How can Spains finances be so bad when we pay so much tax etc

[TenerifeTeddy]

I know Spains/Canaries economy is in the pooh!, but I don´t think it´s because of insufficient tax revenue.:mad:

I have just been working out just how much little me and my wife have had to pay in local & national taxes & SS payments this year, it is scary.:(

2 x Social Security @ €274 per month = €6576 per year
2 x rent retenciones for locales €110 per month = €2640 per year
2 x basura for locales & 1 x Apartment €500 per year approx
IBI for apartment €256 per year
2 x taxes quarterly per year = €5000 approx

That's €15000 per year, just from us running 2 small businesses!

On top of that we have just been charged €700 for the opening licence by the Town Hall, for my wifes new venture.

I also had to pay €24 tax and IGIC on a €29 Spanish laptop keyboard imported from the Peninsula.

So either there is massive waste going on, or nearly every other bugger is working on the black!!!

[junglejim]

Have you seen the amount of Beaurocrat´s you support ?
The amount of Black Money here via property deals , bar workers, cleaners etc is massive .

[seanocelt]

And the Canaries black economy is way worse than Spain's. Cake and eat it etc.

[CIM]

I have yet to meet a Canarian landlord who will take rent via bank transfer...
I have yet to meet a Canarian employer who will give an indefinido contract or pay a salary in full - instead of mostly in cash.
Its deeply rooted in their culture to do everything cash, not pay tax, not declare etc. No wonder things have gotten so bad.

So what should us expats do when we move over here? Surely we should be doing our utmost to integrate ourselves and embrace the local cultures and customs? Which means not bothering to pay tax... like the locals

It reminds me of a well known British song:

http://www.youtube.com/watch?v=uxOEhc960Bc

[9PLUS]

When in Africa...

[golf birdie]

anyone who has spent time in the offices of any official department here will know where their money goes. Sometimes I still think we are in the 1980's:laugh: If ever they took on professionals who knew how to run things 3/4 of the staff would be gone.

[casabonny]

We have always paid our landlords for rent via bank transfer , even when we first came here .In my mind thats one of the first most important things to do.It safeguards both parties and I have yet to come accross any commercial landlord who didnt want paying by this method.Saves them the time and fuss of chasing cash and the risks in volved with carrying large sums of cash around .
I accept its a way of the life and culture here but its not going to change overnight.Since early this year no business could pay any more than 2000 euros in cash in any one transaction ( there are of course exceptions where facturas are proveable on both sides ) and with the annual declarations to Haceinda for any one person /buisness who spends more than 6000 euros per annum with a company or business many more are unable to dodge the system.It also means that those working on the black market , such as builders etc who buy from the same place and get facturas in thier name , who dont do tax returns or if they do declare low income are very likely to be caught out .
No one likes paying taxes but they are a necessary evil and sadly thats never gonna change !
Just my opinion though.

[9PLUS]

Didn't know they passed the €2000 in cash law?


It was mentioned that transactions of more than €2500 must be via bank transfer but i don't think its been passed

[slodgedad]

After nearly 20 years of living here I am still gobsmacked at wage slips.

In the UK what you earn is at the top and what you receive is at the bottom..Simples (Tax Wise)

I have rarely met anyone in Tenerife who is paid this way.

Contract and nomima 500, wages 1000.

Even the lowest paid workers are paid this way, whereas in the UK, even if you are on minimum wage it appears on your payslip.

[9PLUS]

Easily solved put people on €10 an hour and then the Tax & SS get taken out of their wages.


And then see how the employee likes that...

[slodgedad]

Easily solved put people on €10 an hour and then the Tax & SS get taken out of their wages.


And then see how the employee likes that...

Problem here, as you well know, is that to employ someone on a 1000 a month contract costs the employer at least 50% more, which is why the dole is so generous, short term, because the employer has paid it in.

It gives no incentive for employers to employ workers who they know won't be staying long.

Hence part time contracts, black money and the island getting no income from the vast amount of the lower paid.

Having said that there are many, I know, whos' nominas' say 200 a month and they are earning 5 figures

[9PLUS]

Taking those cals into account someone on a €1000 contract actually has earn't €1500

If compared to the UK for instance, yes we've had this conversation before.

[slodgedad]

I agree, but the point is that this is the reason most are not legally employed even though they are earning.

Good luck to those that earn and pay nothing but, getting back on topic, I think my point is valid.

I remember leaving school, oh so many years ago in the UK, and still having deductions from my pittance.

[casabonny]

Didn't know they passed the €2000 in cash law?


It was mentioned that transactions of more than €2500 must be via bank transfer but i don't think its been passed
apparently the banks have been informed and have to adhere so I assume it was passed. our bank manager is best friend so will check when she returns from hols but she has advised us about this a while back .

[TenerifeTeddy]

The last few posts just reminded me that I forgot to add in employers SS contributions, so add on anther €500 per month, the total is now €21,000 per year in Local & National Taxes and Social Security payments.
for 2 small businesses. How mad is that!!!

[seanocelt]

The last few posts just reminded me that I forgot to add in employers SS contributions, so add on anther €500 per month, the total is now €21,000 per year in Local & National Taxes and Social Security payments.
for 2 small businesses. How mad is that!!!

Mad enough that you need a decent turnover to break even. A pub here on those overheads , plus rent, entertainment and stock would need to turn over about 100k a year before you get a wage. Thats over 300 a night every night, and more for every night that it doesnt , on the following nights. And the busier you get the more staff needed. Dont even start me on rising electric and water costs. Simple eh?. But i have spoken to 2 owners lately who "never factored in quiet spells and so much taxes". The taxed, like you are paying for all the tax dodgers, and not just businesses as pointed out, many buildings dwelt in but "unfinished" to dodge tax , nominas that are blatant lies, cash in hand payments not declared on values....on and on.

[chocaholic]

It seems everyone I speak to has had extra tax demands, whether it be for business, property etc
We pay over the odds for those who dont pay anything.
They should stop hounding those paid up in the system and
Go after those paying nothing working illegally.
The whole system here is corrupt and screwed up.

[Pooh]

The last few posts just reminded me that I forgot to add in employers SS contributions, so add on anther €500 per month, the total is now €21,000 per year in Local & National Taxes and Social Security payments.
for 2 small businesses. How mad is that!!!

That's about what one factory worker on minimum wage is paying in Sweden...
I'm not going to mention how much tax I'm paying, but it's been quite a sum since we got here, a year ago... But since it's still only about 1/3 (or less) of what I paid in Sweden, I can't really complain.
(In Sweden a small one-man business would pay 30% in SS, another 30-32% in Local taxes, plus about 20-22% in National Taxes... Plus, the VAT is 25%.)
But I'm getting worried if I will be able to pay the taxes next year, since the business has plummeted lately...
TBH I haven't seen much of the black economy here... never been a question about paying cash, for almost anything.

[poker]

Didn't know they passed the €2000 in cash law?


It was mentioned that transactions of more than €2500 must be via bank transfer but i don't think its been passed

They pay in Oro now , dont need banks . ;)

Sent from my GT-P1000 using Tapatalk 2

[woodchip68]

In the UK

Personal taxation

Personal taxation rates for 2012-13 are set at:

20 per cent on income between £1 and £35,000
40 per cent on income over £35,000
50 per cent on income over £150,000
The basic personal tax free allowance is £8,105. However, if your income is over £100,000, your personal allowance will be gradually reduced - by £1 for every £2 of income above the £100,000 limit - to nil.

Company taxation

The rates of corporation tax for a single company are:

20 per cent for companies with profits of up to £300,000
24 per cent for companies with profits of more than £1.5 million

VAT

The three rates of VAT are:

a standard rate of 20 per cent
5 per cent - on fuel and power used in the home and also by charities
zero - this applies to many different items, including most food, books and newspapers

National Insurance

National Insurance contributions are collected by HM Revenue & Customs at a rate of 12% from the employee and 12% from the employer.


Just to put things into perspective !!

[cheery]

There is another VAT rate in the UK.
A flat rate of 12.5% for businesses turning over between £175,000 and £225,000. You can't claim VAT back on anything but you don't have to work out what you paid VAT on and what you didn't. In the first year this rate is 11%. We are on this scheme and personally speaking it seems that small businesses across Europe get hammered because they can't afford clever tax lawyers and accountants. It would stop tax dodgers if the rate was applied similar to PAYE so that you only pay the bit which is over the threshold. That way you wouldn't get businesses which are just over trying to fiddle.

On the cultural issue, Greece are in exactly the same position as Spain. there was a panorama programme a while ago about the 'brown envelope' society. Everyone was at it, surgeons, council officials, builders. It seems that now the game is up everyone wants others to pay their share whist still evading their own.

[CIM]

So whats the consensus on running a business here then?
Do you show all income and outgoings, pay your staff in full , declare everything and pay your tax as you should? Or do you do what all your competitors are doing and take cash payuments, fiddle your expenses and whittle your tax bill down to a far less burdensome amount??
Theres the ethical choice and then there's the practical choice I guess.
Very difficult to compete if your nearest competitors are dodging a ton of tax and you aren't. Whats the smart "business decision" to make in such situations?

[TenerifeTeddy]

I doubt anyone will answer that question honestly on an open forum. Which is a shame because that shows the level of the problem here. If things were fairer and less costly to be fully legal, then probably far more people would be inclined to play by the rules.

What winds me up in my line of work, is people openly advertising on FB and in the local papers etc, offering cheap computer repairs etc, and just supplying a mobile phone number. It´s done with many other types of business of course. They are cheap because they have no overheads, and contribute nothing into the system!! I don't mind competition, but it has to be fair.

I would like to see a hotline phone number or email address where these people can be reported and then hopefully prosecuted. This would level the playing field for those of us working legally and the Government would also earn more money in fines. Going through the normal denuncia process is expensive and time consuming.

[YOUNG GOLFER]

It is a shame that there are people who have their own websites offering their services here in Tenerife and don't even pay their social which is not right.

I know of 3 so called Estate Agents who work like this only getting cash through sales.....how a customer looking for property can deal with these people i just don't know.....one has a website the others stick up loads of adverts in shop windows, supermarkets, bars and lamp post.

I have had one of these agents in my office ( or a so called agent) who had a client who wanted to sell their property she told me she needs 10,000€ commission 5,000€ for her 5,000€ for her partner and said i can put on what i want on top but they need cash lol the property was about 100,000€ and i was asked to do all the admin talk about taking the p... .

I know other people who rent out apartments charging half a months rent (finders fees) not just from the client but also from the owner plus 100€ contract fee on a apartment of say 500€ a month so they make 600€ not a bad days work plus their commission each month...... again getting their business from crappy bits of paper stuck up on lamp post.

Yesterday i rented another apartment out on a long term contract these people asked me right away what my fees where I told them it was 30€ for a contract no finders fee but 1 months rent and 1 months deposit (refundable) they could not believe it.

When it comes to paying tax these people will always get away with it because they don't exist in the system.

I know other people who have a good amount of apartments they rent out and clean and again they pay nada in taxes or social.....even had one of these ask me if I wanted to buy her business (what business lol).... had another who ask if I wanted to work with them as times are hard and we should help each other out (again P... off)

Today i got a visit from the tax man doing the rounds and i have nothing to hide like many others I pay my way but it does get my back up when some woman walks pass with a bag of fresh laundry off to clean a apartment (you can't make it up).

I bet there are many members on here that are in business and work hard pay their dues but to see others just get away with it makes me sick.

A very good friend of mine is a taxi driver who at the moment is taking around 80€ a day which sounds ok at first...... but because it's not his taxi he shares it with his boss he makes 30% of that being self employed so for a 10hr shift that's 24€ around £19.50 a day (tips 5€ a day)....but Mr i know it all from the bar up the road will take you back to the airport for 25€ cash (not right).

I could go on but got work to do and taxes to pay.

[9PLUS]

I would like to see a hotline phone number or email address where these people can be reported and then hopefully prosecuted. This would level the playing field for those of us working legally and the Government would also earn more money in fines. Going through the normal denuncia process is expensive and time consuming.



You go straight to the Social Security office or call them to send a work inspector around, anonymously of course.

A social question is, is it correct to denounce or report another person for making a living and not paying their way....

The black economy affects everyone

[seanocelt]

On YG's point, although maybe this belongs in the illegal letting thread too, a woman yesterday said her apartment cleaning business has gone from full time to ZERO (not one partment to clean) in May as "all the owners are scared to let or setting up legally". Now, i bet she never paid any taxes, nor the owners letting over the years (they may be mislead about setting up legal lets too). Of course its everyone else's fault and she may return home.

[golf birdie]

Tenerife was built on black money so is it any wonder why this is the case now?? Look at the buildings that went up before the euro came in, the reason was black money that had to be spent. It may change one day but it won't be any time soon.

[TOTO 99]

A lot of it probably starts off with good intention but lack of confidence as far as how long the enterprise will last.

They get going, make a few quid and suddenly, surprise surprise, your making a living.
That living would be drastically damaged if you go legal. The decision is made that you can't afford to go legal. After that it's just cruising along hoping you don't get caught.
We all know people who are doing it but unless it affected us personally we allow it to continue. If they were really horrible people they'd probably fail anyway but generally they're not. They're the fun bloke down the bar or the lady who helped you out with information a while ago.
I've never actually heard of anyone in Tenerife being done for tax evasion so it makes me wonder how serious they are when it comes to chasing it.
If they were that serious surely we'd never see a looky looky man or the like?

[bonitatime]

We are in modulos so pay a fixed fee quarterly and the tax on the rent and the autónomo but I would rather work a bit more than cheat the system.
I am never going anywhere else so It probably slants how I look at things.

[lapalma]

It is a shame that there are people who have their own websites offering their services here in Tenerife and don't even pay their social which is not right.

I know of 3 so called Estate Agents who work like this only getting cash through sales.....how a customer looking for property can deal with these people i just don't know.....one has a website the others stick up loads of adverts in shop windows, supermarkets, bars and lamp post.

I have had one of these agents in my office ( or a so called agent) who had a client who wanted to sell their property she told me she needs 10,000€ commission 5,000€ for her 5,000€ for her partner and said i can put on what i want on top but they need cash lol the property was about 100,000€ and i was asked to do all the admin talk about taking the p... .

I know other people who rent out apartments charging half a months rent (finders fees) not just from the client but also from the owner plus 100€ contract fee on a apartment of say 500€ a month so they make 600€ not a bad days work plus their commission each month...... again getting their business from crappy bits of paper stuck up on lamp post.

Yesterday i rented another apartment out on a long term contract these people asked me right away what my fees where I told them it was 30€ for a contract no finders fee but 1 months rent and 1 months deposit (refundable) they could not believe it.

When it comes to paying tax these people will always get away with it because they don't exist in the system.

I know other people who have a good amount of apartments they rent out and clean and again they pay nada in taxes or social.....even had one of these ask me if I wanted to buy her business (what business lol).... had another who ask if I wanted to work with them as times are hard and we should help each other out (again P... off)

Today i got a visit from the tax man doing the rounds and i have nothing to hide like many others I pay my way but it does get my back up when some woman walks pass with a bag of fresh laundry off to clean a apartment (you can't make it up).

I bet there are many members on here that are in business and work hard pay their dues but to see others just get away with it makes me sick.

A very good friend of mine is a taxi driver who at the moment is taking around 80€ a day which sounds ok at first...... but because it's not his taxi he shares it with his boss he makes 30% of that being self employed so for a 10hr shift that's 24€ around £19.50 a day (tips 5€ a day)....but Mr i know it all from the bar up the road will take you back to the airport for 25€ cash (not right).

I could go on but got work to do and taxes to pay.

With the greatest respect to YG I may be one of the people that uses the services of people who rent apartments to me and my family in most of our trips to Tenerife,including the apartment(s) rentals per week,the airport pick up and drop off's',
the added value of having a food/drinks pack being sourced and put into the apartment without the need of going to a supermarket.

In paying for any apartment rental I was always asked for UK pounds,for the airport pickup/drop off they were always in euros.

The most sad part of YG's post was that his friend the taxi driver was making peanuts for his days work,but the final nail in the coffin was the taxi drivers tips 5euros,the exact amount that I paid each taxi driver when we returned to our rented apartment each evening up in San Eugenio Alto.

[kangnkodos]

i do believe its called catch 22.ive been legal 3 times with my small building business but because of the astronomical fees and mind numbing paperwork involved i have never lasted longer than about 6 months.everytime i go legal i have to put my prices up hence losing out on most jobs to black workers and of course the retirement brigade(im only building this large extension for my neighbour cos i get bored).so personally i blame the whole spanish system for penalising decent honest hard workers and making it near impossible to survive in the legal world.

[universal]

Further to earlier comments on the black economy and "nothing changing soon" - Hacienda have just announced they are offering a black money amnesty - no questions asked and a flat rate of 10% to legitimize as much as you like!
Makes one wonder if it's worth trying to play by the rules sometimes!

[CIM]

i do believe its called catch 22.ive been legal 3 times with my small building business but because of the astronomical fees and mind numbing paperwork involved i have never lasted longer than about 6 months.everytime i go legal i have to put my prices up hence losing out on most jobs to black workers and of course the retirement brigade(im only building this large extension for my neighbour cos i get bored).so personally i blame the whole spanish system for penalising decent honest hard workers and making it near impossible to survive in the legal world.

I would make a lot more if I wasn't autonomous - no doubt about it. 20% tax plus 7% IGIC deducted from everything, social security contributions etc. I have no problem paying if all of my competitors are but its simply not the case. Even the so called "big estate agents" have sales people who are not legal and a lot of them take almost all of their sales commissions in cash. So I absolutely understand where you are coming from.


Further to earlier comments on the black economy and "nothing changing soon" - Hacienda have just announced they are offering a black money amnesty - no questions asked and a flat rate of 10% to legitimize as much as you like!
Makes one wonder if it's worth trying to play by the rules sometimes!

Do you have a link to the source of this - had a quick look but didn't find anything on Google News.

[universal]

Please see extract from today's "El Periodico":
AGUSTÍ SALA
BARCELONA
Sin límites ni condicionantes. Desde ayer hasta el próximo 30 de noviembre, al titular de dinero negro en metálico le bastará con ingresarlo en la cuenta de un banco y luego pasar por caja en Hacienda para pagar el peaje previsto del 10%.

Edición Impresa Versión en .PDF Información publicada en la página 27 de la sección de Economía de la edición impresa del día 05 de junio de 2012 VER ARCHIVO (.PDF)
La amnistía fiscal anunciada en marzo pasado entró en vigor ayer al publicar el Boletín Oficial del Estado (BOE) la orden que la consagra. Inicialmente estaba previsto solo dirigirla a bienes y activos de los que se fuera titular antes del 31 de diciembre del 2010. Luego se decidió ampliarla a todo el dinero en efectivo. A diferencia del resto de activos, con el dinero en metálico no declarado «será suficiente la manifestación, a través del modelo de declaración, de ser titular del mismo con anterioridad al 31 de diciembre del 2010». Para el resto activos deberá acreditarse la titularidad antes de esa fecha

News first announced in "El Mundo" on 30.03.12

[funhunter]

If you want to understand the reason for Spain's present problems you need to look further than Spain!! Anyone ever heard of BANKIA 3 years ago? No, because it was only established in December 2010 yet was allowed to swallow up other Spanish banks and "suddenly" demand a bailout of 19 billion euros!!!!???? Work it out. A MUST READ book is the best seller "The Shock Doctrine" by Naomi Klein, after you've read that you'll understand why the world is the way it is and who pulls the strings.