angiescarr

I've suffered from a problem all my life. It's a bit like Tourettes but it's not Tourettes. It still causes people to gape at me shocked when I open my mouth and tell the truth! No it's not that I never tell a lie or a little fib. It's not that everything I do is completely whiter than white. It's just that when I was little I was taught “Oh what a tangled web we weave when first we practise to deceive” and “your sins will always find you out” and other such 'wisdoms'. These formed part of my childhood. And, as if to prove the veracity of these homilies whenever I did pull a childish stunt I was always the first one to get caught. Maybe I should have learned something from the fact that my more devious siblings would wriggle out and leave me in the spotlight. Be it the hiding behind the door to sneak a look at the Christmas presents... or the first one to try sex out or the ones who smoked in secret or experimented most with drugs. It was me who got caught behind the door. Me who got pregnant, in spite of the several years longer it took me to lose my virginity. Me who got caught with my husbands neat row of cannabis plants on the back windowsill. When asked about these pretty plants I couldn't come out with a snappy and believable answer. No I cringed and admitted it. And when advised by my Dad to burn them. Why couldn't I stop myself from admitting that we would be doing that....and very slowly!!? I was honest with my kids. Which wasn't a problem until there were other parental figures on the scene who were less candid. And I was honest with the tax man. Maybe not 100%, I won't deny on the way back from an event I might buy myself a new pair of shoes before the money hit the accounts. (See. There I go telling the truth again!) But really, more honest than anyone I knew even in England. I believed and still do that If I tell a lie, I'll be the first one to be found out. But maybe that's because I'm just not good at it.

So, all my life I've worked a bit harder, for a bit less than most people I knew but I've felt reasonably virtuous. I didn't mind paying Tax because I'd been on benefits myself for a few years. Why should that matter...Nobody else seems to worry about it!
A couple of times it has helped me to know that a lie told about me could easily be proved to be a lie. I'm not sure, Maybe that's the full extent to which honesty has helped me. Nobody believes it anyway and nobody respects it. And it leaves you with a heavier tax burden even in England than the small business person deserves.

Anyway, when I moved to Spain, I believed we could continue the way we always had. declaring my income from all sources and paying a reasonable amount of tax. Feeling virtuous and earning my pension if and when the time came. Boy was I in for a shock! People had warned me this was not the case. EVERYBODY warned me from every sector of society. Everybody said Spain doesn't work like that. And guess what? I thought I knew better. I believed honesty was the best policy and at least I believed that if I wasn't honest, I would get caught.
I thought my attitude was laudable. I found out they were right and actually I was stupid!

Things started to get difficult right from the start. I struggled every month to pay the debts we'd left behind in England due to the crash (La Crisis as it's called here) which happened right in the middle of our house build (this is a separate story...though relevant). But worse than that I struggled month after month to pay my National Insurance (Seguridad Social) which was nominally 270 euros a month but always rose to 320 or 350 depending on how late we paid. And month by month we had to pay later and later. This has to be paid month in month out regardless of income.

Tax and IVA (paid by even the smallest business from the first euro...good month or bad) has to be paid at the end of every quarter whether your income comes over the tax threshold or not. And if you're late yes, more charges. And if you ask for a delay, they tell you you haven't proved that you haven't enough income...although clearly you haven't, or you'd avoid the extra charges, the worry and finally the embargoes which can cripple your business altogether stopping your bank accounts and taking your car and later...your home. There is no way out.

Yes there is. You can learn from your mistakes or from mine! You can be more Spanish about things. It hurts ….but it's the simple truth. There is an honesty trap in Spain. Spanish small businesses are taxed heavily because they EXPECT there to be extra grey/black income. If there isn't you can theoretically, if you include social security as a tax be paying more tax than you earn! This has actually happened to me.

If you are unsure whether to become Autonomo in Spain think VERY carefully.

IMAGINE 12 months of low turnover and high National insurance payments.
CHECK whether your car can be considered a business vehicle or not (If it's a 'turismo' because you can't afford a swanky new business vehicle it doesn't matter if your use is 90% business. You'll only be allowed 50% offset against tax).
Think who are your customers. If they are outside of Spain look at the high postal costs and the IVA and ask yourself whether you can really compete. (I can't even compete with people who resell MY goods!)
If a very large percentage of your customers are outside of Spain ask yourself if you wouldn't be better off keeping your business abroad and just declaring your worldwide income here.
Finally ask your Gestor for advice and take it!

I didn't even take my Gestors advice. And though I can't tell you here what it was, I'm sure you can guess.

Neptuno

So true- we're always being told how stress free it is in Spain, but not if you try to do things by the book.it's hard to go against the flow.
It's true what they say- thieves prosper.
We're the mugs, yet still I can't live by the adage"when in Rome( or Spain)........

Dxf

Hola

The thing is - do you sleep well of a night and would you sleep at all if you didn´t tell the truth?

Davexf

Rosemary

I have always been told that I must have an "honesty gene" because like you I always do things by the book, the straight and narrow way and I have no intention of changing because I am comfortable knowing that no-one can say that I am doing wrong.

It sounds like you would have had a very diffierent experience in Spain if you had done things differently but if you are honest with yourself I think that you would be saying that you would have been far too nervous to have done it this way.

You are an honest person and should be applauded for it and you should congratulate yourself on this trait, it is a good trait not a bad one.

Rosemary

jjh

We do everything by the book. If we didn´t, like you angiescarr, we would be the people who get caught. We did everything by the book in the UK and will continue to do so in Spain.

However, it really does make cross when I know that so many (ex-pats) are dodging this tax or another and then bang on about people going to the UK and abusing the system.

HBG

If you're honest and get through life because of your own honesty and endeavours, then that should be applauded.

It gets more complicated when you're honest because you're a scrounger, scrounging from you parents, spouse, siblings or even the state.

And it's downright complicated when your supposed honesty compels you to grass on your family and friends.

(I'm glad I chose Spain as my expat location because I believe in quite a high level of integration and doing as my neighbours do. Some years ago I nearly went to Papua New Guinea where the people eat each other).

cricketman

Not everyone in Spain is cheating

My wife actually pays more in social security payments than she earns each year at the moment. My brother in-law even pays the IVA of his cutomers when they refuse to pay it

The difference is when cheating helps you put food on the table. I asked an Andalucian once why there was such a culture of cheating in Andalucia and he said "because people have to put food on the table, what other option do they have?"

amideislas

You post seems to suggest that it is only expats who engage in such things.

But nothing could be farther from the truth. It is both a cultural and systemic issue, and not limited to "expats".

It wasn't that long ago that the Spanish lived under a dictatorship which greatly encouraged living "below the radar" - and it became a cultural lifestyle. Today it's quite different, but we still live under a system which fundamentally penalises those who operate "above the table" whilst encourages those who do not.

To suggest it's only expats that operate this way suggests you may not be aware that Spain is still home to millions of Spanish nationals who also equally incentivised to "get around" the various penalties imposed by the system. You don't have to be an "expat" to be subjected to it.

And I read Angies post as suggesting precisely that.

jjh

Please do not patronise me. I am aware of the situation. I am not engaging in an argument as I took angiescars post to mean she was referring to herself as an ex-pat. I wasn´t, for a moment, suggesting that it was only ex-pats. Good day to you.

amideislas

I wasn't "patronising" you, but rather pointing out the naivety and narrow-mindedness of anyone who might believe that the common, accepted practice of "getting around the system" is somehow limited to expats.

In fact, I'd argue that it's more oft the expats who come here with naive notions that "doing everything by the book" or "whatever they tell you" is somehow the "proper" strategy, when in fact, doing so with enthusiasm can actually lead you right into the penalty box, whilst the locals have a little chuckle...

angiescarr

I can't make any suggestions. I am just saying that expats lay their heads on the chopping block either way. Unless you don't have to work for a living in this country you are going to find that you pay more because the system is based around charging more to cover for the black/grey system. It needs saying because there is little support and no sympathy for expats who aren't 'comfortably off' even if it's because they're honest caring souls. Those who are 'dishonest' (and I use that term uncomfortably because I have many Spanish friends who wouldn't call what they do dishonest. Culturally it's accepted) call you stupid for being 'white' and those who are 'honest expats' don't understand unless they're actually going through it themselves because they'll say "you should have known". OK I'm letting it be known.... because it's something anyone setting up a business here needs to bear in mind. Unless you work in the black/grey You WILL pay more of your income than is just (or sometimes even possible). And the lower your income the proportionally higher that burden will be.

cricketman

There is a bit of a different working culture as well

In the UK, there are lots of people who work in something they have a passion in, maybe aromatherapy or art lessons at their home, or selling stuff on e-bay, who don't earn very much money. Maybe a few hundred pounds per month, but it is seen as a bonus because they are doing something they enjoy - and the tax/national insurance system takes very little off them

The Spanish system does not allow such a position. If you are going to earn less than 8-10,000 euros doing an activity in Spain, then it is not viable due to the social security payment etc. Simple. You would be advised to do something more profitable

HBG

Without talking about extreme or downright criminal behaviour, too much transparent 'honesty' in Spain will be expensive for the expat, especially in business. Spanish people know better and conduct their lives accordingly.

A meaningless example? I tried for an opening licence for a business on the Costa del Sol and tried to do it by the book. It was impossible. I went to a more knowledgeable abogado who got me the relevant licence and several other permissions within a week. He fell off his chair when I tried to pay him by cheque and needed smelling salts.

For the next few years I dealt with brown envelopes, like everyone else.

cricketman

Like a lot of people yes, like everyone, no

It really depends where in Spain you are. if you tried to hand out brown envelops in the North then they would be much more likely to laugh at you or even report you to the police for extortion

olivefarmer

I still marvel at the breathtaking scale of IVA avoidance.

At the builders merchants.

"I am sorry, I will have to charge you IVA on the concrete Vigas because I had to pay IVA on them, everything else comes without IVA."

So how does that work then? The cement factory doesn't pay IVA or just to big enterprise i.e. big orders? same with bricks, sand, tiles...... No one in government spots a huge undertaking employing hundreds yet paying no IVA each quarter.