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.

  1. Leslie says:

    Nice rant.

    I was charged thousands of social security once for an employee I did not have. Unfortunately I could not prove that I did not have the employee (because there is no way to do so) and the supposed employee was nowhere to be found in Spain. I ended up having to fire the employee just to stop the bills from mounting.

    Nice weather, though 🙂

    • dragojac says:

      You couldn’t make that sort of stuff up. It’s outrageous and would be funny except that a lot of us are out of pocket thousands because of inflexible, illogical and destructively inadequate systems.

      I’m going on strike for labour market reform.

  2. Sonja Kennington says:

    I´m autónoma too. I´ve found the answer to the non-payment issue is to charge upfront. As for the ridiculous social security and tax “system” (I use that word very loosely), well there is no answer to that.

    I would definitely go on a protest march for labour market reform. Not sure about strike though. Can you strike against yourself? ; )

  3. Richard says:

    One wonders whether the tax & social security authorities just accept that there are lots of low paid self employed people who don’t put their heads above the parapets. For instance, once you have a health card, why pay the autónomo if it means struggling to pay the rent ?

  4. yesterday I was happy to celebrate 8 years in Spain. I´m an illegal alien, thus have no right to pay taxes. I do my work for cash, and wire funds through third corporations for commissions up to 12%. That means, that my cash costs me up to 12%. If I sell a house (I design, and manufacture dome homes for installation at any type of land, I get the end client to pay the manufacturer directly, and get my cash commission from the manufacturer with 12% “fee”. Or I get the manufacturer to make a home and a half, so the client pays most of the price in cash, thus I get ALL that I have gained.
    Once you get into cash only business, you avoid taxation, bouncing checks, bureaucracy nonsense, etc… Other way of doing that is barter. Yes, it´s a bit more complicated, but why would you willingly support the system, that is not functioning, that is using your money to bomb other countries into moonscape, and bailing banks (that charge you for breathing wrong) out¿

    Once ALL of us will go into cash business, they will have to make the ways of robbing us little nicer.

    And other observation: You know, that mr Zukerberg (frontman for FaceBook) is paying only 1% tax, while his charitable fund under some chinese name, gets all the FB cash-flow? And we are talking billions with nothing to purchase… Think about that… I refuse to finance the governments, that I did not elect, the wars I did not start, and corrupt bankers I never trust. I will help an old person with a fruit basket or help in their garden, I will pick up, and recycle the plastic thrash at the beach. I will get a person off any drugs. But paying to the wolves for not eating me, is not near natural, or I do not have enough fear.

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