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Spanish Solutions Newsletter

MAY 2010/ issue 9

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In this issue:

�Comaskey Properties Letting

�Registering on the Padron

�What does it cost to be a Legal Business?

� REMINDER- Iberdrola

� Customer Profile- Tyres Direct

REMINDER - IBERDROLA

Back in January, we explained that we had discovered that by changing from Iberdrola Comercialización de Último Recurso, S.A.U. to Iberdrola Generación S.A.U., electricity prices will be at the minimum permitted in the market. This doesn't mean your bills will be immediately lower, but the increases will less. 

Your bills will be bi-monthly with accurate readings. The opportunity to switch is only there for a limited period and so we are reminding you that we can make the change of contract for you with Iberdrola at a charge of €30 to cover our time and the work involved.   If you are interested, please send Ana an email on office@spanishsolutions.net or telephone 966761741.

What does it cost to be a Legal Business?

The first choice to make is whether to form a company or to act as a Sole Trader (an Autonomo). The simplest way is to be a sole trader and you can either trade in your own name or as a business name.

You will have certain essential expenses, mainly tax, VAT (known as IVA), social security, your accountancy fees, insurance depending on your type of business, and running expenses.

IVA is Spanish sales tax and the general rule is that there is no exemption from charging IVA, the smallest business must charge IVA where applicable (currently 16%, increasing to 18% from 1 July 2010).   In Spain you don´t need a VAT number as the NIE number is used as the equivalent.

Regarding tax: Registration has to be made with the Hacienda (the Spanish tax authority).  A tax return for a self employed person is made annually in June (called I.R.P.F.). You can choose between two methods of paying tax:

a)       the "direct estimations method", just on your actual profit and earnings and pay VAT (IVA) separately or

b)       you pay a quarterly fixed income tax & IVA amount under the "modulos" system. 

It is best to discuss the two systems with your fiscal representative.  Every quarter you present your invoices in and out to your fiscal representative, so that they can work out your IVA and tax bills for each quarter.

Then at the end of the tax year (1^st January to 31^st December) you need to have your annual accounts done and submitted by 31^st January.   Besides Personal Income and Vat Returns, you may have other tax returns to present depending on whether you need to pay a rent retention for a business or whether you have employees.

Your fiscal representative can discuss this with you and will be able to discount expenses against income if you are a sole trader, so it is vital to collect the relevant factura receipts. 

With regard to invoices (facturas) in Spain, at Spanish Solutions we find that even existing businesses are confused on what these must contain when they are asked to produce one.  They should contain the following:

·         Your company name, CIF or NIE for an Autonomo and address

·         The customer´s full name, CIF (or NIF for Spanish or NIE for foreigners) and address

·         An unique invoice number

·         The date

·         The invoice must have a line for the amount before IVA is added as well as a line for the IVA itself.

The other major expense that an Autonomo will have is Social Security. Autonomos are required to register with this scheme for self employed workers, paying approx. E235 - 275 by direct debit each month. (You are then entitled to the Spanish national health service after a certain period). 

Other types of business structures

Two or more proprietors can set up a Comunidad de Bienes (CB), similar to a sole trader but, whilst each proprietor pays income tax and social security contribution, the business makes the IVA return.

There are also benefits to forming a company; a Sociedad Limitada (SL), or buying a ready-made one.  It is more expensive, but as the company is a separate legal entity, you may be protected from personal liability in the event of bankruptcy, and there can be tax benefits.

If you set up a company, it is more complicated and you are going to probably need help to do it.  You will need a name clearance certificate and to register the Articles of Association.  A Notary needs to sign them off and you will have to register your company for tax and IVA and to pay stamp duty.  The company needs a bank account with initial share capital of E3,006 deposited. 

Hiring employees involves a lot of paperwork (work contracts, registration, social security, tax retentions, payslips and annual certificates etc) and business social security contributions can be extremely expensive.

Each new worker should be registered with the social security authorities and his contract registered with the national employment service within ten days. If you don´t and your business is inspected by the labour authorities, you could be fined.

Paperwork to be kept to hand

On this point, we are intermittently inspected by the Police Local as are other businesses and the paperwork that that we are asked to produce is:

-          the paperwork from the Town Hall regarding the business opening licence as we have premises

-          the employees´ contracts

-          the forms from the tax office that the company is registered (036/037)

Employees enjoy extensive rights, which include a minimum wage and and one month's paid holiday and 14 public holidays (two of which are locally established).

The Spanish government is making considerable efforts to encourage employment stability.  Permanent or indefinite or 'fixed' contracts are supposed to be the rule and temporary contracts the exception.  Whichever type of contract you use, you must make sure that it complies with the minimum legal requirements for workers' rights and you should obtain advice on this.

All contracts must, by law, be written in Spanish, so make sure that your adviser arranges a translation if you are not fluent in Spanish. Two copies of the signed contract must be sent off to the Employment Service, who will stamp and return them, one for the employee and one for your records. If you want to terminate an employee's contract, you will need to tread with extreme care.

This all sounds quite daunting, but you will find that, once helped along by friendly professionals and friends, you will find your way through the system whether as a sole trader, or employing staff. 

Poli, our tax adviser, is happy to arrange an appointment regarding setting up businesses, licences, taxes and fiscal representation.  Please contact her on info@spanishsolutions.net or 966761741 with any queries.

and finally…

Please contact us if you have any comments regarding this newsletter or if you have any general questions or queries.  We shall be happy to be of help.

Editor: Amanda Thomas, Spanish Solutions sales@spanishsolutions.net   00 34 966761741 Visit us online at www.spanishsolutions.net.  

CUSTOMER PROFILE – TYRES DIRECT

We would like to draw your attention to one of our clients who has three Tyre centres in Almoradi, La Zenia and Guardamar. Tyres Direct is a one-stop service shop for tyres, alloys, puncture repair, servicing, brakes, exhausts, batteries, oil filters, plugs, wiper blades and more.

At Tyres Direct they understand that when a motorist needs a new tyre they want a quality service, value for money and a convenient location. There are so many brands and ranges of tyres available on the market today that it can be quite bewildering. At Tyres Direct they make sure you get the right tyre for your vehicle and all customers are offered the Tyres Direct Free Return Safety Check so that no matter which centre you pass you can call in for a Free tyre safety check.

Call Tyres Direct Almoradi 965701106, La Zenia 966765319 or Guardamar 966726641.

Registering on the Padrón

What is the padrón?

 It is a list of all the people who live in a certain town.

 Who should register?

Officially all residents in Spain are required by law to register on the padrón, yet many British ex-pats still have not done so. Perhaps some view the padrón as a means of vigilance by the state, in 'big-brother' fashion. However, in reality, it is simply a way for the town hall to know how many people live in their area, without entering into investigations as to a person's official residence status or financial affairs. In addition, the information provided at registration is confidential and protected by data protection laws.

How do I register?

You don't have to own your house to register, just have an address where you habitually live, no matter whether you are the owner, you rent, or live with family or friends.

Nor is registration a long drawn out process. Simply go to the padrón office of your town hall and fill in the form they provide. Take along official identification, such as a passport, and also your NIE or residence certificate/card, a recent utility bill in your name, and the deeds to your house or a copy of your rental contract.  Although you may have to return to collect your certificate, the actual registration is completed all on the same day.

What are the benefits?

Once you've completed the simple process, you can begin to enjoy all the advantages  being on the padrón offers, such as better public services

Central Government allocates money to the different municipalities according to how many people are on the padrón. Therefore, if you are not registered, your town hall is losing money for the provision of health centres, police officers, fire fighters and schools, access to benefits and social care.

In order to register to vote in local or European elections, you must first be registered on the padrón.  You'll find you need your padrón certificate to carry out various administrative tasks, such as register for healthcare, register your car with Spanish number plates or enrol your children in school.

 Local Agent Comaskey Properties now provide Property Management and Short Term Lets

Comaskey Properties has been operating on the Orihuela Costa since 2002 and specialise in resale property in La Zenia, Cabo Roig, Playa Flamenca, Villamartin and all Polaris World resorts.  They now have a Dublin office arranging viewing trips and providing help and advice.

 Rental Options:

The office in La Zenia has efficiently arranged long term rentals for some time, but they have now also have launched a holiday lettings website.

Demand for well furnished and presented rental properties is very high, and they are always looking for more properties: especially 3 or 4 bedroom villas, detached properties; and, as always, the closer to the beach the better, along with walking distance to facilities.  They actually have a waiting list of tenants for these type of properties.

 They also provide a Keyholding Service.

Comaskeys inspect the property regularly once every fortnight.  They check that all utilities are connected & operational, that there are no leaks, infestations, or problems, that all windows & doors are secure & all locks are in working condition and all fittings are in good order.  They leave a check list form in the property signed by their member of staff who checked the property, dated & signed.

At the end of every calendar month, they email to update you with regard to your property and they hand over keys to any tenants you have entering the property at anytime (24hrs) and facilitate the entry into your property of any tradesmen authorised by you.

Comaskey will organise the cleaning of your property after each & every tenant (a fee for this is charged at Euro 50 directly to the tenant upon booking), lodge directly into your bank account all fees due to you from the letting of your property and check in & out all tenants occupying your property.  They charge a very reasonable 300 euro for the key holding service per annum, which can be deducted from the first rental if desired.

If you have a property that you would like to rent out long term, or short term, please contact Susie for long term or Rachel for holiday lets at Comaskey Properties with details of your property or telephone 966773453.

The team : Poli Borisova, Ana Maria Barbadora Fernández, Eva G. Gilmartin, Lynne Henderson, Yvonne Hollywood, Silvia Sanchez, Amanda Thomas, Susana Garcia Vega

Full members of TIBA -The International Business Association, an association of professional and legal businesses on the Orihuela Costa.  See www.tibacb.com for more details of their tradesmen and services.

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