Unregistered Businesses in Spain
Here’s a personal note from spanishpropertyinsight
This is rather a pet hate for me. When I first came to andalucia Spain, 13 years ago in February 08, the law was the same as now - everyone working has to be registered, even the lowliest self employed. You had to pay tax and more importantly IVA (vat) at 16% of ALL your income, there was and still is no mimimum exemption threshold level like the UK.
Which of course is a big shock when you first move here and are scratching to make a living. My husband and I took ‘advice’ and were told to be careful if advertising etc as the authorities were likely to call you, book you and then serve you with a denouncia when you turned up to your appointment! In those days, Sur in English was the main english paper and there were hardy any adverts for services or entertainers etc so it was easy for the authorities to find you.
Of course it was rather easy to tell if they did call you as their heavy spanish accent rather gave the game away! But needless to say people were getting caught and fined.
However, the fine was 5000 pesetas (as I recall) which in old good money was around 4000 sterling. Quite hefty, but then again we worked out if we got away with it for 6 months, then anything else earned was a bonus!
We got around the legislation a little as in those days you could ‘buy’ a contract of employment, pay your own tax and be somewhat legal (gosh I hope I dont get into bother for all this now!!) and on the back of my husbands, I got my own residencia - like gold dust at the time!
Anyway, after a couple of years to be honest, we decided to go legal and incorporated a company, with all that cost and signed up to paying the social security, which is now 245 euros each per month AND an accountant (gestor) which costs 100 euros per month. So minimum outlay is over 600 euros per month before eating. Then 18% tax and also 16% iva on top. Books have to be submitted every 3 months as well and you cannot roll on profits or anything, you are taxed on the earnings and thats that!
