In some ways being officially self-employed (autónomo) in Tenerife, and no doubt the rest of Spain is a bit like sticking your head above the trenches on a night when there’s a full moon (should that be fool?), shoving three fags (cigarettes for any Americans who may get the wrong idea) in your mouth and lighting them with a flare.
Firstly there’s the autónomo payments – the equivalent of the NI contributions in the UK. These are around €260 a month. €260 down before you start, but that’s the system so I’m not moaning about that. What is poor in Spain is the lack of support for small businesses. The odds in many way are stacked against them.
I’m a trusting person – actually I’m not really. Having Presbyterian Scottish roots means that my default setting is to be suspicious of everyone until they prove me wrong…or right, but I do try to give people the benefit of the doubt.
Like many people on Tenerife I’ve fallen foul of sincere promises of payment when firms I’ve worked for haven’t paid me on time because ‘times were hard’. Many of the people I know – differing nationalities from Canarios to British, German and French ex-pats – have carried out work for people on Tenerife for which they were never paid. This is something you learn when working with businesses based on Tenerife; in some ways it can still be a frontier society.
I’m a lot wiser than when I first moved to Tenerife and now am fully aware that this is an unavoidable risk of doing business here and am more cautious as a result. But the biggest shock of all was learning that if you get shafted by an unscrupulous contractor officialdom, instead of helping, puts the boot in.
Here are a couple of examples that any newly arrived might want to know about.
Be very wary of cheques
One company issued me with an cheque which duly bounced higher than a power ball. Damned annoying, but what followed was even worse. The bank charged me €45 for the fact that the cheque bounced. Not only did I not receive the money I was owed, I was punished for the fact that someone else issued a dodgy cheque. A double whammy.
Watch out for the Retención
The retención is a crazy system which positively encourages dishonest employers to shaft the self employed. As an autónomo I’m not responsible for paying all my taxes, oh no. In a law which makes no sense at all, anyone you carry out work for is responsible for holding back between 7 and 15% of your earnings – a retención – which they are then supposed to pay to the tax office on your behalf.
So what are the potential consequences of this? Dishonest contractors get away with paying you less than they should and don’t pay the retención to the tax office. But guess who gets hit with all the questions about the missing money that effectively was stolen from you in the first place. It’s an absolutely illogical system that makes no sense.
Check the Details
So after you’ve not been paid, had money held back from your earnings and been charged for the pleasure of being diddled, what happens at the end of the tax year? Well here’s what can happen. Honest Harry, the firm you carried out work for, has supplied you with incorrect information about his business details. It turns out you’ve been declaring work for a company that the tax office has no record of. So what can happen then? You can get fined for supplying incorrect information.
As you light up those cigarettes, the bullets are flying at your head from all directions whilst Honest Harry is scuttling to freedom along at the bottom of the trench with wads of notes stuffed into his pockets.
Does Spain need Labour Market reforms? Damn Right it does, but whether it implements the right ones is a completely different matter altogether.