Monday, September 29, 2014

Our seven year anniversary

It’s been seven years since we moved here. Some random things that come to mind:

  • Culture
    • The whole Catalan nation thing still seems as stupid and closed-minded as on day one, but it doesn’t bother me anymore. In the US the stupid and closed minded people are into guns and crazy religion, so compared to that, it’s pretty harmless I guess.
    • Culture is something that should come from the people, not be imposed by the government.
  • Referendum
    • I’m 100% in favor of having a vote. If people want to be stupid and decided to have their own country, well, it’s a democracy.
    • As an American, I’d have to leave an Catalunya until they approve a tax treaty with the US (or I’d have to pay about 90% taxes). Good luck in getting it done quickly, since the US hasn’t approved a tax treaty in five years because one US senator is throwing a hissy fit.
    • Let’s see if anyone in Catalunya does a Ghandi and actually has the guts to stand up to Rajoy.
  • Real estate
    • The prices are still stupidly expensive. Aren’t bubbles supposed to pop?
    • People don’t know how to take pictures of real-estate. You’re trying to sell that house for a million euros, and you can’t be bothered to clean up and pay someone 200 euros to take some decent pictures?
  • Employment
    • If I ever lose my job, we’re going to have to move away because the jobs here pay nothing.
    • Working in high-tech here still feels like a backwater whenever I go back to the US.
    • The finiquito is a really dumb idea that keeps people working in jobs that they hate.
    • Part-time employees here are exploited at least as much as US ones, if not more. 
  • Kids
    • Being a parent in Spain without grandparent support is very very hard
    • Kids are happy here.
    • It’s nice being able to let the kids run around town by themselves without the safety paranoia of the US. It’s weird, when I was growing up our parents let us run around but now kids in the US to be supervised 24/7.
    • The kids speak Catalan well enough not to be a handicap anymore, although I’d prefer if they’d learned an actually useful language like German or French.
  • Economy
    • Things are marginally better, but I feel that nothing substantial has been fixed since the crisis. Mostly just swept under the carpet.
  • Long term
    • Who knows? I keep waiting for some event to force us to move somewhere else, but so far, it’s been pretty smooth sailing.

Friday, September 19, 2014

Circular referendum logic

So why not have a referendum in Catalunya like in Scotland? The central government’s argument is that there can’t be a referendum because it would be illegal. Why would it be illegal? Because the central government won’t approve it, and the constitution requires their sign-off.

Any why won’t the central government sign-off? Because it says the referendum is illegal… etc

Of course, the Catalans are saying they aren’t having a referendum, they are having a “Consulta”, which according to their own Statut, they are allowed to do (according to article 122):

The Generalitat has exclusive power to establish the legal framework, modalities, procedures, implementation and the call by the Government itself or by local authorities, within the scope of its powers, surveys, public hearings, forums participation and any other instrument of popular consultation, except as provided in Article 149.1.32 of the Constitution.

The constitution says:

The State has exclusive jurisdiction over the authorization to call for popular consultations by route of referendum.

Still, Rajoy shouldn’t act as if he is obligated by law to stop the referendum consultation, he’s just stopping it because he doesn’t want it to happen.

Thursday, September 18, 2014

My Scottish Independence vote prediction

Here’s my prediction, so I call look silly once the results are in.

My prediction is that No will win. Here’s why:

  • Young people want independence and old people don’t. Combine that with the fact that old people vote and young people don’t, the cause is probably doomed. Every time I hear about how this and that poll isn’t accurate because they don’t reach “mobile phone only” voters, the results end up being that the mobile phone voters get distracted and forget to vote.
  • A yes for independence would be a victory for democracy. Remember that this is the EU and we don’t want any of that pesky democracy stuff. Especially referendums on important questions.
  • If the result is so close, do you think that the UK government doesn’t have a plan to change a small number of votes? Wouldn’t that be said if a couple strategically place mobile phone towers started being unreliable and all those young people who can’t navigate without their phone can’t find the polling booth.
  • The bookies are only giving 4:1 odds for a yes win.
  • Having the vote during the week means that retired people have an advantage over younger working people.

I think it would be really cool if the yes side would win, just to stick it to the EU and show that people can actually vote and make a difference. Of course, that is not the world we live in.

Sunday, September 7, 2014

Podemos: OMG ponytails!

Funny to read El Mundo freaking out about the growth in support of Podemos. The picture they choose:

El líder de Podemos, Pablo Iglesias, en una conferencia en el...

I suppose they are trying to say:

  1. He’s got a ponytail. Damn dirty hippy.
  2. He’s just preening in front of the press.

On the substance, the main criticism is that they wouldn’t be able to pay for all the promises they are making. Unlike, say the PP, for example, who has basically broken every single campaign promise they made. But I guess that’s ok, because they’re all a bunch of lairs anyway.

Tuesday, September 2, 2014

Spanish finance minister Montoro threatens to use the dreaded 720 form against Jordi Pujol

Since 2013, residents in Spain with assets above a certain threshold are required to file the modulo 720 form every year detailing assets outside of Spain. The penalties for non-compliance are severe, and non-declared assets are taxed as an “unjustified capital gain”, to which additional penalties and interest apply.

Jordi Pujol’s 30 year undeclared fortune outside of Spain seems like a perfect test case for this new law, and it will be interesting to see if the prosecutors go after him using this route. If not, it would make people question the value of filing the 720 form. There are some possible constitutional issues with the law (invasion of privacy, presumption of guilt, etc), so it will be a good test to see how much the Spanish government really believes in the enforceability of this law.

Tuesday, August 12, 2014

Simplifying your US investment taxation for Americans living in Spain

If you are thinking of living in Spain and have an investment account that you want to leave in the US, you may want to think about simplifying your taxation.
If you hold your investments in your own name, you will need to recalculate your taxes once for the US, then do the same thing again for Spain, apply the US-Spain tax treaty, pay some amount in Spain and some in the US. In addition, for some assets there may be differences in how they are treated in terms of recognition of gains, so you may end up with double taxation.
One alternative is to hold your US assets in a member-managed US-based LLC (Limited Liability Company).For US tax purposes, LLCs pass-through their earnings to the owners, so from a US perspective, there’s no change to your taxation. Since you are a US citizen, you need to declare and pay taxes on this income.
From the Spanish side, you need to make sure that you avoid the Controlled Foreign Corporation rules. A foreign company owned by a Spanish resident is generally exempt (see Article 91) if that company is:
  1. not based in fiscal paradise, and
  2. the company pays (including taxes paid on passed-through earnings) at least 75% of what it would pay if it declared taxes as a resident of Spain.
Since US marginal rates for passive income are generally higher than in Spain, it’s pretty standard to easy to meet for US citizens. If you were not a US citizen you wouldn’t be able to do this since you would not need to pay any US taxes on pass-though earnings, and thus would fail the 75% test.
Although this normally won’t save you any taxes, it could save you a bunch of aggravation. If you want to be fancy, you can fund the LLC though a loan instead of via equity to reduce the book value of your acquisition.

Sunday, July 13, 2014

Real estate offer agreements in Spain

If you want to make an official offer on a house or apartment in Spain, in some cases the real estate agent will ask you to put down a deposit, together with signing an agreement that if the seller accepts your offer, you will lose your deposit if you back out.

Problem is these contracts tend to be very badly written and can lead to real problems if things don’t work out. Especially important is who is going to return your money if things don’t work out.

The important points of the contract are what happens in each of these cases:

  • If the seller does not accept the offer in writing within a short time period (48 hours), the real estate agent should return your deposit immediately.
  • If the seller accepts your offer, but then backs out, the real estate agent should to return double your deposit. Since the offer contract is only signed by the real estate agent and you, the agent can’t really legally commit the seller to pay anything, since the seller isn’t signing the contract. (The real estate agent might have a contract with the seller, but that’s not your problem)
  • Will this fee will be credited towards the purchase price as part of the agreement? Sometimes it is assumed that this is a commission for the real estate agent, so be careful.

Alternatively, you could just look for a deal where you deal directly with the seller. In that case, don’t sign any agreement except the final one at the notary. In the past, people usually signed “arras” pre-sale agreements, but these can also be minefields (more on that later), so avoid them if at all possible.