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Comment by qnk | Hacker News Reader

This group should push for legislation changes also. It's not only about networking or spreading the word. I, particularly want to expose the Spanish case: youth unemployment is around 50% and Spain is really far away in the list of most friendly places to start a business.

It's really hard to start your own company in a garage and automatically start owing the government a €340 monthly fee, especially when that's the amount of money some families have at hand to feed themselves.

Many talented people, courageous enough to start their business go to The UK and do it for a one time fee, that's around 70€. In Spain we're talking about ~€5000 on your first year of operation, just because you own "My Startup Inc." on paper.

Please Europe, make it easier for European entrepreneurs to start our businesses. The entry barrier in countries like Spain are discouraging people from doing it.

Edit: grammar.

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I am not familiar with the Spanish tax system, but can't you simply register a Ltd in the UK? EU law says that you are free to incorporate your company where ever you want (in the EU). Or what is this 340€ /month about?

Germany saw the problem of many people incorporating in the UK a few years ago and introduced a limited liability company with starting at (theoretically) 1€ capital, called UG. Previously the GmbH required 25.000€.

Wiki tells me the needed capital for a Spanisch S.L. is 3006€, not that much. But I can't find the 340€? What is it about.

If you want to be a "trabajador autónomo" (autonomous worker), you have to pay a mandatory monthly fee of about 250€ (it varies a bit on your activity, if you want extra coverage, etc). There are some discounts, if you are under 30 (35 if you're a woman) and it's your first time being an "autónomo", you pay only 20% of the tax on the first 6 months and 50% on the next 18.

The 20% thing was approved about a month ago, and it's been a bureaucratic mess. I applied to it on the first day of being on the law, and as of today I'm still waiting for approval. Apparently their systems are not prepared for this discount and they have to be applied manually. Of course you don't have to wait, you can pay full rate and then claim the difference, but that could take months.

If you create a SL, you must designate a legal administrator, and the cheapest way is being an "autónomo".

Edit: about creating a Ltd in the UK, if your revenues are more than 50% from Spain, you will be fined by the Spanish IRS for capital flight. It's not easy.

So that money goes into health insurance and social security?

If you work as an "autónomo" and your business fails, do you qualify for social-security /unemployment benefits? In this case it would not be the worst deal, espacially counting in the discounts. The scandal here is, that the system needs ages to approve the paperwork.

Also as I understand EU laws, incorporating somewhere else would not solve the problem, since you are subject to the local taxes at the place where you actually do the work.

Yes, with that money you pay social security and health care, which is fully covered with the minimum, mandatory "autónomo" fee. That's nice I guess.

Unemployment is optional (about +20€/month IIRC), to get it you have to prove a specific lost of revenue in a specific length of time, first year doesn't count, and you get 2 months of pay per 12 months worked ("normal" jobs get 4/12). I recently read that only about 25% of the unemployment petitions are approved. I chose not to pay it.

Since the moment you stop being an "autónomo" you get 90 days of "free" health insurance. After that, if you are <=26, you can use the health insurance of a parent or sibling. If you are 27, you have to pay for health care, or prove that you don't have any income to get free healthcare.

So basically the only benefit you get for the fee is health care? Then its pretty expensive. Does it increase with income or is it a flat fee?

Can you work around the whole thing, if you make e.g. your wife (or father, or whoever) the owner of the company and hire yourself as CEO? So you would pay health care + other stuff as a percentage of your wage (which would be very low monthly + share of yearly profit).

I am asking extensively because I plan to spent a year in Spain in the near future. And while all this information is irrelevant to the stay (I am a student and will hopefully have set aside enough to spend the year without having to work on the side). But I really like to understand as much as possible on how the country works. :)

Yes, it's a flat fee, it only increases if you want extra coverages (full pay on day 1 of sick leave, unenmployment, etc).

The mandatory minimum doesn't increase which income†, but since you are also paying towards your retirement, you can choose to pay more, if for example you are in your final working years, so that you get a better retirement. But I'm not thinking about that right now :)

I am not the right person to ask about these things, and I may be wrong, but I think the workaround you are suggesting would cost, in the best case, the same as being autónomo on your own. You'd be paying about 250 € in taxes for a worker with the minimum wage (758 € in 12 wages).

†: of course you will have to pay income tax later (annually if >=70% of your income is B2B, quarterly if not, so many random rules!).

Sounds like there are a ton of pitfalls running a company in Spain. Good luck in the tight economy!

Just for comparison, creating a limited company/corporation in Sweden requires a share capital of at least 5930 EUR plus a 225 EUR one-time registration fee. Saddest part? We're falling behind in the rankings as other countries are removing these unnecessary barriers [1].

[1] http://www.doingbusiness.org/data/exploreeconomies/sweden/

There's a huge difference though: if you fold you get to keep the share capital, and if you don't you get to use it for company expenses.

The amount of time and number of Euros/pounds spent on forming a legal entity to represent your company is typically small compared to the ongoing overheads. In the UK, these include:

- paying an accountant to prepare and submit your annual financial statements

- mandatory insurance policies, sometimes under conditions where it seems doubtful they would ever actually help anyone (except the insurance company, I suppose)

- preparing and filing tax returns annually/quarterly/monthly, depending on circumstances and how many different kinds of tax apply to you

- filing an annual return with Companies House.

And that's just to exist, before you even start buying or selling anything, having any employees, dealing with any sort of financial services or outside investment, working with anyone's personal data...

So while the cost of starting a company is certainly a significant issue in some places, I'd say the general issues of tax/legal red tape, employer obligations, and one-sided deals with large suppliers/clients/service providers are far more damaging overall.

Have you started a company from absolute scratch? It's gut wrenching, you work like hell and lose hard earned money every month. Unless of course you're well connected and can get funding from day one.

I can absolutely see how a perpetual 340 EUR per month can tip the scale in favor of default: keep working the confy job.

Does it matter once you're up an running? No, you're right it doesn't.

Sorry, perhaps I wasn't clear. I'm only arguing that in the UK, although the cost of forming a limited company is relatively low, the other, ongoing overheads of operating such a company are much higher, and therefore represent the greater deterrent to potential entrepreneurs. This position seems consistent with criticising the €340/month charged elsewhere that you and qnk have mentioned.

I think qnk is referring to the social security payment ("RETA") you are required to pay when you are registered self-employeed (autónomo).

Edit: more info http://spain.angloinfo.com/working/starting-a-business/empre...

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