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Barcelona Village

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Barcelona Village - content area

Business and self-employment

Spanish business life is very different from UK business life. It's almost certain that things are easier and more freewheeling in the UK than in Spain. Our aim was for me to set myself up as self-employed and offer web-design and market research services to local businesses (www.notanant.com and www.dobney.com if you're interested).

For this reason I needed to have an economic status in Spain, and not only that I would like to contribute economically to the country I live in. Having been self-employed and started businesses in the UK, I wanted to go light to start with - keep everything really simple while learning the ropes and formalities, then as work grows you develop into something more structured and complex. This was the way I'd started in the UK.

As ever, we're trying to work our way through the system bit-by-bit (the best way to learn) and since this is light and small scale we're not using a lawyer - this is a perfectly feasible way of operating in the UK when starting out self-employed. In the UK all you need to do is to register with the tax office - you don't even need to register for VAT to start.

In Spain, bureaucracy means life is not as easy for small businesses or the self-employed. There doesn't seem to be a concept of making things easy for the tax payer, or of 'plain spanish' in official documentation (in the UK there's a well established Plain English Campaign which means official forms tend to be very well written).

Whilst it is straightforward to register as an Autonomo, albeit the form is very long, once registered you will be swept along with their social security, VAT and tax systems and will find that that business has more paperwork and more contact with the tax offices than in the UK. Many people end up using a Gestor because the forms are written in jargon, the queues in the offices are long and you can end up being fined for any oversight - there is a sense that everyone is a potential wrong-doer in the system and the system is designed to spot failings, rather than to encourage fair tax-paying by honest folk.

Secondly, making successful contact with Spanish businesses can be difficult (and the prices they pay will be a lot lower than those in Northern Europe or the US). The difficulty with dealing with the bureaucracy means things do happen on the side and for favours - bad bureaucracy encourages bad habits. Hence the need to work with people you know. We're avoiding any deliberate bad practice simply because it's enough hassle to get it right. I hate to think what happens when you start to get it wrong.

This section goes through how we got through the processes of registering to become Autonomo (Modulo 039), what this means for social security and issues such as VAT declarations. For instance for VAT (L'IVA - pronounced liva - you need to know what to listen for at the tax office when talking to people) is due at fixed quarterly dates - January, March, July and October - up to the 20th of the month. VAT has be to sent in via registered post or presented at the tax office, or dealt with online (though you need an eDNI or a certified electronic certificate which is a bit of a pain to get and use). This applies to all businesses so as you can imagine there are queues of business people and their representatives at the tax office every three months.

If you are working by post/face-to-face, unlike the UK you don't get sent any forms - you have to buy them at the tax office - Modelo 039 to register, Modelo 303 for IVA, Modelo 390 for annual return etc etc.

One warning lesson. I actually received no notification that I had been accepted as Autonomo and while twiddling my thumbs waiting for a letter to confirm my status, tax numbers etc was sent a letter informing me that my IVA forms were late. I immediate completed the forms 'sin actividad' because I didn't know it had started.

But the result was that the tax office has sent a further letter saying they are looking to apply a fine for the infraction of missing the IVA date, from which, I ended up being fined for not returning a zero declaration IVA form - not once but twice because it took them 8 months to notify me the forms should have been submitted by which time two had been missed.

Like I said the system is not really set to help honest business people - for instance the information on the Agency Tributaria website is overly complex and legalistic and it's difficult to find the answer to straight-forward questions (like what is a valid VAT expense). The telephone and email helplines are more helpful if a bit narrow in their answers.

 

1. The Spanish autonomo trap for part-time workers

This is our saga of helping a friend who has taken a low-paid part-time job as an autonomo, and how difficult the Spanish autonomo system is for the low-paid or anyone wanting to work part-time in a hobby-type business.

2. Low income part-time autonomo first quarter returns - the expenses trap

As mentioned, I'm helping someone working part time, on a low wage deal with the challenge of the Spanish autonomo trap for part-time workers. After then end of the first registered quarter comes the first set of paperwork.

3. Low income and the Renta repayment trap

Episode three in helping someone setting up to be autonomo in Barcelona, and yet another wrinkle - this time the effect on cash flow of IRPF (income tax) retentions and repayments.

4. Temporary autonomos - The Gestor Trap

This comes from a query sent to me from a person who took five months as an autonomo prior to being employed. Everything was done correctly as they employed a Gestor to do the work, but then they were surprised at the cost of the Gestor - again this is in addition to any tax or social security to be paid.

5. Trapped in bureaucracy - more forms for autonomos - Modelo 347

To continue our series on Autonomos, we've just discovered we have missed a form - which could mean a large fine, and large fines aren't very nice for low paid individuals. Agencia Tributaria requires you to submit certain forms, but they do not help or provide information to make it easy. It is assumed you will know.

Business set-up and VAT

There are a number of options for setting up a business.  With a business in the UK, I wanted to become an autonomo (self employed). As with the UK unless you've done it before it feels like feeling your way in the dark. And it's in Spanish. And you don't know what the rules and regs are. You will also have to think long and hard about cross-border tax planning.

Making business contacts

Business in Barcelona relies on networks of contacts which can be difficult to break into and which require good Catalan and Spanish

Letter after not submitting IVA

When I started it wasn't clear that I had been registered as autonomo as I received no letter or details. Consequently I didn't submit an IVA tax return. This is the sanctioning letter after I had submitted late.

Invoicing, IRPF and IVA

Autonomos invoicing Spanish companies have to include IVA (VAT) and will have an amount deducted from the invoice for IRPF for income tax.

Modelo 300 - VAT form

Modelo 300 is the form for the quarterly submission of VAT. VAT is always submitted at the year quarters - January, April, July, October. A Modelo 390 annual return is also submitted in January. This gives details of what to expect.

Fine for non-submission of VAT form

When I first registered as autonomo, I didn't receive any notification or certificate for VAT and so didn't know I needed to complete an IVA declaracion. I've now been fined for non-submission  - business-friendly isn't it!

Electronic certificates and tax and IVA

You can make online declarations for things like IVA via the agenciatributaria.com website. BUT you have to have a digital certificate (certificados electronico). Unfortunately there are glitches and technical problems particularly if you're using Firefox (and for bigger forms a bunch of really weak implementations).

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