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Spain Cracks Down On Black Market Jobs

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http://www.nytimes.com/2011/04/29/business/global/29iht-black29.html?_r=1&ref=business

Spain will give companies three months to put their workers fully on the books or face fines under a new bill aimed at eradicating a black market that accounts for up to 20 percent of the economy.

The bill aims to boost state coffers as Spain struggles to emerge from nearly two years of recession, with a bloated deficit and an unemployment rate of 20 percent, the highest across the European Union.

“It’s not a question of looking back to what companies did in the past but rather to help bring jobs to light as well as boost income for the state,” the Labor Minister Valeriano Gomez said Thursday.

After the three-month period, heavier sanctions would be imposed on companies found hiring undeclared employees and that workplace inspections will be increased, he said.

The govt makes one last desperate attempt to increase revenues to avoid a bailout. I doubt it will work. Workplace inspections to increase as well as the possibility I suppose of the inspectors taking kickbacks not to report illegal activity? Although I suspect I'm being too cynical there.

Still I bet some nice govt employee has worked out how much tax that 20% of the black economy is, rather than assuming that 20% exists because there is no tax.

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And it's not just the black market jobs. They are about to have a massive clamp down on holiday home owners who rent out.

It is illegal to rent out your property in Spain, unless you have a Touristic Licence. Very few properties have this licence. However, most holiday home owners rent out their properties in order to pay towards the mortgage, community fees etc. Most rent out illegally under Spanish Law.

The Spanish authorities have twigged that they are sitting on a gold mine. They have employed inspectors to visit the touristic complexes etc etc and gathering info about owners and who are renting. They are also collecting data from OwnersDirect and holidaylettings etc, and then confronting home owners with the evidence. The fines are massive - 66,000 Euros !

Example fine

OwnersDirect have inserted a clause in their small print

Law enforcement

Basically they will give details of all lettings to the Spanish Authorities.

Now, think about this. The Spanish Govt have a way of raising massive revenues without destroying their own economies, because the individuals paying nto the coffers are expats.

So, it raises the question.....Will Spain default like Portugal.

I think: No.....because holiday home owners will be contributing massive revenues shortly to the Government in the form of huge fines, licences and then 25% of all bookings where tax deduction for expenses is not allowed. Clever eh?

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Going to hit the Brit community hard in the Canaries, Practically every British bar/restaurant has someone working under the radar cos it was so easy to get away with it......

Anyone want to push their necks out and predict the consequences when they come after the property taxes? Tenerife is already in the midst of a crash of sorts this will be a straw that breaks the camels back with many simply walking away..

Is it fair to assume the Spanish tax authorities will order the banks to sell (at any cost) and get first dibs on any revenue raised?

Didn't we discuss in here some time ago the ability of the Spanish banks Santander (due to its wide reach here) in particular under Euro law to come after British defaulters through the UK courts to asset seizure and bankruptcy if necessary?

Methinks there is a huge story here that we will soon see played out on our tv screens.....

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And it's not just the black market jobs. They are about to have a massive clamp down on holiday home owners who rent out.

It is illegal to rent out your property in Spain, unless you have a Touristic Licence. Very few properties have this licence. However, most holiday home owners rent out their properties in order to pay towards the mortgage, community fees etc. Most rent out illegally under Spanish Law.

The Spanish authorities have twigged that they are sitting on a gold mine. They have employed inspectors to visit the touristic complexes etc etc and gathering info about owners and who are renting. They are also collecting data from OwnersDirect and holidaylettings etc, and then confronting home owners with the evidence. The fines are massive - 66,000 Euros !

Example fine

OwnersDirect have inserted a clause in their small print

Law enforcement

Basically they will give details of all lettings to the Spanish Authorities.

Now, think about this. The Spanish Govt have a way of raising massive revenues without destroying their own economies, because the individuals paying nto the coffers are expats.

So, it raises the question.....Will Spain default like Portugal.

I think: No.....because holiday home owners will be contributing massive revenues shortly to the Government in the form of huge fines, licences and then 25% of all bookings where tax deduction for expenses is not allowed. Clever eh?

That's going to cause a bit of trouble.... I wonder how many signing up for villa's etc... realised this was the case.

Out of interesting do many of the popular countries where Brits have bought have these sort of rules? Like Turkey, Portugal, etc....

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I worked in Spain last year and the locals said that the 20% official unemployment was much higher than the real rate.

Many 'unemployed' just worked on the black market.

Good idea, black markets free of repressive taxation get money flowing and growth moving much more efficiently.

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That's going to cause a bit of trouble.... I wonder how many signing up for villa's etc... realised this was the case.

Out of interesting do many of the popular countries where Brits have bought have these sort of rules? Like Turkey, Portugal, etc....

The panic has started. This will spread like wildfire.

Tenerife Forum

The Spanish Authorities are desperate for revenue, and they have the perfect answer.

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And it's not just the black market jobs. They are about to have a massive clamp down on holiday home owners who rent out.

It is illegal to rent out your property in Spain, unless you have a Touristic Licence. Very few properties have this licence. However, most holiday home owners rent out their properties in order to pay towards the mortgage, community fees etc. Most rent out illegally under Spanish Law.

The Spanish authorities have twigged that they are sitting on a gold mine. They have employed inspectors to visit the touristic complexes etc etc and gathering info about owners and who are renting. They are also collecting data from OwnersDirect and holidaylettings etc, and then confronting home owners with the evidence. The fines are massive - 66,000 Euros !

Example fine

OwnersDirect have inserted a clause in their small print

Law enforcement

Basically they will give details of all lettings to the Spanish Authorities.

Now, think about this. The Spanish Govt have a way of raising massive revenues without destroying their own economies, because the individuals paying nto the coffers are expats.

So, it raises the question.....Will Spain default like Portugal.

I think: No.....because holiday home owners will be contributing massive revenues shortly to the Government in the form of huge fines, licences and then 25% of all bookings where tax deduction for expenses is not allowed. Clever eh?

This could be a massive hit to the property market. I know a few colleagues who went 'gung-ho' into Spanish property Buy-to-rent. When this news hits, I bet they will be looking to offload asap.

I was in Marbella at Easter and spoke to a few estate agents plus expats in the bars as I will be looking to move down there in a few years and my conclusion was to take long term rentals, live stress free and watch the market continue to fall. I also read in the papers that the banks are fighting back against the jingle-post with threats to pursue debts.

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This could be a massive hit to the property market. I know a few colleagues who went 'gung-ho' into Spanish property Buy-to-rent. When this news hits, I bet they will be looking to offload asap.

I was in Marbella at Easter and spoke to a few estate agents plus expats in the bars as I will be looking to move down there in a few years and my conclusion was to take long term rentals, live stress free and watch the market continue to fall. I also read in the papers that the banks are fighting back against the jingle-post with threats to pursue debts.

My understanding is that the Spanish Govt is developing a single database that every property must be registered with, if they get rented out. This wil include:

1. Private Villa's/Apartments, not on a community.

2. Apartments/houses on a 'Residential' registered complex.

3. Apartments/houses on a 'Tourist' registered complex.

It's very common for run down touristic complexes (run down because package holidays squeezed profits too much), to be sold off as a residential complex to private individuals. The Touristic Licences were cancelled. But here's the rub, to get the licences back, the community has to have 50% of the apartments plus 1 in agrement, before they apply for the licence.. You just ain't gonna achieve this. A lot of the units are owned by locals and others are owned by expats solely for their own use. So 'Residential' complex owners are unlikely to be able to rent out.

I've heard stories that some owners are being presented with a complete list of all bookings, that were made via sites such as 'Ownersdirect'. The authorities are gathering the evidence and using it. This is followed by a massive fine and 15 days to appeal. If you don't pay, the debt stcks with the property, and you won't be able to sell. That's the job of the Notary, to establish that the property is debt free.

I wouldn't buy now or ever, in Spain (or anywhere for that matter). As soon as you own, you are a victim for taxation. Long term rentals over there are dirt cheap. And besides, the quality of builds is crap, and those places look shoddy after a few years without constant maintenance. B)

Edited by Davetolbooth

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My understanding is that the Spanish Govt is developing a single database that every property must be registered with, if they get rented out. This wil include:

1. Private Villa's/Apartments, not on a community.

2. Apartments/houses on a 'Residential' registered complex.

3. Apartments/houses on a 'Tourist' registered complex.

It's very common for run down touristic complexes (run down because package holidays squeezed profits too much), to be sold off as a residential complex to private individuals. The Touristic Licences were cancelled. But here's the rub, to get the licences back, the community has to have 50% of the apartments plus 1 in agrement, before they apply for the licence.. You just ain't gonna achieve this. A lot of the units are owned by locals and others are owned by expats solely for their own use. So 'Residential' complex owners are unlikely to be able to rent out.

I've heard stories that some owners are being presented with a complete list of all bookings, that were made via sites such as 'Ownersdirect'. The authorities are gathering the evidence and using it. This is followed by a massive fine and 15 days to appeal. If you don't pay, the debt stcks with the property, and you won't be able to sell. That's the job of the Notary, to establish that the property is debt free.

I wouldn't buy now or ever, in Spain (or anywhere for that matter). As soon as you own, you are a victim for taxation. Long term rentals over there are dirt cheap. And besides, the quality of builds is crap, and those places look shoddy after a few years without constant maintenance. B)

Thank you Dave for the information. I have been following some of the expat chat sites over the past 12 months about moving to Spain and they agree that renting is the way to go while doing your research. Yes, long term renting is cheap and in OK areas of the Costa Del Sol I was seeing apartments from 400euros/month and small villas from 650euros/month from just a quick look at the papers - why take on the risk/pain of buying!?

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And it's not just the black market jobs. They are about to have a massive clamp down on holiday home owners who rent out.

It is illegal to rent out your property in Spain, unless you have a Touristic Licence. Very few properties have this licence. However, most holiday home owners rent out their properties in order to pay towards the mortgage, community fees etc. Most rent out illegally under Spanish Law.

The Spanish authorities have twigged that they are sitting on a gold mine. They have employed inspectors to visit the touristic complexes etc etc and gathering info about owners and who are renting. They are also collecting data from OwnersDirect and holidaylettings etc, and then confronting home owners with the evidence. The fines are massive - 66,000 Euros !

Example fine

OwnersDirect have inserted a clause in their small print

Law enforcement

Basically they will give details of all lettings to the Spanish Authorities.

Now, think about this. The Spanish Govt have a way of raising massive revenues without destroying their own economies, because the individuals paying nto the coffers are expats.

So, it raises the question.....Will Spain default like Portugal.

I think: No.....because holiday home owners will be contributing massive revenues shortly to the Government in the form of huge fines, licences and then 25% of all bookings where tax deduction for expenses is not allowed. Clever eh?

they;ll destroy their tourist economy.

Edited by crash2006

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My understanding is that the Spanish Govt is developing a single database that every property must be registered with, if they get rented out. This wil include:

1. Private Villa's/Apartments, not on a community.

2. Apartments/houses on a 'Residential' registered complex.

3. Apartments/houses on a 'Tourist' registered complex.

It's very common for run down touristic complexes (run down because package holidays squeezed profits too much), to be sold off as a residential complex to private individuals. The Touristic Licences were cancelled. But here's the rub, to get the licences back, the community has to have 50% of the apartments plus 1 in agrement, before they apply for the licence.. You just ain't gonna achieve this. A lot of the units are owned by locals and others are owned by expats solely for their own use. So 'Residential' complex owners are unlikely to be able to rent out.

I've heard stories that some owners are being presented with a complete list of all bookings, that were made via sites such as 'Ownersdirect'. The authorities are gathering the evidence and using it. This is followed by a massive fine and 15 days to appeal. If you don't pay, the debt stcks with the property, and you won't be able to sell. That's the job of the Notary, to establish that the property is debt free.

I wouldn't buy now or ever, in Spain (or anywhere for that matter). As soon as you own, you are a victim for taxation. Long term rentals over there are dirt cheap. And besides, the quality of builds is crap, and those places look shoddy after a few years without constant maintenance. B)

Looks like the Brits who bought are going to have rent now off the radar, ie friends of friends and word of mouth. Not sure what the actual legal position of something like this would be, but people will have to say they've paid £0 for renting the villa for two weeks, they merely paid the owner a fee for organising a taxi too and from the UK airport. So the actual transaction was in the UK and the property was let out for free?

I'm sure there are many ways around this taxation issue, is there anything in Spanish law about letting people stay in your property for free?

Perhaps sites will crop up which offer a free apartment for two weeks and you pay the owner a fee for organising the UK side transport?

Although I suspect many will just give up and try and sell.

Trouble is the Spanish will kill their own tourist industry, they assume people will just be able to pay and they'll get all this revenue. Looks like an interesting few years is developing.

Haven't the Germans also bought big in Spain? Do they rent out as well?

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how to destroy your economy in a few simple steps. :rolleyes::lol:

They could get black market to go legal by cutting taxes - and if it really is that big, they could afford to cut taxes a lot.

oh well - I give the euro 5 years before the defaults in southern europe make it untenable.

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Looks like the Brits who bought are going to have rent now off the radar, ie friends of friends and word of mouth. Not sure what the actual legal position of something like this would be, but people will have to say they've paid £0 for renting the villa for two weeks, they merely paid the owner a fee for organising a taxi too and from the UK airport. So the actual transaction was in the UK and the property was let out for free?

I'm sure there are many ways around this taxation issue, is there anything in Spanish law about letting people stay in your property for free?

Perhaps sites will crop up which offer a free apartment for two weeks and you pay the owner a fee for organising the UK side transport?

Although I suspect many will just give up and try and sell.

Trouble is the Spanish will kill their own tourist industry, they assume people will just be able to pay and they'll get all this revenue. Looks like an interesting few years is developing.

Haven't the Germans also bought big in Spain? Do they rent out as well?

Germans, Scandinavians, Irish and recently Russians in a big way.

It's very difficult finding enough rentals without using the two main letting sites. Even then, the original developer who took over the run down complexes, hold a majority share holding. They keep a couple of properties for themselves, and these properties have a disproportionate voting right. It's almost impossible to get these Spanish developers out, and they hold all the cards. They collect the community fees and decide where and how much of it is spent. It's a great earner for life.

They know which proprties are being illegally let out, and the authorities are approaching them first.

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Thank you Dave for the information. I have been following some of the expat chat sites over the past 12 months about moving to Spain and they agree that renting is the way to go while doing your research. Yes, long term renting is cheap and in OK areas of the Costa Del Sol I was seeing apartments from 400euros/month and small villas from 650euros/month from just a quick look at the papers - why take on the risk/pain of buying!?

No problem mate. I put a deposit down on a place in the Canaries last year, and pulled the plug when I got wind of this.

I managed to get my money back - less about £600. Fortunately I used a independent lawyer who wasn't bent.

Even then, the twatarsed estate agent wanted a cut, even though I'd pulled out. He didn't get one.

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they;ll destroy their tourist economy.

Absolutely......and it won't take much for the cheap airlines to pull the plug, when seat sales dip.

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Germans, Scandinavians, Irish and recently Russians in a big way.

It's very difficult finding enough rentals without using the two main letting sites. Even then, the original developer who took over the run down complexes, hold a majority share holding. They keep a couple of properties for themselves, and these properties have a disproportionate voting right. It's almost impossible to get these Spanish developers out, and they hold all the cards. They collect the community fees and decide where and how much of it is spent. It's a great earner for life.

They know which proprties are being illegally let out, and the authorities are approaching them first.

It's only a great earner if those with properties there keep paying.... If people decide to walk away from the complex the developers may be holding a great loss maker for life.

Although this all sounds like a recipe for disaster. Still I'm sure any bankers making a loss from this mess will get a nice taxpayer bailout.

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It's only a great earner if those with properties there keep paying.... If people decide to walk away from the complex the developers may be holding a great loss maker for life.

Although this all sounds like a recipe for disaster. Still I'm sure any bankers making a loss from this mess will get a nice taxpayer bailout.

Absolutely....and the danger is that you end up owning on a complex in decline. Dirty pool, unkept gardens etc.

And you will probably have to pick up the share of fees not collected from abandoned units.

Depends what's written in your contract.

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Absolutely....and the danger is that you end up owning on a complex in decline. Dirty pool, unkept gardens etc.

And you will probably have to pick up the share of fees not collected from abandoned units.

Depends what's written in your contract.

Sounds delightful for a holiday, where can I buy one? I wonder how the sales people will manage to sell the empty ones when it looks like a crap hole?

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Sounds delightful for a holiday, where can I buy one? I wonder how the sales people will manage to sell the empty ones when it looks like a crap hole?

They won't.

The developer ends up buying the abandoned units from the banks (brown envelope job), re-develops and the process starts all over again, to the next mugs who are on holiday and looking to buy a bit of paradise.

Clever eh?

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And it's not just the black market jobs. They are about to have a massive clamp down on holiday home owners who rent out.

It is illegal to rent out your property in Spain, unless you have a Touristic Licence. Very few properties have this licence. However, most holiday home owners rent out their properties in order to pay towards the mortgage, community fees etc. Most rent out illegally under Spanish Law.

The Spanish authorities have twigged that they are sitting on a gold mine. They have employed inspectors to visit the touristic complexes etc etc and gathering info about owners and who are renting. They are also collecting data from OwnersDirect and holidaylettings etc, and then confronting home owners with the evidence. The fines are massive - 66,000 Euros !

Example fine

OwnersDirect have inserted a clause in their small print

Law enforcement

Basically they will give details of all lettings to the Spanish Authorities.

Now, think about this. The Spanish Govt have a way of raising massive revenues without destroying their own economies, because the individuals paying nto the coffers are expats.

So, it raises the question.....Will Spain default like Portugal.

I think: No.....because holiday home owners will be contributing massive revenues shortly to the Government in the form of huge fines, licences and then 25% of all bookings where tax deduction for expenses is not allowed. Clever eh?

just wondering how they can pay the fines? You seem to assume BTLs are awash with cash.

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just wondering how they can pay the fines? You seem to assume BTLs are awash with cash.

They probably won't be able to, but the debt stays and is registered with the property at the local townhall, so either pay-up, or you cannot sell.

And interest is added to the debt. Nightmare!

Clever eh?

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why should this damage tourism ? , most people rent an apartment or go to a package hotel ...... It will only hit the owners

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because there will be less places on the market driving up rents. The rents will also rise as they have been artificially depressed due to not paying the required tax which will eat into the yeilds unless the rental prices goes up.

Edited by FIGGY

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why should this damage tourism ? , most people rent an apartment or go to a package hotel ...... It will only hit the owners

Possibly true - the hotels have been demanding a clampdown for years. on illegal renters.

Just don't expect cheap hotel accommodation. B)

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  • 284 Brexit, House prices and Summer 2020

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      • down 5% +
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      • up 5%



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