EOS MAIL BOX

 [Author : I am a student of Politics and Economics. I have been writing professional articles for Real Estate companies regarding the Spanish economy and real estate market.]

Spain has for a long time been crippled by its bureaucracy, which has discouraged foreign and domestic investors from bringing their ideas and businesses to the economy. Entrepreneurship has been much needed as the unemployment is significantly high and the Spanish market does not offer much innovation or ambition. However, the government has agreed upon new measures that should attract entrepreneurship and increase transparency in the private sector.

With a new reform, which exclusively targets entrepreneurs, the process of starting a business will be much easier. Furthermore, in addition to improving the time it takes to establish a registered company, 1 to 3 months, the reform offers a series of tax incentives (up to 60 per cent), in order to increase efficiency. These incentives are aimed at both large corporations and individual business owners. Besides the corporative tax being deducted, in an attempt to encourage spending the government is reducing the income tax for individual entrepreneurs by 20 %, when investing in a company.

Few measures, that reflect the new reform, have already been implemented and improvements can already be seen. Since March, more than 30000 young people have registered themselves as self-employed. Between January and April, more than 27000 training and education contracts have been signed. With these changes in the Spanish business sector, hopefully, entrepreneurs will show more interest.

However, Spain will forever be reminded of their incompetent management and sloppy system, which prevented good businesses from being established. Today, the World Bank ranks Spain as being the 136th, out of 185, on the 'ease of starting a business' list. This is quite disturbing considering that Uganda is only ten places below Spain.

Despite the fact that Spain has all the key attributes necessary, in terms of geography and popularity, for an entrepreneur to start a business, they have still managed to be so inept to not create a more intelligible system that would enrich their economy with jobs and opportunities. However, as the country has hit rock bottom a sense of urgency, finally, has occurred which has provoked such reforms as this one.

The new reform will be implemented by the end of 2013. It is intended to promote internationalisation and make Spain a centre of business in Europe. With this new reform, it should take less than 24 hours to establish a business. One can only hope that the government can live up to this change in the business structure, and start welcoming more entrepreneurs and opportunities. 

 [Author : I am a student of Politics and Economics. I have been writing professional articles for Real Estate companies regarding the Spanish economy and real estate market.]

The first quarter of 2013 showed an increase in Spanish public debt. The amount has now reached a colossal 923 billion euros and is only expected to get worse. In addition, the unemployment rate has not been stimulated nor improved, as the queues in front of the unemployment benefit offices are growing longer and thicker.

Despite Spain's improvements in the business sector and the government structure, panic is still terrorising people as they are desperately trying to find jobs. It was reported that unemployment had climbed new heights, an impressive 27 per cent, which is the second worse in Europe. This is forcing Spanish people to leave their mother country to find something abroad. More disturbingly, the youth unemployment rate is peeking, with more than 57 per cent. They are better known as the 'lost generation'.

Spending is a major problem, as Spanish people are cautious about their budgets. Moreover, public debt is now equal to roughly 88 per cent of their GDP, and the government is urgently trying to encourage household spending as Spain's financial breakdown is only expected to worsen. As a result, we see prices in the real estate market fluctuate as it was reported that the price for renting has decreased by 0.1 per cent. It seems that the Spanish population is responding to the government's efforts, by becoming more independent as there is little trust between the two. People do not buy Spanish government bonds, and a whole generation of 'lost' young people are fleeing their country. They are working in opposite directions.

Domestically, it can be concluded from the first quarter of 2013 that the labour market is not improving as it should, compared to other European countries. There is a lack of innovation and business creation within the country, and the young graduates who are supposed to be a key component to the future Spanish economy, are leaving the country. However, foreign investments and money injections are increasing and, hopefully, companies will come to Spain as new reforms will improve competitiveness and increase transparency.  

[Author : I am a student of Politics and Economics in England. I have been writing professional articles regarding the Spanish economy and the real estate market]

When we enter the month of August, the process of purchasing property will be a slightly more expensive one, as the Spanish government is implementing new taxation laws.

Previously, the 'wealth transfer tax' was set at 8 per cent for a single property acquisition. However, from the 1st of August in 2013 the tax will be set at 10 per cent unless the investor is below the age of 32, which in that case would be 5-7 per cent depending on their situation. Spanish taxation authorities have estimated that the government will yield approximately 150 million euros with these changes, which should help improve the bottomless deficit they are facing at the moment.

Recently, new laws have been installed which dictate that residents in Spain who have assets worth more than €50000, have to report it to authorities. This has turned out to be somewhat of a 'witch hunt', as residents feel their privacy has been breached by tax collectors. Foreign retired people in Spain, who received their residency through the acquisition of a property, are reluctant to reveal their fortunes at home as they have enjoyed the free ride in Spain.

As a result, foreign investors, in particular British people, who received residency before the emergence of the new taxation laws, are now fleeing the country. People are doing so to avoid the taxes they have to pay for their assets at home. This is perhaps a prediction for the future, that the Spanish real estate market is becoming exclusively a commercial housing market.

As it is now, Spain is a mess. There is no growth and GDP per capita fell by 1 per cent in 2012. In addition to that, the interest rate is at an embarrassing 0.5 per cent and consumption is not rising. If Spain is willing to embrace a brighter future, then the implementation of these regulations is a good start as it will create or more organised and intelligible system.

These reforms have been supported by regulations that will make residency more obtainable for investors outside the EU zone. For only €500000 or by purchasing 2 million euros worth of government debt, an investor can provide himself and his family with Spanish residency. Up until now, it has been a struggle to receive residency without waiting months for a reply. Hopefully, with a change in government attitude this reform will be successful, and more 'real money' will enter the market and help steadily increase housing prices.

This bombardment of new reforms and taxation regulations is, clearly, a shout out to the Spanish people and foreign investors. The 'hidden' economy is about to be revealed, and people are leaving for that reason. If the government can eliminate tax fraud and implement transparency, then maybe in the future Spain will become a reliable place for investment.

 [Author : I have lived and worked in Spain for over 25 years.  I spent a year in Madrid University, launched two businesses and have owned three houses.  I am a freelance writer and split my time between Spain and Scotland ]