In an attempt to prevent fraud in the employment sector, a new initiative has been put into play by Employment Minister, Fátima Báñez. Unfortunately, employment fraud is rife in Spain and even though it is commonplace, these practices are also completely illegal and include:

  • Not registering employees on official contracts
  • Declaring less hours on contracts than those actually worked
  • Paying part of the worker’s salary in cash, only declaring a minimal amount
  • Receiving unemployment benefits whilst working elsewhere for cash

Continuing on from last month, now that you know the various types of contracts available to potential employees, the next step is to learn how to set one up. A code is required from the Social Security office to allow you to hire. From there as the employer, you become responsible for informing them of any new, cancelled or modified contracts and each month you must pay an additional Social Security contribution for that contract (an amount equivalent to approximately 40% of the employee’s salary), however your asesor can check to see if any reductions apply depending on the contract and the employee’s circumstances.


As a business owner you may know from the get-go that you need staff or the situation may arise during the busy season when you are run off your feet and could do with an extra set of hands and if you’re particularly lucky, your business will have grown to a point where you have no choice but to contract staff. There are plenty of horror stories doing the rounds about the pitfalls of hiring outside help or assurances that it isn’t necessary to give “official” contracts, you can just pay in cash.


 

This is a broad subject so it is difficult to get into particulars because there are so many factors to consider but in easy terms, a business can be registered under one of two different tax systems:

  • Accounts
  • Fixed tax

It is important to choose wisely at the start of your business because once you register under a particular system, the tax office will not allow you to change within a three year period so unfortunately, you cannot test the waters and change your mind later if it doesn’t work out for you.


The first question that comes to anybody contemplating setting up their own business is, “how much is this going to cost me” so don’t let your enthusiasm take over; before you march down to your nearest Social Security office to register as self-employed, consider what it really means to run your own business and the on-going costs involved.

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