Self employed persons (autonomos) and small companies represent 95% of the Spanish economy. In particular, autónomos are very relevant to the growth of the Spanish economy although there have been very few incentives to stimulate the creation of small business from a tax and social security perspective. The Spanish Government made a timid effort in 2013 but recent pressure from the centre-right political party Ciudadanos has brought into law new measures to help autonomos set up new businesses and create employment. These are measures that should have been enacted years ago but its better late than never!
The New Obligation of Gibraltar Financial Institutions to Provide Automatic Exchange of Tax Information to The Spanish Tax Office
As part of the recent agreements of exchange of tax information subscribed by Gibraltar for cooperation in tax matters, the Gibraltar financial institutions will be reporting to the Spanish tax office the relevant tax information of all their account holders, including income on earnings, tax withheld and tax residency status. The first reporting will take place before the end of 2017 related to the tax year 2016. The world is getting smaller...
Its hard to credit this but a recent report in an online newspaper exposes the parlous state of Spain's compliance with EU rules(and its own laws)on company accounts filings. It seems that 2/3rds of Spanish companies completely ignore the regulations and they do so evidently with complete impunity.
A new law was passed on 3/2/2016 to force landlords in Andalucia to register properties used for holiday letting. The fines for ignoring this law are truly draconian with a minimum of 18,000€ and maximum of 150,000€. An estimated 400,000 properties in Andalucia will be affected.
More than 90 countries have now signed up to the automatic information system, including most tax havens and the other bad boys like Switzerland, Austria, Luxembourg and Cyprus (to name but a few!). There is now no place left to hide except places where you would have to be very brave to leave your money.
Picture the scene: with youth unemployment in Spain currently hovering around the 50 per cent mark for under 25s (source Eurostat), you decide to give your son a helping hand by letting him set up business in an empty shop you happen to own.
The dubious sight of well-paid businesspeople walking away from soon to be bankrupt companies—but not before pocketing millions of Euros (in some cases hundreds of millions of Euros)—rightly raised a stink, particularly with those less fortunate employees who lost their jobs and shareholders who lost their money.
Those of you who have lived in Spain for many years will probably have been regaled in the past with tales of how people had managed to escape tax liabilities by buying their properties through 'holding companies.'
"In this world nothing can be said to be certain, except death and taxes." So said American founding father Benjamin Franklin but, in the case of Spain, such a view could be seen as a little simplistic.
Spain is one of a number of countries that charge tax on unrealised capital gains when their tax residents leave the country, and it has had a new law in place since January 1, 2015.
We have set out a series of Q & As to answer your basic queries about how this law might affect you
The Spanish Government recently announced new measures to fight against the black economy in Spain, unofficially 28% of the Spanish GDP. Who are the targets and will these measures work?
The Spanish social security system is difficult for foreigners to understand and is extremely expensive for employers. The good news is that the government has at last introduced some meaningful employment incentives in the 2014 social security system.
FAQs - M720 annual declaration of foreign assets. Beware, some of the answers to the questions are truly mad.
There is no automatic obligation to file an M720 each year, so if you filed last year for assets owned on 31 December 2012 you may not need to follow this painful process this year. However, if there have been changes in foreign assets you may have to file again.
From 2014, the possibility of filing the tax declarations by hand will gradually be disappearing, so that they only can be submitted by internet.
The Spanish Government has approved the Budget for 2014. No surprises, the tax system will remain as it has been for 2012 and 2013. Far sighted policies that will generate growth and employment seem as remote as ever.
A fairly simple answer to that question is that Spain is Spain. Everything takes longer and involves more red tape than most other countries in the civilised world.
Spain is very active in signing new tax treaties and updating some old treaties, unfortunately not necessarily for the benefit of the individuals investing in Spain.
In previous articles we explained that the Spanish Government reintroduced wealth tax in 2011 as an emergency economic measure. The reintroduction was achieved simply by removing the 100% exemption to the tax that had originally been introduced in 2008.
When I heard that Spain was bringing in a new VAT cash accounting system, I was stunned. The first thought: how very progressive for Spain. However, then I read the law and how it will work, I quickly changed my mind, it would seem that the lawyers and governmental bureaucrats who wrote the law just do not know how small businesses work in the real world.
The latest fashion for the wealthy in Spain is to find another country to pay income tax.
Here are details of the Stick that followed the tax amnesty Carrot. If there was ever a piece of tax law that needed thought, this is it!
Spanish taxpayers have been given their last chance to clean up their tax affairs.
New measures, just introduced by Rajoy's Government, provide taxpayers with an amnesty for tax fraud. They can now declare previously hidden income and assets by paying a flat 10% one off tax charge. The deadline for the amnesty is 30 November 2012.
This is the carrot.
The stick is a change in the tax rules that will eliminate the current four year tax prescription rule.
A few weeks ago the Spanish Government introduced another important tax incentive for property purchasers in a bid to kick start the moribund property market and help the banks get rid of their stock of repossessed properties. It is worth comparing Spain's property tax incentives to the massive French tax increases on foreign property owners. If there was ever a time to buy in Spain, this is it.
This year we are holding our annual charity golf day on June 29th at the San Roque Club golf course. In the last three years we have raised 25,000 € for the Motor Neurone Disease Association and this year we want to break the 10,000 € barrier! Help us raise money for the charity and have fun at the same time!
There is much in the news today about various firms of auditors being appointed to analyse the real bad debt situation that has caused the banking crisis. As a small scale Spanish auditor myself, I can't help think that something has gone seriously wrong in the audit profession in Spain and it amazes me that no one is pointing the finger at the big firms that have been responsible for the audit of the Spanish banks in recent years. Amazingly, it is the same firms that are now being appointed to carry out a new review of the bank's balance sheets.
Expats take note! There are times to give thanks to the much maligned Spanish adminsitrative system.
An article in a blog I was reading this weekend caught my eye and I decided to do some digging. After a few minutes, what I have long suspected about the bank's holdings of defaulting loan assets became crystal clear.
Election day on Sunday 20th November should produce a dramatic change in Government for Spain. But what will this mean?
What makes a resident of Spain a tax resident of Spain? It is an important question and misinformation arises everywhere, not least in the press, over a beer in the golf club, just about anywhere, in fact.
The European Commission made official complaints against Spain in May 2010 and February 2011 regarding its Inheritance tax legislation. These complaints were ignored and so the EC has commenced an action against the Spanish state through the European courts.
Over the last few year or so we have heard that various governments have licitly and not so licitly managed to get hold of lists of people with bank accounts in funny places. What has become apparent is that these lists are being shared with the tax authorities of any interested country. Well Spain has shown its interest too...
Thoughts on alternate realities...
Or was he thinking of the Maginot line? Lets hope Sarkozy's imaginary line will hold for longer than the Maginot line that proved useless within a few days to repel a German invasion. The phrase 'wishful thinking' comes to mind.
Many will remember that happy day in December 2008 when the Spanish Government eliminated Wealth Tax, or so it was thought!
The idea in 2008 was to make Spain a more attractive economy and do away with an archaic tax that has its roots in 1977 when inflation and interest rates were in double figures, the fledgling Spanish democratic state was crying for financial air and so an 'extraordinary tax' was born.
In yet a further attempt to stimulate small business growth, from 15 June 2010 and until 31 December 2011, small companies and self employed would now be able to receive finance easier from ICO (Instituto de Crédito Oficial) than a bank.
The Spanish Government has enabled its ICO (Instituto de Crédito Oficial) to grant loans of up to 200.000 € directly to small businesses, bypassing the high street banks. The question is will a Government department do any better at providing financial help to small businesses than a typical bank? We shall see...
After many years of negotiation between the Marbella town hall and the provincial planning authorities the newly approved PGOU was finally published on 20 May 2010. This final step completes the long and controversial process for the approval of the municipal urban plan. Marbella has the distinction of being the first of the large towns on the Costa del Sol to have its new town plan approved and this is the most significant event in the town planning system for Marbella for 24 years, since the last PGOU was approved. The PGOU also regularises over 16,500 dwellings that have been illegally built during recent years.
There is a new proposal for a substantial change in VAT law that will allow small scale self employed businesses and companies to pay VAT on their real sales income.
From 1 January 2010, EU residents (whether individuals or companies) who rent their Spanish properties will pay 24% tax on the net rental income, instead of 24% tax on the gross rental income.
The Spanish Government intends to approve a number of changes in legislation to strengthen the tax office's armoury against the black economy and tax fraud. They propose to modify the Penal Code so that substantial tax fraud may be penalised with up to 6 years (currently four years) in jail.
The Spanish Government, currently the PSOE which is the main centre left party, announced on 1 March 2010 a number of proposals to stimulate the creation of employment and the economy in general. The main proposal is to incentivise property refurbishment which the Government believes will create 350.000 new jobs. Official figures show current unemployment at 20% nationally, (25% in Andalucia).
Since the publication of the 'grey list' by the Organisation for Economic Co-Operation and Development (OECD) in April 2009, the number of countries included on the list has decreased from 35 to 16. 19 countries have signed at least 12 different agreements of exchange of fiscal information with different countries. The signing of these agreements results in their removal from the 'grey list'.