Spain is one of the most expensive countries in the world in which to have your own business. If you are self-employed in Portugal you do not pay rates or VAT: you only have to pay 24.5% annual income tax. Italy follows the same line, although taxes are lower at 20% .
In Spain you pay a monthly rate, reclaim VAT on a quarterly basis and pay the respective income tax. Spain is amongst the countries in Europe who take least care of their self-employed, making this a fiscal nightmare for them. In fact Spain is the only country in its group, with laws which penalise those who work for themselves, especially at a time when its the only solution for most of its 4.5 million unemployed.
The combination of high social security and legal costs is excessive and ranges from between 264 and 1075 euros, without accounting for the flat rate of 50 euros which only applies for the first six months: to reclaim it takes 3 years at least, not to mention the quarterly VAT and corresponding income tax payments.
If you take the example of our neighbouring countries, Portuguese self employed only need to pay taxes once a year, given that they don’t have to reclaim VAT or pay social security rates. This way they only pay 24.5% of what they earn a year. In Italy, its a one off payment too, like Portugal, and the average rate is 20%.
Further north, in Holland, the self-employed pay a monthly insurance rate of 100 euros and an annual contribution of 50 euros. In the UK, the rate is between 13 and 58 euros, assessed according to income, while VAT is only reclaimed once a year. In Germany the rate is 140 euros only when the monthly income exceeeds 1700 euros, with obligatory medical insurance.
Source: Negocios.com
Sunday, 22. Februray 2015 – 11:07
By Tima Batstone
