Saturday, November 14, 2009

Working Freelance in Spain

Expatica ran an article at the end of last year on how to become autónomo or freelance in Spain and I couldn't help but start laughing at the line: "The procedure of going freelance is fuss-free as you can be registered as self-employed within one day." Have they actually ever done it? Leaving aside that fuss-free is not generally a term I'd use to describe the Spanish bureaucracy the process of becoming freelance is particularly famous here for what a pain it is to do.

This is the cover for the form known as "Modelo 036." Actually, it's more like a book, spanning nine pages of small print written in Spanish legalese that leaves even native speakers confused and consulting a lawyer. Not only must you fill it out completely and legibly in blue, not black, ink, but you must also go to three different offices which are conveniently located on opposite sides of the city. Considering they all open at nine and close at 14.00 Mon - Fri, completing this task with one fell swoop would require super human speed of the Flash and no lines which is about as likely to happen as snow in August.

As anyone who has had dealings with Spanish civil servants can tell you, dealing with a funcionario as their known, is a test of patience of biblical proportions. Notorious for their mala leche (bad milk or surly mood) and the law of falta uno (one thing missing) your first visit will probably end with you being sent home after waiting in a long line for some reason that makes no sense. The best advice I could give is to think of it as a way to practice zen and take at least two copies of every form you've collected during your stay here, a stuffed coin purse for any unexpected fees or copies, and still plan on coming home at least once during the process with your head shaking in frustration. 

The end result of this process is the social security department deducts either 280 a month or 840 a quarter from your bank account regardless of how much you earn and in return, you get access to the national health care system and some protection in case of a work place accident, but no unemployment benefits or paid vacation and a reduced pension whenever the Spanish government finally decides on a retirement age.

So is it worth it? Given the fact that private medical insurance costs around seventy euros a month, maybe closer to a hundred with dental, objectively and economically speaking, probably not. Not too long ago, the systems that monitored social security taxes (the ones you paid as an autónomo) and the income tax (deducted by the company that hired you) weren't connected, so you could get away with paying the latter while avoiding the former. But you face the risk of one day having the Spanish authorities come after you nowadays, especially since the arrival of the crisis, so it's best to do it despite it not making economic sense.

On the plus side, working freelance generally means you can charge higher hourly rates than what  contracted worker would get. With the help of a good accountant, you can write off some purchases like meals and travel cards as business expenses, getting some money back at tax time. Best of all, you are the boss and have more control of your destiny and time table. One of the common complaints of contracted workers I hear is that they often have to work their specified hours, whether busy or not, and also sometimes more depending on the work load or if their boss feels like going home to screaming kids and a nagging wife or not.

On the negative side, many freelance friends of mine who have small business have commented on the difficulty getting clients to pay for services rendered.  This was always a problem in the best of economic times, but has become particularly noticeable and more frequent with the economic downturn. The judicial process for redress is complex and expensive it seems. Meanwhile, there doesn't aren't many credit agencies that will buy off debt and seek to collect. But I have to admit my knowledge on this subject is tangential so feel free to correct or expand in the comments section.

I recently read in the Spanish press that the government is looking to fix some of the flaws with the autónomo system like offering unemployment benefits. I hope so because more and more people I know are becoming freelance given the current job market. Also, as I mentioned before, it's increasingly how companies are hiring in Barcelona since they avoid paying any of the social security taxes or severance pay.

1 comment:

  1. If you enjoy stories about this spanish big problem :) you just can't avoid reading "Vuelva usted mañana" from Jose Larra:

    It was written in the 19th century and you can perfectly see this country hasn't changed at all. Also, very recommended reading. Larra is one of the greatest writters we had and he was very young. He actually died at the age of 30 or something like that. It is amazing the insight he had being so young. There are plenty of Essays from him about the country and the people. All very acid, sarcastic and full of criticism