Tuesday, March 4, 2014

Autonomo fees - An unpopular view

It's rare to read a guiri/expat blog about working in Spain, without the invariable whinge about the autonomo costs that self-employed people have to pay. Often the cost (close to 300 euros monthly) is compared to the low cost of national insurance contributions required by the self-employed in say the UK. It's also portrayed as being unfair because people have to pay the full whack whether they are making a profit or not, and regardless of monthly fluctuations.
I'm one of the few (perhaps the only one?) who thinks these complaints are misplaced, and that in fact there are far more important things in Spain that need to be addressed to help foster the growth in self-employed businesses.
Firstly, there are schemes that now allow a new autonomo to start off on a reduced rate - and the government is apparently bringing in further measures to help new businesses.
Secondly, the autonomo fee can be written off as an expense against revenue, thus reducing the total tax due to be paid.
Lastly, and the British critics always omit this point, you will save a lot more money (if you rent business premises, for example a shop or offices) compared to the UK in terms of commercial rent and especially business rates.
Now I realise that the last point only applies to those who rent business property. Those who don't, for example English teachers or freelance programmers, don't make that saving - or perhaps I should describe it as "not having to fork out on business rent each month". And perhaps more importantly, many starting out may choose to work black if they don't need premises, as they wait until they achieve a reasonable turnover, although that's obviously not a course of action that I can endorse.
Nevertheless, I feel that the real barriers to making a success of a business here are the high levels of VAT/IVA (21% in many cases) and a somewhat depressed internal market. Of course some businesses are not affected by this - books carry a IVA rate of just 4% and the teaching game can get away with 0%. The internal economy may not matter too much to an estate agent whose main clients come from overseas. From my point of view the autonomo system as it stands is bottom of the list of things I'd change to help businesses in this country.

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