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At Spain’s Door, a Welcome Mat for Entrepreneurs

nytimes.com

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Re: At Spain’s Door, a Welcome Mat for Entrepreneurs

#31

Post by junto »

fauigerzigerk wrote: post #16
carlesfe wrote: post #14

Spain is like phone companies: a welcome mat for outsiders, a nightmare for insiders. Spanish companies can't have anybody working (i.e. 'dormant' state), they always need an "administrador" who pays a monthly 300€ self-employment tax. This kills companies in early stages unless they can break even quickly (3600€/yr while not having any income, plus maintentance expenses, is terrible) Creating a company is bureaucrat…

I agree that the 300€ are a big turnoff initially, but it is not a self-employment tax. It's social security contributions and it entitles you to full health coverage (and eventually a pension). Granted, you can get the same in the UK for almost nothing until you actually make money. But the 300€ is about the same as in Germany I believe and you get a big rebate in the first few years if you register as self-employed…

Germany is slightly different if you register as a freelancer rather than self-employed. As a freelancer you can apply for a 3 year exemption from pension contributions when are first registered.

Then as long as you don't earn more than 5/6ths of your income from a single client you can remain exempt.

Fall foul of that 5/6ths though and you have to pay full whack (half for the first 6 months) which is a whopping 500 EUR per month.

It is designed to discourage people who really 'should' be employed, working on long term contracts for a single employer.

Re: At Spain’s Door, a Welcome Mat for Entrepreneurs

#32

Post by Adirael »

slapresta wrote: post #23
carlesfe wrote: post #14

Spain is like phone companies: a welcome mat for outsiders, a nightmare for insiders. Spanish companies can't have anybody working (i.e. 'dormant' state), they always need an "administrador" who pays a monthly 300€ self-employment tax. This kills companies in early stages unless they can break even quickly (3600€/yr while not having any income, plus maintentance expenses, is terrible) Creating a company is bureaucrat…

Spaniard here. While I've never started a company, this resonates pretty strongly with my experience as a freelancer. In order to be an autonomous worker, you must pay 250€ a month. On top of the 21% VAT and the 16% IRPF taxes, of course, and without even having any income. According to the law, you only need to register as an autonomous worker and pay the tax if you expect to do this "regularly and as a way of livin…

Careful with that IRPF "discount". In the end of the day you have to pay what you have to pay, they just let you pay less monthly. I was bitten in the ass this way my first year operating, I had to pay more money than I had in my bank when the tax season came.

Following years I started tributing at a 20% which resulted in the state owing me a bit (not much, nobody wants to lend interest free money).

Re: At Spain’s Door, a Welcome Mat for Entrepreneurs

#33

Post by fauigerzigerk »

endzone wrote: post #27
fauigerzigerk wrote: post #19

Earlier quoted context omitted.

That's right, and on top of that you can create a limited company for a tiny fee with zero minimum capital requirements. The UK is pretty much ideal in that regard. However, there is only one place in the UK for starting a startup and that place is London. Rent alone will cost you several times your Spanish social security contributions.

startups can only work in london? what a bizarre claim

It was not my intention to make that claim. Startups can work anywhere in the world. But within the UK, London has by far the largest startup ecosystem. For a foreigner moving to the UK to start a startup, other places don't make much sense in my view. For UK nationals it may be a different matter.

Re: At Spain’s Door, a Welcome Mat for Entrepreneurs

#34

Post by fauigerzigerk »

Symbiote wrote: post #28
fauigerzigerk wrote: post #19

Earlier quoted context omitted.

That's right, and on top of that you can create a limited company for a tiny fee with zero minimum capital requirements. The UK is pretty much ideal in that regard. However, there is only one place in the UK for starting a startup and that place is London. Rent alone will cost you several times your Spanish social security contributions.

> However, there is only one place in the UK for starting a startup and that place is London. But it's a small-ish country, with decent transport connections. Why not Manchester, with trains every 20 minutes to London when needed? [1] Or Bristol [2]. Cambridge has had startups for ages. [1] http://traintimes.org.uk/london/manchester [2] http://www.theguardian.com/technology/2014/jan/12/bristol-ba...

It's certainly possible to do it that way, but when I was living in NW England, I ended up not making the trip to London very often. You can blame my laziness if you like.

Re: At Spain’s Door, a Welcome Mat for Entrepreneurs

#35

Post by fauigerzigerk »

junto wrote: post #31
fauigerzigerk wrote: post #16

Earlier quoted context omitted.

I agree that the 300€ are a big turnoff initially, but it is not a self-employment tax. It's social security contributions and it entitles you to full health coverage (and eventually a pension). Granted, you can get the same in the UK for almost nothing until you actually make money. But the 300€ is about the same as in Germany I believe and you get a big rebate in the first few years if you register as self-employed…

Germany is slightly different if you register as a freelancer rather than self-employed. As a freelancer you can apply for a 3 year exemption from pension contributions when are first registered. Then as long as you don't earn more than 5/6ths of your income from a single client you can remain exempt. Fall foul of that 5/6ths though and you have to pay full whack (half for the first 6 months) which is a whopping 500…

I think most serious startups will want to incorporate pretty soon in order to have access to venture capital and limit personal liability. I wonder what the social security contributions are for owners of a limited company in Germany. (And no, I don't expect you to Google that for me ;-)

Re: At Spain’s Door, a Welcome Mat for Entrepreneurs

#37

Post by fauigerzigerk »

scalesolved wrote: post #25
joeyspn wrote: post #22

Earlier quoted context omitted.

Not negative at all. It is actually quite accurate. I started up in Spain 5 years ago and was the worst decision ever. Never again. For several reasons our venture failed and I was stuck with hundreds of thousands of € in debt w/o any protection, with me and my co-founders scared of losing our homes, and severely affecting our personal lives. Spanish gov is specialist in showing a big smile in the pics that appear in…

How would the tax situation work with having a LTD in the UK and residing in Spain?

You would normally have to make payments into the Spanish social security scheme. The rules are actually quite complicated but if you live and work in Spain that's where you have to contribute to social security. Owning a UK limited company does not change that.

Re: At Spain’s Door, a Welcome Mat for Entrepreneurs

#38

Post by onlito »

lemming wrote: post #11

I lived in Spain for 9 years and ran a company there for 7 of those - I would never do it again. Even with competent professional legal & accounting assistance it's a bureaucratic nightmare by the standards of most other places I've been. It's also not particularly cheap - contrary to what the article says, Berlin in my experience is much cheaper. That said, it's a nice place to live, especially Barcelona, and that h…

I agree with you, the bureaucracy is tough in Spain especially with accountants who don't really know the rules either. I don't think it's less bureaucratic then Germany though, Germany is only more predictable. Absolutely true what you say about hiring, people from abroad love coming to Barcelona & there are extremely skilled local people ready to work their butt off if you give them a chance. Also there are very attractive reductions in social security costs available if someone you hire has been unemployed before.
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