Am i missing a trick??

I am thinking of starting a business in Spain, nothing flash, not trying to earn a million, just a sensible wage so i can live here. However when i put figures down on paper and take into account Social Security, tax, IVA it appears that i would have to earn a hefty amount just to pay these people before i even earned a penny (or cent i suppose) for myself!

Have i completely mis understood the system? If i start a small business on a self employed basis i seem to have to pay approximately 265€ per month social security (even if i don't earn a penny that month), i have to pay 18% IVA (there is no threshold like back in the UK where i don't have to pay/charge IVA) and i would have about 6000€ tax free before i had to start 20% tax on my earnings?

Could someone tell me if i'm right or wrong? if i'm right i cannot see how anyone can start a small business here :o(

Thanks.

You are absolutely correct plus you need to add the fees for the accountant for the declarations

Don't forget you are also able to claim back IVA on purchases for your business

Perhaps this is why so may people in Spain decide to work black, I am legal and know how difficult this was in the early stages of my business

On the vat note, if you close your business within five years you have to repay all the vat you have claimed.

It is also is fairly expensive to start up a business with legal fees and registration fess, these fees apply all over again if you close the business down.  Unless you are confident that you will have a good turn over I would not even consider it, not as easy as starting up business in the UK !! 

Gosh! Seems like it not worth even trying. I wonder why they make it so difficult to set up a small business? I suppose in reality i pass on the IVA to my clients and then that only leaves the social security and tax!

Alfonso, you got is spot on!

It IS so tough for new businesses.  There are very few incentives for people to start new businesses as the costs can be crippling, especially in the early stages when you're not making much money.

And it certainly is the reason why so many people have now gone back to the old way of doing everything cash and many no longer claim they are self employed. 

We can all see what a problem it is but it astounds me that the Spanish government cannot see it at all.  Especially in these incredibly tough times people should be encouraged and helped in setting up new businesses.  The country and the economy needs it.

So if you do set up a business here...just make sure you're going to make plenty of money

Justin

Not sounding good if i want to be legal!

I also have read soomewhere that if i work as a self employed person in two activities that are unrelated (eg window cleaning and brick laying) i end up have to pay two social security payments at 265€ each. Is that also correct!

oh and one final thing .....any words of encouragement? :o)

Q " How do you become a millionaire in Spain? "

A " Start off as a multi miilionaire"

 you are all correct...i sometime wonder why i bother but you can make it work......first step is to get an accountant that knows how to juggle figures and know their way around the system....thats the only way it is feasible...(i was told this and obviously do not use undrhand practices to beat the system)

Love it Kenny

georgia...I'd heard the same sort of thing

Justin