Well, I’ve been providing business advice and international tax planning for over ten years. It’s not new. From time to time, Spain is interested in picking a fight with a particular country, I have seen it with Andorra, with Monaco, with Panama, with Belize, with Switzerland and many more.
And after all these years I am still surprised that no one has the courage to lash out at, for example, the United States, wherein many states taxation does not reach 5%, wherein a Delaware building – to name an example – more than 300 Ibex35 subsidiaries are housed. Of course, it is easier to lash out at a small, seemingly vulnerable country than against a giant like America.
My title makes it very clear. The problem here is Spanish fiscal hell, let’s not kid ourselves. Spain has a tax agency with oversized powers that lead to dubious practices in many cases outside the law, officials with terrible objectives, abominable fundraising pressure, minutes with inventions worthy of the worst horror book, a defenselessness for the infinite taxpayer, and a very clear result: More than 50% of AEAT acts are knocked down by the courts. Judge yourselves, do you really want to continue paying taxes and contributing in a country like this? When will Spanish tributes stop paying in fear and begin to seriously defend their rights in court?
I am also surprised by the criticism of certain media outlets with subsidiaries on the Isle of Man or jersey, entrepreneurs with PLC’s in Luxembourg (1% corporation tax), or well-known presenters who have a SICAV with 99 “friends” – friends for her, mariachis for finance – who tax their large incomes at rates below 3%. That is in front of the camera we wrap ourselves in the flag of Spain to bring out a populist argument, devoid of value, demagogue and with very little sense.
Bigger is not better
Perhaps before criticizing someone who decides to move their residence completely legally to, among other things, have a tax saving of 40%, we should analyze what is failing in the Spanish system. It has been shown that countries larger than Spain work perfectly with lower taxation, in some cases less than half of what is paid in Spain.
Therefore, my question is, if a country works with citizens and companies that bear half the tax burden that is endured in Spain and also receive quality services, what is Spain doing wrong? Where is the money? In what or in whom is invested the huge amount of money that comes out of the pocket of citizens and companies in Spain?
Let’s talk about numbers.
In Spain, an employee’s social security costs about 40% of his salary, in Andorra it is 20, in Malta 22, in Gibraltar 19, in Netherlands 15. Spanish taxes are so high than in other countries like Andorra, Estonia… The system works, they have leading health systems and sensational individual pension schemes. Where will the money from Spanish social contributions really stop?
The same goes for VAT or IS. Some taxpayers give in to the state in the form of several taxes about 70% of what they earn. Is that fairer than living in one of the safest countries in the world, in a privileged natural environment, with three free education systems, with a world-renowned health system and where the maximum tax rates are also 10%? Moving to Andorra, it is not a crime, it is not unethical, it is not amoral, it is a wise decision. Andorra has not been a tax haven since 2012, for Spain since 2016.
Changing a country is exceedingly difficult, leaving it can be easier than you think.