Sunday, May 30, 2010

Ready for the beach?

On a Friday night, to relieve the mental stresses and strains of a hard week's accounting, I like to visit the gym. Nothing too taxing - a couple of miles on the treadmill (broke my record this week), a few weights and then into the sauna and hydro-pool. I go to one in the seaside town of Estepona.

What was remarkable this week was the complete lack of punters - no problem finding a parking space, no tripping over other mens' towels in the changing rooms and no fighting for a turn on the chest press. I was very surprised because since January the place has been a madhouse on Friday nights. I think the New Year's resolution syndrome operates pretty much the same in Spain as I remember it did in London.
Could the sudden drop-off in gym attendance be another sign of the belated arrival of Summer proper? Already the weather is "scorchio" every day, tourist numbers are building up, the kids are demanding ice-creams seemingly every hour and the dog is being left fuming at home not understanding that it's too hot to go everywhere in the car with me.

I guess it's true and people are deserting the gym for outside pleasures. The lure of the beachbars (chiringuitos) is too much and all the New Year's resolutions go out of the window. It's a mainly Spanish sports club so I wonder if gyms in Spain have their own cycle: Peak attendance in January, fat and bloated after the holidays. Lots of hard work in the Spring getting ready for Summer and those unforgiving bikinis and swimming shorts. A quiet Summer on the treadmills drifts into Autumn as people try and get the most out of what's left of longer evenings and sitting outside. A quiet end to the year too as party season kicks in. And repeat.

Call me a creature of habit but I like to keep a mediocre level of fitness and a similar exercise regime all year round, perhaps with a bit more swimming thrown in during the Summer and a bit less running up and down on the football pitch.

PS Let's hope Spain's beach bars and other seasonal businesses have a better year than last year - the Spanish economy certainly needs it. Actually the signs are not particularly good so far with the volcanic ash crisis contributing to a fall of 11% in Spain's tourist spending (by foreigners) during April. See article.

Wednesday, May 26, 2010

How old do you have to be to see a doctor in Spain?

That's a trick question of course: you will see a doctor (or a midwife at least) as soon as you are born. The real question is when can a person legally go to the doctor in Spain, on their own without a parent or guardian being present or aware of it?

The answer it seems is 16 although there is a dispensation if the child is suffering or otherwise in need of immediate attention.

It's not just an academic question either. I suppose most parents would like to know everything important that's going on with their kids, even when they are quite big kids who really should be standing on their own two feet. Add to that the fact that teenagers are perhaps more likely than anyone to have sensitive and delicate issues to talk to their GP about and the question of a "parent's right to know" can become controversial.

For example, being a Catholic country, Spain has regular and noisy debates about abortion. It is legal for girls over 18 but currently only with parental consent between 16 and 18. The law is being changed so that 16 and 17 year olds can have abortions without their parents' consent so long as they know about it. A strange compromise that has abortion clinics worried already - for example are they to take a patient's word for it that they have told their parents?

And a lot of sensitive matters are already out of the parents' hands at an age well before 16. For example it is now possible to buy the morning after pill without prescription and at any age which has caused a lot of criticism:

If you have a question about age limits in Spain or other legal questions you can go to the Advoco website and send in a free query. click here Spanish law

IVA tips for Spanish businesses

A good proportion of the queries we get from our Spanish business and autonomo clients concern IVA (Impuesto sobre el Valor Anadido) or VAT as we call it in Britain. The system operates much the same as it does in the UK: you charge VAT on your sales and hand it over once a quarter to the tax office but first of all you deduct the VAT you have had to pay on your costs.

Simples, says the meerkat?

At its most basic it is simple, but it doesn't take long before complications arise. Here are some of the things that have come up during the last year:

Declaration thresholds: There aren't any in Spain unlike the UK where small businesses can get out of charging VAT altogether.

IVA exemptions: the only Spanish businesses that don't charge IVA are those making exempt supplies, such as those relating to education, culture, sport and insurance.

Reduced rate IVA: the general rate of IVA is 16% (due to rise to 18% on July 1st). But there are two reduced rates - 7% (will rise to 8%) for things like airline tickets, restaurants and hotels and 4% for food, books, newspapers and medicines.

Costs exceeding income: can you get your IVA back? Sometimes, but not right away. If, during a particular quarter, you have paid more IVA out on your costs than you've charged on your income, you will not have to pay anything over to the tax office but they won't pay you the excess. Instead you carry the difference forward to the next quarter and claim it against IVA charged on your income then. If you get to the end of the year still in excess (i.e. you've made a loss) then you can reclaim it.

Reclaiming IVA if you don't charge it: if you pay IVA on your costs but don't charge it on your sales (e.g. because they are exempt or exported) then you can't reclaim the IVA you have suffered.

Exemption from making quarterly declarations: you do not have to declare if you have no IVA on your sales because of exemptions

Invoicing abroad: You don't have to charge IVA on exports of goods but you sometimes do on services. If you are invoicing a non-business customer (i.e. one without a VAT number in their own country) you do charge IVA, but you don't if it's a business customer. That's a general rule and there are exceptions - see this explanation Invoicing to and from Spain - New VAT rules

Getting IVA back on your expenses: You can only recover IVA with a proper invoice made out to you with your company or autonomo CIF (id) number on it. You will have to request a proper invoice from the provider of the service. EG if you are in a shop or garage ask for a factura and they should give you a proper one as opposed to a receipt.

For more information about the different rates of IVA that apply in Spain: Spanish IVA rates

For more tips like this check out the Advoco website, for example the autonomo guide:

Saturday, May 22, 2010

Spain's economic crisis turns nasty

If you thought 2010 was going to be back to normal with the economy and the year of recovery, looks like you are out of luck. A dreadful week for the Spanish economy ended yesterday with the administrators moving into CajaSur a major savings bank in the south of the country. Depositors should be reassured that there is deposit protection insurance of €100.000 per person so that a joint account would have up to €2000.000 of their deposits safe.

Another Caja, CAM, is in merger talks with other banks after it too has got into difficulties.

All this comes after the government announced a series of austerity measures. These come on top of the VAT and investment tax rises that were announced in January. The new measures include a cut in public sector pay (5% on average), ending the 2.500€ gift to new mothers (nicknamed the baby cheque) and a freeze in most state pensions.
The government has also promised to bring in some increased taxes for "the rich" but won't say what they are or who they consider rich. The press is speculating that the wealth tax may be brought back for people with assets over €1m.

This comes just as the economy was reportedly growing again albeit by a miserly 0.1%. You wonder how long such a weak recovery can last in the face of such bad news. The austerity measures are designed to cut the deficit by around 8% of GDP so that's a massive chunk of demand to come out of the economy. The banks' woes will make mortgages even harder to come by we can safely assume which does not augur well for the housing market. On top of this the unions are threatening a General Strike (article) in protest against both the austerity measures and proposed labour market reforms.

The Advoco website has a full guide in English to the economic crisis charting its development and underlying causes from the beginning up to the present day: Spain's economic crisis.

Wednesday, May 19, 2010

Are brands as valuable as they say?

I decided to write my latest article on brand valuations after reading a survey called The Top 100 Global Brands for 2010. It purported to show which global brands added the most profits for their owners and thus were the most valuable. Here are the top 21:

1 Google 2 IBM 3 Apple 4 Microsoft 5 Coke 6 McDonalds 7 Marlboro 8 China mobile 9 GE 10 Vodafone 11 ICBC Asia 12 HP 13 Walmart 14 Blackberry 15 Amazon 16 UPS 17 Tesco 18 Visa 19 Oracle 20 Verizon 21 SAP

The top UK brands were : 1. Vodafone 2. Tesco 3. HSBC 4. BP 5. Shell 6. O2 7. Barclays 8. Standard Chartered 9. Marks and Spencer 10. Smirnoff

Spain was represented by Movistar, BBVA, Santander and Zara.

I noted that 12 out of the top 21 were tech-related: computer/internet/mobile. Ever suspicious I began to have my doubts about the list with such concentration of names from one sector. For sure you would expect names like Google and Microsoft to be up there on the list but so many tech names had to be more than a coincidence.
Brands earn their keep by allowing their owners to charge a premium price for their product or service because they are highly thought, because they are perceived to be cool or simply because they are long-established and consumers feel comfortable with them (think Cadburys, Heinz). My suspicion is that the compilers of this list saw the high profits that these tech companies were making and put that down in large part to brand. But actually, in the technology arena, at least brand is actually less important. Why do you buy an iPod? Because it has an Apple logo on? No, because it is a clever, useful gadget. If Sony made a better one you'd buy that and Apple's profits would disappear. Same with Microsoft, no 4 on the list. It's actually not got that great a brand image and people buy their products because they practically have no choice.

When you move away from technology then brand becomes more genuinely important and you can't really argue with the high values given to such names as Coke, McDonalds and the luxury marques like Hermes. But hopefully the article will make people who read it a bit more wary of just accepting the claims of this report and others similar. We buy products and pay premium prices for lots of reasons and are not quite the unthinking slaves to branding that the marketing folks would have us believe. Here's my article:

Friday, May 14, 2010

Subsidies for Spanish self employed autonomos

Free money! The Spanish government may be so short of cash it is being downgraded by the ratings agencies, and being bailed out by the Germans, but there is still plenty of money sloshing around if you know where to look.

There are so many subsidies and programs available for new and existing businesses, either funded by the government, the regional government or the EU, that it's impossible to keep up with them. There is a whole network of government offices in Andalucia whose sole job it is is to guide potential claimants to these bags of loot (these are the CADE offices - see website here).

But there is a snag or two of course. State handouts wouldn't be state handouts without strings attached, hoops to jumps through to get and a bias in the system to certain favoured groups. I attended a seminar at the Marbella CADE office this week to learn about an autonomo subsidy program which I have described in full on the Advoco website -

To be fair it looked fairly straightforward in terms of applying although it is only available for certain times of the year (for the next month and then again in September). There is also a big bias in favour of certain favoured groups. The subsidy starts at €5.000 for an ordinary bloke and climbs steadily with each feature you have which the government deem to be a disadvantage e.g. women (€2.000 more), disabled (€3.000), immigrant (€3.000) etc A bit unfair and patronising maybe? The €11.000 jackpot goes to unemployed, disabled women who have been victims of domestic violence.

Friday, May 7, 2010

Green riches will not materialise

I was delighted this week to get another article published by the prestigious Arab news portal and newspaper Alrroya:

In it I take a sceptical look at all the optimistic claims made by Greens and politicians about the green economy. It has become accepted wisdom that moving to a low carbon economy will be good for jobs, growth and living standards whereas the opposite is probably true.

It recognises that there are economic gains to be made from energy conservation measures and that individual countries could do well if they become the most efficient and technically advanced in the new industries but on the whole the "greening" of the world's economies is more than likely going to be a long and expensive slog.

Barring the discovery of a miracle fuel or energy process, the move to renewables and the cost of the huge infrastrutcure investments required for the low carbon economy will mean higher prices and lower living standards. The net effect on jobs and growth could be neutral if resources are merely redirected to green projects from the rest of the economy but I suspect, knowing the track record of governments, that a lot of bad tax policy and clumsy state intervention will actually destroy jobs and reduce growth rates.

It might look on the surface like an anti-environmental , green bashing piece but actually I am very supportive of the green agenda. I hate the thoughtless waste of precious resources and destruction of our natural world. I fear for my children's economic future if we don't succeed in building an energy system which is not so heavily reliant on oil. I don't buy the whole global warming argument uncritically but it would be stupid to ignore the risks posed by ever increasing carbon emissions. Therefore we need green policies but just don't try selling them to me as an economic panacea.

Sunday, May 2, 2010

Spanish gift tax - a nasty surprise

No one likes taxes but some hurt more than others. One of the most unpleasant has got to be gift tax which strikes me as particularly unfair. If you have built up assets over the years it is normally because you have paid for them out of income that has been taxed once already. Why then should you have to pay again when you give those assets to your nearest and dearest?

I suppose the answer is because (1) the government finds the money handy to spend on vital projects likes billion pound computer systems that never go live (2) if you could give things away without a tax it would undermine inheritance tax takings and (3) the state doesn't want wealth to flow unhindered through the generations as that might entrench class structures.

Mmm. But it's not for humble accountants to moan about the Whys of a tax but merely to advise on the Whats, Whens and most pertinently How Muches of them. Here in Spain the tax seems particularly harsh and all encompassing. We have just put a guide on the website call, er, Spanish Gift Tax. It's got all the facts and the all important rates which are quite murderous in some circumstances. Give a €1m house to a mate and it may cost them around €530.000 in tax (they pay not you). The taxes apply to Spanish assets even if you or the recipient of your generosity is not a Spanish resident. There are a few Spanish gift tax avoidance strategies, like setting up a company to own assets like houses, but these need careful thought and structuring to make effective. If this is an issue which is or might at some stage effect you then take a look at the guide as a starting point but also take advice.
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