Spanish economy contracts in Q1

The Bank of Spain has today confirmed that Spain is technically in a recession after the economy shrank by 0.4% in the first quarter of 2012, further evidence that the downturn is continuing in Spain.

Following a decline of 0.3% in the fourth quarter of 2011 a second consecutive month of economic contraction is technically a recession.

The government already knew this as they have said the economy is still shrinking and predict it will shrinnk by a futher 1.7% this year.

To try and slow the contraction they have approved labor market reforms, new banking regulations and employment law but still Mariano Rajoy’s government are warning Spain to prepare for a rough patch as things are likely to get worse before they get better. Worse than 24% unemployment? Worse than 50%+ youth unemployment? Worse than 50 billion euros of cuts? Maybe it’s time to leave Spain.

The figures released by the central bank are preliminary figures with the official GDP results due to be released by the National Statistics Institute later this month. I will of course bring you details.


Argentina and Iran – A Spanish Oil Crisis

Could Spain run out of oil?
Could Spain run out of oil?

Argentinian president Cristina Kirchner has not only seized 51% of oil giant YPF, she has also sacked the Spanish directors who were posted at the company’s headquarters in Buenos Aires.

The Argentinian government now owns 51% of the oil company for “the good of Argentina”.

On Sunday Spain’s foreign minister called on European leaders to enact concrete sanctions against Argentina to try and push the country into fully compensating Repsol for the loss of 51% of the company, worth around 10 billion euros.

To make matters worse Iran has stopped all exports of crude oil to Spain in anticipation of EU embargoes, despite the fact that Spain is not backing the EU sanctions being discussed.

There are no embargoes in place yet but the EU is likely to bring a ban imports from Iran into place on July 1 as an attempt to force the Iranian government to abandon it’s alleged development of nuclear weapons.

Iran supplies up to 80% of Spain’s oil and this action is very likely to dramatically increase the cost of a litre of petrol across Spain.

“Spain is badly hit because we used to import a lot of Iranian oil,” said a foreign ministry spokesman.

However Iranian president Mahmoud Ahmadinejad has insisted his country can survive for up to three years without selling any of its oil.

Spaniards have already seen a big increase in the cost of fuel over recent years with a litre of unleaded now costing around 1.48 euros. If fuel costs rise much more it will be beyond the reach of many Spaniards who are already struggling with rising unemployment and rising costs.

Incidentally, when I arrived in Spain eight years ago a litre of unleaded was around 0.76 euros, meaning it has almost doubled since 2004.

Spain hoping to avoid Greek style bailout

Mariano Rajoy’s conservative government will be meeting today to discuss, and approve, an extra 10 billion euros of spending cuts and increased charges in health and education as part of his austerity drive and an attempt to convince investors that Spain does not need a Greek style bailout.

“The fundamental objective at the moment is to reduce the deficit,” Rajoy said in Madrid this week.

“If we don’t achieve this, the rest won’t matter: we won’t be able to fund our debt, we won’t be able to meet our commitments.”

Rajoy said his government is committed to making cuts and reforms to ensure the Spanish economy becomes stable and  productive. “We need this process of adjustments in order to grow and create jobs,” he said.

Despite a high demand for long-term bonds at auction earlier this week, the country’s economy is still struggling to get moving following the crash of 2007.

With the highest public debt Spain has ever seen and the highest unemployment in Europe, Rajoy’s government have already introduced 50 billion euros of austerity cuts across the country which has resulted in protests from unions and the public.

With many Spaniards already doubting that the country can bounce back Rajoy’s announcement may be seen as a threat to encourage the people of Spain to accept the new cuts as a necessary evil that may be the only choice Spain has left.

“No one can expect such deeply rooted issues to be resolved in a few weeks,” Rajoy said.

Rubbish Tax for Nerja residents

Residents of Nerja are understandably unhappy at the prospect of a three euro per month “rubbish tax”.

Under the new plan, residents will be charged an extra fee to collect their rubbish as the town hall is broke, with debts of 4.8 million euros.

The fee is set to be introduced from 2013 as the town hall aims to reduce it’s debts, hoping that the fee will raise over half a million euros annually.

Finance councillor Antonio Villaclaras justified the charge saying he had “no choice”, and pointed out that the charge was substantially lower than some other town halls in the Axarquia are charging.

Opposition parties have criticised the move, saying Mayor Jose Albert Armijo has broken his election promises.

They say that he undertook to freeze taxes and rates.

Original article at The Olive Press

Living On The Coast Exhibition

living on the coast show
Click to view larger

Have you ever wondered what it’s like to live here on the Costa del Sol? Is it really all sun, sea, sand and sangria?

Now you can find out by visiting the “Living On the Coast” lifestyle show, taking place in Marbella from Friday 27th to Sunday 29th April, at the Palacios de Congresos (Marbella Conference Centre).

The event has been created by the organisers of the highly successful Over 50’s show, which is also held on the Costa del Sol each year.

To ensure the event appeals to the widest possible audience the event will host activities ranging from gardening and pastimes, to wine tasting and cooking demonstrations.

Visitors will be able to get financial advice, property advice for buyers and sellers and advice on health and wellbeing on the coast. The exhibition is also designed to encourage business to business opportunities.

There will also be live musical entertainment from Tres Divos.

Living on the Coast will feature an attractive mix of displays, presentations and demonstrations all geared to maximise interest in the Costa del Sol.

You can find out more information from the organisers here: Living On The Coast

Costa del Sol still popular with Expats

malaga airport
More arrivals than departures

During 2011 reports say more EU citizens moved to the Costa del Sol than left it.

Despite many reports that there had been a mass exodus of expats from the region official figures prove this is not the case.

Many people did leave the region last year; 1,820 EU citizens and 5,250 South Americans left the country in 2011.

However, 8,445 EU citizens relocated to the Málaga province, as well as 2,495 from South America and 2,873 from Africa – a total of 13,813 new expats deciding to make their home on the Costa del Sol.

According to the Instituto Nacional Estadisticas (INE) of the total departures from the region only 2,414 were Spanish.

So while almost 13,000 people left the region, over 13,000 arrived ensuring the number of expats in the region remained reasonable stable, and rubbishing reports of mass departures.

Málaga at Number 1 for the British

Málaga has been a popular destination for British tourists for as long as I can remember and this year seems to be no different.

Online flight provider SkyScanner reports that Málaga is at number one for the number of flight searches from the UK for 2012 summer flights.

This is a rise of one place from last year when New York (now in ninth position) topped the chart.

Málaga isn’t the only Spanish city proving popular again this year. Despite Faro in Portugal coming in second place, Spain dominates the top seven with Alicante at number three, followed by Palma de Mallorca in fourth. Tenerife, Ibiza and Barcelona complete the top seven.

Over the last three years Spain has consistently topped SkyScanners chart of popular searhes. In 2011 Málaga maintained it’s position as the most searched for city from the UK.

This comes as experts predict an increase in airport charges will damage tourist numbers in Spain this year.

Spain in the news

There isn’t much going on in the property market at the moment. Most of the news seems to revolve around the budget and unemployment so I thought today I would give you a quick overview of the main stories across Spain.

Argentina seizes control of YPF

Cristina Fernandez
Argentinian President Cristina Fernandez

Argentine President Cristina Fernandez says she will “fulfil a life-long dream” to solve her country’s energy shortage by seizing control of YPF, Argentina’s biggest oil company, which also happens to be a subsidiary of Spain’s Repsol.

The oil giant is reported to be worth over 18 billion euros, with Repsols 57% share being valued at over 10 billion, a figure which Madrid will be looking to recuperate in compensation for the seizure. Under the seizure plans Repsol would be left with only 6% of the company.

Spain has threatened action against Argentina for nationalising the Spanish energy firm, but Argentina is already shut out of world debt markets and has repeatedly ignored international fines on previous occasions which makes it seem unlikely that Madrid will be satisfied with the outcome.

Spain tests markets with 10 year bonds

Spain is likely to pay dearly for it’s longer-term debt today as it auctions a 10-year bond for only the second time this year to markets already nervous that Spain will miss deficit targets and fail to restart growth.

The 10-year bond rose above 6 percent on Monday for the first time in five months, increasing concern that it could soon become unsustainable for the government to refinance itself.

Spain aims to raise 2.5 billion euros from the sale of bonds and with this relatively small auction demand is likely to be high.

King says sorry for hunting trip

King Juan Carlos says sorry
King Juan Carlos says sorry

Spain’s King Juan Carlos has made an unprecedented apology for taking his luxury hunting trip to shoot elephants while his country wallows in economic crisis comes.

“I am very sorry. I made a mistake and it won’t happen again,” the monarch told television reporters as he left hospital following an operation to repair his hip which he damaged during the hunting trip.

The monarch is also the honorary president of the Spanish arm of the WWF (World Wildlife Fund) and while the king was apologising, members of the group were deciding whether to remove him from the post. Hunting elephants for fun hardly fits the WWF ethos and many other animal rights groups also demanded his resignation from the post.

Increase in airport charges threatens tourism

Increased airport charges threaten Spanish tourism, a market on which many parts of the country depend.

The Alliance for Tourism Excellence, Exceltur, say that the “disproportionate” increase in charges could lead to the loss of up to 2.87 million Spanish and foreign tourists across the country’s airports.

The Association, which includes companies such as El Corte Ingles, Iberia, Amadeus and Barceló, estimates the loss of income could be as much as €1,636 million a year.

As most of the airlines have already seen increased oil prices chew into their profit margins this increase is likely to translate to increased ticket prices for travellers.

El Mundo reported that as operating costs for airlines are cheaper in other “attractive” destinations many operators, and tourists, will instead visit Turkey, Egypt, Morocco or Greece, places where the “sun and sea” holiday is also available.

Wealth and Income Tax in Spain – 2012

As you may know, every year any non-resident owning property in Spain is obligated to submit a Property Imputed Income Tax declaration and now, after being reintroduced, the Property Wealth Tax.

Perez Legal Group can assist you in this obligation by providing you with the Fiscal Representation Service, consisting on the following:

  • Calculating the tax due on the basis of the ratable value and the number of days of ownership (if you bought or sold last year), ensuring you do not pay more than strictly required.
  • Filling out the forms with your personal and property information.
  • Submitting to the tax office our appointment as your fiscal representatives in Spain, thereby assuming the responsibility of receiving any formal communication and acting timely upon them.
  • Representing you during the fiscal year in respect of any communications which we may receive from the Tax Office.

We are happy to announce that our fee for this year has been reduced considerably for we are now charging a fee of €95 plus VAT.

In order for us to calculate the total tax liability, we would need to know the following for your properties:

  • Ratable Value on the last IBI receipt. This is shown on the IBI (Impuesto de Bienes Inmuebles-Council Tax) receipt under the name of “valor catastral” and we require this from you, should you have it, given that this bill is typically paid via bank standing order. Please note that new properties (less than 2 years) might not have a ratable value assigned yet.
  • In case you rented, number of total days you have rented out the property (if applicable and only if such rental has been declared, an unlikely scenario, in our experience).

First of all, we would need to know if you or any of the people who purchased jointly with you (where applicable) were Spanish residents or not. In such cases, these people would not be liable.

Also, for every non-resident tax-payer we would need to know the full details of any other properties they might own in Spain which we are unaware of, together with the ratable value and the number of days the property has been rented (where applicable).

Upon receiving this information we will let you know the total tax liability for the tax payers. If you don’t have the last council tax receipt but you have a one corresponding to a previous year we can still obtain the updated ratable value. If you don’t have one at all we will get it for you.

In case you are resident, we will be able to prepare your Income Tax Declaration at the fee of 80 Euros plus VAT. This should be filed before the 30th of May 2012.

PLEASE NOTE THE FOLLOWING: You should know that until now, if a debt were contracted with the Treasury in Spain by a Spanish foreigner, the Spanish Tax Authorities had to meet many issues before they could act against foreigners residing outside of Spain.

However, a ministerial order of July 31, 2010 has set out within European territory that any foreign debt will allow the Ministry of Finance, electronically, to make reports of foreclosures and repossessions of property situated in other states of the European Union in order to meet debts incurred in Spain.

The European Union tax system agreed that the Tax Authorities will facilitate information and will report about the state of any debtor and guarantors of a debt in order to make feasible the placement of an embargo on Spanish properties or properties located in England and other European Union country, taking the necessary legal measures to ensure these debts are paid against the property, Bank accounts will also be considered.

This procedure will not be used to satisfy all different types of debts but those contracted with the IRS for non-payment of Value Added Tax (VAT), Income Tax of Individuals (income tax), Wealth Tax and other excise duties.

To facilitate this process, the Ministry of Finance will have the cooperation of other agencies such as the Labor Inspectorate and the General Treasury of Social Security (TGSS), guaranteeing the confidentiality and security of citizen data information.

For more information or for assistance with your tax declaration contact Perez Legal Group using the details below.

Perez Legal Group

Tel: +34 952 833 169

Increase in number of new businesses

INEThe number of new companies created in Spain rose 3.2% during February, compared to the same month in 2011, according to figures released by the Instituto Nacional Estadística (INE).

However, the number of companies dissolved increased by 10.9%.

8,214 mercantile companies were created in February, 3.2% more than in the same month of 2011, and 3.3% more than in January 2012. The capital subscribed for their constitution exceeded 551 million euros, 87.6% more than in February the previous year. The average capital subscribed (67,130 euros) registered an interannual increase of 81.8%.

On the other hand, 3,892 mercantile companies increased their capital in February, 12.9% more than in the same month of 2011. The capital subscribed in the increases registered an interannual increase of 9.1%, and exceeded 4,531 million euros. The average capital subscribed in these transactions (1,164,304 euros) recorded a decrease of 3.4%.

The number of companies dissolved in February was 2,245, indicating an interannual increase of 10.9%. Of these, 76.9% did so voluntarily, 7.9% due to mergers and the remaining 15.2% for other reasons.

Results by type of company

26.8% of the mercantile companies created in the month of February corresponded to Construction and property development and 19.2% to Trade.

Out of the total mercantile companies created in the month of February, 99.5% were private limited companies and 0.5% were public limited companies. Out of the total companies that increased their capital, 91.1% were private limited companies and 8.9% were public limited companies.

95.0% of the capital registered by the mercantile companies created was subscribed by private limited companies, and 5.0% by public limited companies. Regarding the capital subscribed in capital increases, 54.6% corresponded to private limited companies, and 45.4% to public limited companies.

The interannual rate of the number of public limited companies decreased 21.4% in February. In turn, the rate of private limited companies increased 3.4%. Considering the companies that increased their capital, the number of public limited companies registered an interannual increase of 9.5%, and private limited companies increased 13.5%.

The capital subscribed by the public limited companies created increased 6.0%, while the capital subscribed by private limited companies increased 95.5%. As per the capital subscribed by the companies increasing their capital, the interannual rate for public limited companies increased 15.6%, and the rate for private limited companies 4.2%.

Results by Autonomous City and Community

Comunidad de Madrid presented the greatest average capital subscribed by the mercantile companies created in February, with 114,808 euros. In turn, La Rioja registered the least average capital subscribed (8,256 euros).

Cantabria recorded the greatest average capital subscribed by companies increasing their capital (2,788,711 euros), while La Rioja recorded the least average capital subscribed (242,286 euros).

Out of the total capital subscribed in the creation of mercantile companies during the month of February, Comunidad de Madrid accounted for the highest percentage (35.2%), while La Rioja recorded the lowest percentage (with 0.1%).

Regarding the total capital subscribed by the mercantile companies increasing their capital, Comunidad de Madrid registered the highest percentage (32.6%), while La Rioja recorded the lowest (0.1%).

The full press release can be downloaded from INE here: Mercantile Companies Statistics – February 2012.