The way forward for the Spanish economy

A couple of months ago, I wrote in one of my blogs a fairly detailed article about why the Spanish economy is failing and several suggestions as to how it can be improved. While the Spanish government is trying to push entrepreneurs and self employment it is failing to pave the way for them. Most recently a gathering of more than 350 entrepreneurs at the ESADE business school in Madrid came up with a summary of 40 proposals that the government should look at implementing for entrepreneurs and start-ups to succeed.

So here is a summary of some of the suggestions along with my suggestions and modifications.

1. With technology parks like Malaga Valley and the governments efforts and activities in centres such as Wayra, Spain needs to look at reducing the Capital Gains tax on company to about 10%, in order to compete or at least match that of Ireland, where many of the technology companies, like Linked, Facebook, Google and the rest have built their hubs. It is amazing the number of Spaniards who actually work in Ireland in these companies. These are talents and wealth that have left the country in search of work and also a possible future.

2. Change of attitude in AEPD. Currently the Data Protection Agency in Spain is imposing fines almost double that of most places in EU and is hindering growth and development, in a sector that must be considered the driving force of the economy.

3. Reduce the Social Security fees for the self employed to €20. In UK these fees start at €12 (10GBP) for a self employed and it is a fee that’s affordable to startup a business and assume an activity. At costs nearing €300, many self employed people are either working black or struggling to make ends meet.

4. Most startups have nothing other than costs, so IVA should be returned back to these companies on a monthly basis to improve their cash flow. Martin Varsavsky also suggests that a startup should not have to pay any IVA for the 1st three years of its business.

5. Improve the tax law and take into consideration lost investments in statrup activities in particular for Business Angels and private investors.

6. Remove payouts and contract termination fees to employees in Startups. A startup that relies solely in investment and is very often not cash flow positive should not have to pay out anything to an employee that needs to be sacked for whatever reason.

7. The government needs to consider the pros of someone having a job as the cons of them being unemployed.

8. Improve proceedings and reduce the costs of such things like opening licenses.

9. Provide a true meaning to a limited liability company. An administrator should not become liable for more than what the company’s limited liability is and the administration should not destroy the ones who have once invested in a company.

Finally I would like to end it by a summary of an article I read on Martin Varsavsky blog, where startups should have to pay nothing towards social security for the first three, years, no VAT or accounting returns and no liabilities for employment and layoffs. If a startup is successful it will produce more work than the average established company. It provides employment and can dedicate its funds to its employees and growth success.

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