an entrepreneur.
If someone does odd jobs on their own and manages to earn €600 a month without being registered, the government will call them a tax cheat. But what options does that person have in Spain if they decide to regularise their situation?
As we have already seen, Spain’s business fabric and its source of job creation are not its large companies. Spain depends on small and medium-sized businesses, and the self-employed are among the most important players in job creation. And we are certainly not supporting them.
Further reading
- The hidden price of starting your own business
- Why there is nothing romantic about failing in business in Spain
Featured image: Julio César Cerletti García, CC BY-SA 2.0, via Wikimedia Commons.
