Paying to own a pet shop: Spain’s odd approach to self-employment

parrot

This is Leti, her pet shop and her parrot. Fi made friends with Leti when she spent a year studying in Spain, and with the parrot when we visited the town she lived in out of Madrid. Leti started her store there about a year ago. She and her brother breed parrots, contract in doggie hair dressers and run an impressive collection of programmes that teach kids to take care of pets.

Anyone investing in their ideas and starting a new business is brave. But doubly so in Spain at the moment when the economy is in the doldrums, unemployment is around 20% and more than double that for those under thirty. In that context you might think that government would be going out of its way to support young entrepreneurs and innovators. Not so, in fact, arguably the opposite.

On top of standard income taxes and fees to register their business, autónomos are required to pay about an extra $400NZD/month. This is a large burden given the cost of living is similar to New Zealand.

This payment is in lieu of paying a proportion of income into superannuation and unemployment insurance funds. A flat fee, it seems especially unfair when ordinary employees pay a proportion of their income, and the value of unemployment and superannuation benefits are a function of income too. I’m assuming the payment is flat because it is easy for the self-employed to hide income, but that is little consolation for those who have little income to hide.

Frustrations about the fees are widespread. When Leti shared hers we were having tapas with friends. Everyone was sympathetic. Everyone had a friend, or an aunt or a mother who was struggling with them. There are whole forums that talk about frustrations with the system. Apparently some freelance teachers (think those who give piano or English lessons) de-register for the summer months to avoid paying the fees, but they have to do so for a full month at a time, and forgo single days or work as a result.

New Zealand consistently ranks amongst the easiest countries in the world in which to do business. And I was always like, “yea the companies office website is quite good, but that can’t explain it…” Now I get it a little more. My sense is that if you had a well conceived idea for a new business in NZ you’d be more likely to get money from the government, than be asked to give more than you might if you worked for someone else.

Leave a Reply

Your email address will not be published. Required fields are marked *