Capital gains and losses for non-residents taxpayers in Spain

Spain treats capital gains and losses somewhat unfairly for non-residents. You have to pay for any gains, but you are not allowed to deduct any losses. The assumption is that you will be able to deduct these losses the taxes of your home country.

If you are moving here using the special “Beckham tax” rules, this is a bit tricky, because you may not have a home country to deduct the losses from.

Bottom line: don’t open a brokerage account here unless you are tax resident (or if you are such a genius that your trades never lose money).

Infanta Cristina’s DNI is 14, guess who is 1?

It was interesting to read that royal family has a specially assigned range of DNIs (10-99). It’s kind of cool, but I wonder if they work with any of the online shopping sites, or if the royal family ever needs to do that kind of stuff…

It was also interesting to see who has DNI #1 (and will forever, since DNIs are not recycled). That’s right… Generalissimo Francisco Franco himself, his ghost still hovering in the DNA of the Spanish system of government….

There’s tax fraud and then there’s just not trying very hard

So apparently the VAT tax from last year increase has been completely counteracted by an increase in “fraud”. Well, it turns out that most of this supposed fraud is happening at big companies that do aggressive tax planning.

Which is really a way so say that the government can’t be bother to actually close the loopholes that allow these companies to get away with paying so little tax. In the case of most multinationals, it’s mostly done by “transfer pricing”, where the Spanish subsidiary buys its products from another subsidiary in a low-tax country at an inflated price. The subsidiary then sells the product at zero profit in Spain, thus paying very little in taxes in Spain.

Spain has anti-transfer pricing rules since 2008, which might work if it weren’t for the fact that many multinationals use Irish subsidiaries to house their intellectual property, taking advantage of generous Irish tax rules (which don’t have transfer pricing rules). The “double Irish” arrangement is widely used by Apple, Facebook, Starbucks, etc.

What could Spain do? Well, one way to start would be to threaten to cancel the double-taxation treaty with Ireland. Ireland has much more to gain the Spain from the current arrangement. Hell, the EU could probably even just bribe Ireland into removing the rules for a small fraction of current cost of Irish tax avoidance.

It’s strange that the EU hasn’t made more efforts in this regard, since the worst abusers are by far US-based companies, and the increase in taxation would have significantly positive impact on EU deficits, without negatively impacting European companies.

 

 

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Video resume of the year

Both funny and sad, at how someone clearly qualified to do amazing things struggled so much to find a decent job.

But it looks like it worked and he was offered a job at La Sexta… of course, I’m pretty sure he got a temporary contract.

Spanish ministry of science holds gala to honors scientists after cutting their funding

Funny in a sad kind of way… the Spanish government decides to hold a gala to honor Spanish scientists. Unfortunately many of the honored scientists had recently had been fired or had their funding cut by the same ministry.

One scientist remarked: “When I was told two weeks ago that I had been awarded I was puzzled. What you have had to spend bringing me here is a tenth of what it cost my job”.

Another one: “Thank you for the award, but my contract ends in 12 days.”

The event was being held at the new 23 million euro National Museum of Science and Technology in La Coruna.

If there’s two things Spanish government officials know how to do, its holding galas and constructing overpriced buildings.

A single type of labor contract

Looks like there’s a voice of sanity coming from the EU, suggesting that Spain adopt a single type of work contract, instead of the 40 different types of labor contracts that we now have.

The main problem with different categories of contracts is that makes it very difficult for employers (especially small ones) to have a flexible workforce. In addition, the various fixed timeframes and rigid rules encourage employers to anti-social behavior, such as firing teachers before every summer break and hiring them back in fall. In many cases, it’s not so bad for the employee either since they get the money from the government to cover for their employers bad behavior.

There’s three big ideas in the new labor contract idea:

1) Progressive increase in the size of the required severance pay. The two year limit on temporary contracts has meant that many companies either cycle through workers every two years, or use external contracting company that acts as the employer.

2) Make employer social security contributions dependent on how often the employees end up on the dole. The US already has this, and it encourages companies to provide a stable work environment and everyone wins.

3) If you want unemployment benefits, you need to be making some effort at finding a job. Right now the incentives for finding a new (non black market) job are severely skewed, since most jobs are simply not competitive to receiving 400 a month for doing nothing.

I’d love to see the government end with the obsession of making easier to fire people and instead think about ways to make it easier to hire them.

Spain gets a new official language

Aragonese and Catalan are now no longer spoken in the province of Aragon. Aragonese has been renamed PAPAPYP (Lengua Aragonesa Propia de las áreas Pirenaica y Prepirenaica), and Catalan is now LAPAO (Lengua Aragonesa Propia del Área Oriental).

This continues the mutually destructive strategies of the Catalan nationalists (who piss off other countries and provinces by included bits of them in their map of “Greater Catalonia”) and the PP, who insist that Catalan spoken in these other parts are actually completely different languages.