Autonomo; Spain’s dirty word

IF you want to be self employed in Spain you have no choice but to pay the government at least €250 per month in Autonomo

IF you want to be self employed in Spain you have no choice but to pay the government at least €250 per month in Autonimo, the result being that tens of thousands chose to work for cash in hand and Spain loses millions in tax revenue. Successive Spanish Governments have only themselves to blame as especially in times of crisis, with wages being cut or frozen, but fuel, food, clothing and life’s necessities all costing more, it’s not surprising that thousands chose to make ‘a bit on the side’; mostly to just to make ends meet.

In March 2010 Spain’s former socialist PSOE government announced plans to attack the country’s black economy. A study at the time by the budget ministry said Spain's "black economy" was worth almost 23.3 percent of GDP or €245 billion! Rajoy's new conservative PP government has decided that the best way to attack the problem is to limit the amount of cash in the system to reduce the 'dinero negro' or 'Black money' that’s changing hands. Thus the Treasury is considering limiting the use of large cash payments on economic transactions. The Deputy Prime Minister, Soraya Sáenz de Santamaría, said that the Government will soon adopt a General Plan of Tax Control which expects to collect €8.171 million in 2012 and will primarily focus on tax havens. However, these sort of measures do not help those who have been quite happy to work for ‘a few dollars more’ for a few hours work each week or just on occasion.

With the Tourism and hospitality industry being the single most important sector on the Costas, the majority of staff are either on contracts with bars and restaurants or work part time as occasional staff, entertainers, quiz maters, disc jockeys and the like. However, if you have a daytime job and pay your money into the Spanish tax system, if you want to sing once or twice a week at the local pub, the Spanish Government will tax you twice! Deborah Smith and James Baker, both UK-trained accountants and partners at Advoco (www.advoco.es), a tax and accountancy firm based in Spain have one of the most complete websites dealing with Autonimo issues in Spain. James Baker said “If you are employed in Spain and thus in the social security and tax system but then are offered an additional part-time job on a self-employed basis, you also have to register "autonomo", the Spanish equivalent of self-employed! You have to be in both the employee and self-employed systems at the same time! 

This is unfortunate because it means that people who wish to do things by the book and declare their earnings from a second job have the hassle and expense of signing up to a different tax system, with its own forms and declarations, but also have to pay a second lot of social security each month! 
Worse the social security - around €250 a month for most self-employed - is not reduced because the payer is already paying as an employee in their main job nor is it reduced if the second job is part-time and low earning! Perhaps this is why so many who do hold second jobs in Spain do so without registering but they are at risk of fines and penalties if caught doing so!”
 

In order to just break even, a band or artist would need to work at least three nights a week and so there do not seem to be many British or Irish groups or artists paying Autonimo along the coast. The other issue is, if you don’t have any work for the month, you still have to pay the Autonimo! However, the humble quiz master, maybe earning €50 a night would not even make enough money per month to cover the basic fee!

Spain is the country with the highest ratio of bars/population with almost six bars per thousand inhabitants, that's three times UK's ratio and 4 times Germany's! If one takes a very conservative estimate of there being about 4,000 International pubs and clubs that offer weekly entertainment along the coast with a conservative budget of €400 per week to spend, that amounts to about €80-million of revenue per year. If the Spanish Government did away with autonimo, at 30% tax that would give them at least a basic €24 million to boost their coffers! Former professional dancer Eva Tejedor said “there are thousands and thousands of people that don’t pay tax. Not because they don’t want to but because this system is most unfair for lower paid workers. Entertainers, gardeners, pool keepers, life guards, home help, careers, maintenance staff, cooks all come into this category too. It’s a shame but until Madrid look at the entire situation, black money will continue to exchange hands, as it has done so, for centuries!”

Keith Nicol