
At Spain’s Door, a Welcome Mat for Entrepreneurs - ammobear
http://www.nytimes.com/2014/11/23/business/international/at-spains-door-a-welcome-mat-for-entrepreneurs-.html?ref=technology
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carlesfe
Spain is like phone companies: a welcome mat for outsiders, a nightmare for
insiders.

Spanish companies can't have anybody working (i.e. 'dormant' state), they
always need an "administrador" who pays a monthly 300€ self-employment tax.
This kills companies in early stages unless they can break even quickly
(3600€/yr while not having any income, plus maintentance expenses, is
terrible)

Creating a company is bureaucratically difficult, I reckon it was on the
bottom area in the latest "easiest countries to create a company on" report.

If you're an exporter, you can go bankrupt because you owe worker taxes to the
State... while they owe you return of export VAT. I personally know a case of
these. They owed the State about 300k€ while the State owed them 500k€ for
more than a year. They couldn't "cancel out" the debt. That is outrageous.
They had to file bankrupcy.

And finally, if you're a small company, you have to pay a lot of taxes, while
if you're big and can pay big lawyers/accountants, Spain is equivalent to a
tax haven (i.e. Ireland). This is true. Spain attracts big companies with a
tax maze which allows the rich to evade taxes.

This is really disheartening for Spanish enterpreneurs. We're treated as
second-class citizens... in our own country. Our taxes go to finance big,
foreign companies. That sucks.

Sorry for all the negativity, I'm currently trying to start a company in Spain
and I'm meeting a lot of friends who also have. This is the general sentiment.
Spain needs to fix A LOT of things if they want to be enterpreneur-friendly,
starting with THEIR OWN enterpreneurs.

~~~
joeyspn
Not negative at all. It is actually quite accurate. I started up in Spain 5
years ago and was the worst decision ever. Never again.

For several reasons our venture failed and I was stuck with hundreds of
thousands of € in debt w/o any protection, with me and my co-founders scared
of losing our homes, and severely affecting our personal lives.

Spanish gov is specialist in showing a big smile in the pics that appear in
the press, but the evil is in the details. When things go wrong you're alone.
There's not legal protection for failed startuppers. Starting up in Spain w/o
resources is extremely difficult, and can really mess up your life _forever_.

Looking back, I wish I had started with a LTD in UK, and working from Spain
(yes, you can). It's what I'm doing next.

My 0.02

~~~
scalesolved
How would the tax situation work with having a LTD in the UK and residing in
Spain?

~~~
fauigerzigerk
You would normally have to make payments into the Spanish social security
scheme. The rules are actually quite complicated but if you live and work in
Spain that's where you have to contribute to social security. Owning a UK
limited company does not change that.

~~~
scalesolved
But would you have to pay tax on your limited company's turnover both in the
UK and then subsequently in Spain?

~~~
fauigerzigerk
No, the company would have to pay taxes (corporation tax, VAT, etc) only in
the UK, and if you personally get something out of the company, like a salary
or a share of the profits, then you have to pay income tax or capital gains
tax and social security contributions in the country you live in (i.e. Spain).

There is some double taxation of course because the company first pays
corporation tax on its profits and then you pay income tax or capital gains
tax on any profits you take out of the company. But that is the same
regardless of where you live. One way to mitigate this is for your company to
pay you a salary.

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danielrhodes
I recall reading an article a few years ago where an entrepreneur was sued by
the Spanish government after his company went under. Spain is, as is the rest
of Europe, quite hostile to entrepreneurship. It seems like Spain is trying to
attract people from outside rather than deal with the problems inside. If they
could make it super easy to start a company, relax red tape for businesses
under a certain size, and encourage Spaniards to start companies (not just in
tech) and soften the blow of failure, I think only then is it time to start
inviting in foreigners.

~~~
Symbiote
If you would like to register a business in the UK, go here:
[https://www.gov.uk/register-a-company-online](https://www.gov.uk/register-a-
company-online)

It says it takes 48 hours and costs £15. You must be at least 16, and you'll
need an address -- it could be a rented post box so long as it's a full
address.

As far as I can see, you don't need to be resident in the UK.

~~~
tim333
Indeed but bear in mind you are then obliged to submit annual tax returns for
the company for which an accountant would charge you £300+

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lemming
I lived in Spain for 9 years and ran a company there for 7 of those - I would
never do it again. Even with competent professional legal & accounting
assistance it's a bureaucratic nightmare by the standards of most other places
I've been. It's also not particularly cheap - contrary to what the article
says, Berlin in my experience is much cheaper.

That said, it's a nice place to live, especially Barcelona, and that helps to
attract foreign talent if you can't find good people locally.

~~~
onlito
I agree with you, the bureaucracy is tough in Spain especially with
accountants who don't really know the rules either. I don't think it's less
bureaucratic then Germany though, Germany is only more predictable. Absolutely
true what you say about hiring, people from abroad love coming to Barcelona &
there are extremely skilled local people ready to work their butt off if you
give them a chance. Also there are very attractive reductions in social
security costs available if someone you hire has been unemployed before.

~~~
junto
I'd like to echo the Germany bureaucracy comments but also add that while it
I'd true that Germany has lots of it, and sometimes it seems crazy that one
department of governent won't talk to the other on your behalf, the vast
majority of the rules I've come across seem to be perfectly logical when I've
taken a step back and looked at them properly. German bureaucracy is about
closing loopholes. They don't like them. Spanish and British bureaucracy often
seems to be there for no reason that I can fathom!

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gyardley
Moving to and living in a foreign country is a really great learning
experience, but don't kid yourself - the sheer amount of bureaucracy involved
in these entrepreneur-importing schemes plus the overhead of adapting to a new
culture make them a net negative for any business you're starting.

Go if you want the adventure, but if you're really passionate about something
you're working on, I'd recommend staying in place and working on it instead.

~~~
eps
Bureaucracy can be dealt with by hiring a specialist legal firm. It sounds
really expensive, but in many cases it's not - it's in 10-20K range, which is
comparable to what it costs to move an established household from US/Canada to
Europe. One can of course sell everything, move with just a backpack and do it
frugally by trying to deal with all the formalities themselves, but that's
certainly is taxing if you are over certain age or have family/kids.

~~~
netcan
That's exactly the kind of approach that inhibits entrepreneurship. It's very
hard to see hurdles which kill non existent companies by preventing them from
ever happening. There are big risky steps that happen before it feels real.
The easier these steps are, the more likely it is that people take them.

Red tape that would not be more than an annoyance to an existing company kills
off new companies. Maybe to an individual with decades of entrepreneurship
10-20k for a lawyer to handle stuff and make decisions about things he doesn't
understand is fine, but to an average joe thinking about starting a business
that represents a year or more of savings.

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scalesolved
It just seems to painful to even freelance in Spain, I can't imagine the
loopholes to run a business. Such an awesome place but it really hamstrings
itself.

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fabiandesimone
That all sounds nice but then you have this:

[http://tech.eu/news/spain-government-startup-tax-
reform/](http://tech.eu/news/spain-government-startup-tax-reform/)

~~~
charlesdm
.. provided that the taxpayer has been a Spanish resident for at least ten out
of the fifteen tax periods before the last tax period.

While not amazing for people who have been living in Spain all their life,
this isn't really a big deal for foreigners moving to Spain to set up a
business?

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iagorodriguez
I am a spaniard. I currently run a business on ruby on rails-ember.js
development based on Madrid and I also lived in San Francisco and Chile for a
year in both cases. So, I will share my experience in three basic elements:
life quality, tech community, business management.

First, about Madrid. Madrid is a really beautiful and nice for living city.
You can work hard and enjoy the life at the same time. You dont need that much
money to make a decent living (1 - 1.5k€/month). There is a decent community
for developers. Moreover, the developers technical level is good or pretty
good. Finally, starting a business and managing the business is hard. It is
hard because you start paying those 300€ month that sometimes are a big wall.
Also, there is a lot of paperwork: taxes every 3 months, hiring someone is the
hell, requesting money requires more money in prints than the amount
requested.

Chile: The quality of life in Chile is not as good as I expected. The people
here is pretty familiar (closed circles) so engaging with new friends is not
as easy as in Madrid or SFO. There is a lack of cultural life in the city.

The tech community in Santiago is growing fast but still small compared with
Madrid and thousand miles away from SFO. The tech quality is also mid-low.

The management of business on the other hand is very easy. The main problem is
when you come here without a link to Startup Chile Program because being a
non-tourist here is really complicated. You need a kind of id number - RUT
that cant be get until you 5 months after you arrive if everything goes right.
You cant have a telephone number, internet or bank account without this
number.

SFO is the heaven and the hell at the same time. Lots of interesting people
around from everywhere. I was living on hacker community that made my living
fun and interesting. The main probloem is the cost of living in the city. And
this is a HUGE issue in the midterm for the tech community in SFO. It is too
expensive. The community in SFO, no words, just amazing. (I dont say anything
about creating/managing business because i have no experience).

Hope this small and partial insights help anyone :)

~~~
iribe
The high COL in the SF bay area has become a significant liability because
people like you realize it's way too expensive here. It's affecting everyone
from startups to really large companies who prefer to hire in the SF bay area,
but cannot do so.

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surfearth
According to the World Bank's 2015 Doing Business report, Spain ranks 74 of
189 countries for starting a business. That doesn't sound like startup heaven,
but on the bright side it improved 41 spots from being ranked 115 in 2014.

The data at the bottom of this link provides some good data on the time, cost
and number of steps required to start a company in Spain:
[http://www.doingbusiness.org/data/exploreeconomies/spain/](http://www.doingbusiness.org/data/exploreeconomies/spain/)

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kiliancs
My experience starting a company in Spain has been very bad. I'm not going to
repeat what other people said already, but it took almost two months for the
process to complete. Don't even think about starting a business there during
summer.

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jsanzma
Despite I think that the new law is a huge step forward for Spain, the visas
are nothing if there are not an infrastructure behind it. SV has a huge
investors network that Spain just doesn't have.

~~~
mmind
Actually this may improve soon as it looks that Google ventures is paying
attention to the opportunity of investing in a country with great weather and
high-qualified engineers: [http://www.techrepublic.com/article/google-set-to-
open-campu...](http://www.techrepublic.com/article/google-set-to-open-campus-
madrid-to-drive-innovation-in-spain/)

~~~
jsanzma
I think maybe it could be an option in several years... right now, as Spanish,
I think it's not the best place to launch your start-up by far. We could
consider the political atmosphere too, next year is gonna be the president
election and the country could be unable to be managed...

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Hoffmannnn
The article goes into a lot of good detail about how much easier it is to get
a visa & temporary residence. Let's assume that there was no uncertainty
there, and you could instead get permanent residence and/or citizenship...
After going through all that, what have you gained?

Why go there in the first place? It didn't look like the government was
offering any sort of funding or tax relief for somebody who decides to start
their business in Spain instead of anywhere else.

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Animats
The US has a similar deal, with E-1 and E-2 visas. You can buy your way into
the US by investing $500K. This tends to be used more by people who made money
outside the US and want to live there than by people doing startups. This is a
treaty arrangement available only to citizens of countries which offer a
reciprocal deal to Americans. Spain and most of the EU are is on the list;
China (mainland) is not.

~~~
bjelkeman-again
When we did it we didn't even need all the cash for it. Started a company in
the EU. Built software on a seed investment. Had software startup valued at
USD500k+ merge that into a US company with all the staff from the EU, six of
us. Get E-1(2?) visas. Done.

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archagon
Interesting. I've been looking for a way to get an easy multi-year visa in
Europe, and I have a sole proprietorship that I want to incorporate anyway.
Previously, I was looking at DAFT, but it would cost me several thousand
dollars. Maybe Spain is the way to go?

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hongkonggong
Is it bad to have a depressed local market though (to launch a company to)?

~~~
onlito
You can also use Spain as a gateway to the entire Spanish-speaking market,
which is always an attractive option in case you plan to go international.

