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The Spanish economy has always been awash with ´black money´ - undeclared funds that sit under people´s mattresses or in safety deposit vaults.
This undeclared cash normally enters the system as the proceeds of Spanish property transactions. To avoid the capital gains tax on Spanish property of 18% (formerly 35% for non-residents), many Spanish residents preferred to accept part of the property price in the form of cash under the table. When you bear in mind the effect on Spanish property prices during the boom of recent years, this non-declaration of income saved the Spanish people the equivalent of millions of euros (if not billions) in unpaid taxes. Continue reading »
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In Spain, it´s notoriously difficult for an employer to sack or to discipline a member of staff. Employees enjoy terrific rights, and even when they find themselves made redundant, they are legally entitled to claim state benefit of up to 70% of their income for the following 2 years.
This is a crippling burden upon Spanish society in general, particularly during a recession when thousands of people are losing their jobs, but also for employers who pay whopping social security contributions in order to feed this social fund.
This presents two problems in Spain. Continue reading »
