Editorial:
An article this week under the BoT 'Court Section' regarding an amnesty back in 2010 for those discovered to have funds stashed in Switzerland, comes from a story in El País. Later in the same report, the paper reveals that just one family, the late banker Emilio Botín, his daughter (the current President of the Banco Santander) and another ten close relatives, had paid off their obligations that year to the tax people to the tune of 200 million euros. No fines and everybody happy. But, how much is that? What proportion of their wealth would it suppose? Would they really miss it, or would it just be a small pin-prick? In the end, the rich these days seem to be stratospheric and far apart from our understanding. They pay less taxes anyway and when they do, it's just money. Two hundred million and what the heck?
Housing:
The London School of Economics runs an article from José García Montalvo titled 'Any hope that a revival of Spain’s housing market could help kick-start the country’s economy is likely to prove misplaced'. He notes that the underlying picture in the real estate sector remains fragile and that in contrast to previous economic crises in Spain, a revival of the housing market is unlikely to offer a route to economic recovery.
Marbella House, in an article titled 'One in every 10 mortgages owes more than the price of the property', says 'The reasons behind this negative situation are unemployment, the economic downturn, the mortgage closing faucet and falling house prices … Housing prices fell 38.5% from their highs in 2007 and could be estimated to drop 8.5% in 2014 and 8% in 2015, although some of the bigger banks think that the market has bottomed out and prices may start to rise this year...'.
Building permits are up, says Property Abroad, noting that '...Much of the appreciation is isolated in the third quarter of 2014 – what appears to be a gradual increase over several months when you first look at the figures is really a sharp upswing in Q3. In August alone, just over 2,000 requests were received for building permits, a 30% increase over the same month in 2013. If the current rate of applications to build new homes continues, the year could end with more than 37,000 permits applied for, slightly above 2013’s total but still below 2012’s...'. Around 16% of sales, says the article, is to foreign clients.
'New Spanish government figures point to gentle housing market recovery', reports Easier, leading with: 'Figures released by the Housing Department within the Ministry of Public Works show that ex-pats living in Spain spent 36% more on property in the first half of the year than they did in the same period last year. According to the same source, foreign residents buying homes in Spain spent a total of €4.2 billion on Spanish property in the first six months, compared to €3.1 billion last year. The majority of this expenditure, 88%, was on resale property, totalling €3.7 billion, up 43% compared to last year. In contrast, investment in new property fell by 2% to €469m...'.
'Spain's investment in social housing is among the lowest in Europe. Rented social housing makes up just 2% of Spain’s residential property market, with the country investing less than 1% of its GDP, according to the Human Rights Watch. In comparison, the UK’s social housing makes up 18% of the market and in France it is 17%...'. From The Olive Press (OP: 200th issue this week: our congratulations!)
From Benidorm we learn that the unfinished 'tallest residential skyscraper in Europe' is in bankruptcy proceedings. Story at El País.
La Voz de Almería says that the Junta de Andalucía has demolished 14 buildings in the province in the last eight years, of which only three belonged to the British (two more British owned homes are due to be demolished on November 18th in Cantoria).
And yet, says the newspaper in a surprised and slightly hurt tone, it is the Brits who are kicking up a stink about this.
Of course, it's everyone's fault except the Junta's, which 'is only following the law'. The story goes that 300,000 illegal homes were built in Andalucía in the first decade of this century...
Which the Junta, the hard-working and honest Junta, the 'we need that in triplicate' Junta...
ahh... never noticed.
The two British owners of the latest homes in Cantoria say they want their money back before the houses are demolished, as the Junta tells them to speak to the builder and in, what, ten years or so the court appeal will take, maybe he'll have had the time to put all of his possessions in the name of his wife!
Really, at 37.5% unemployment (over 70% in the small villages of the interior), how much more damage can the Junta de Andalucía do to its subjects in Almería?
A Facebook posting from Andy (commenting on the two homes to be demolished in Cantoria): 'I worked in a Mojácar estate agent when the Prior's home was demolished (in January 2008) and it had an immediate and long lasting damaging effect on sales and the confidence of buyers or potential buyers looking to purchase a property in Spain. It also therefore affected those with properties for sale who found it more difficult to sell in troubled times. If this goes ahead it will effect not just those immediately involved – again!'
'It has long been established that the British ex-pats favour sun-kissed Spain as the ultimate destination, but a recent study has revealed that the castanets call further afield as Spain ranks as the world’s 7th best. A survey by networking community InterNations has shown Spain to be 7th in the world rankings according to criteria including quality of life, ease of settling in, finance and work-life balance. This is perhaps linked to the Spaniards tradition of the siesta which, according to a report from the Spanish Society of Primary Care Physicians (SEMERGEN), can reduce stress, help cardiovascular functions and improve alertness and memory...'. From The Expat Hub.
'Everything that a UK citizen should know when buying Spanish property' useful article from Money Market.
Tourism:
Two from David Jackson: 'Andalucía has announced a sponsorship deal with Aston Villa (backing a winner there!) The deal is initially for two months (Nov and Dec) but is expected to be renewed for the forthcoming season. Rafael Rodriguez (Andalucian Minister for fun) says it’s given Andalucía free publicity to the tune of €70,000 in the UK and €350.000 worldwide already...' (more here). And 'What most people booking a cheap holiday in the sun don’t seem to realise is that their friendly tour operator back in the UK is actually being bribed to attract them to Spain. In essence, Spain’s many regions compete against one another to underwrite the cost of bringing the turistas out hereby paying a proportion of the cost. So the Junta de Andalucía has just paid Jet2.com €175,000 and BA a further €100,000 to keep flying to Andalucía in 2015...' (found here). Heh!
Finance:
'A spate of major contracts won over the last month in Australia, Brazil and the US has strengthened Spain’s already commanding position in the global infrastructure market. The potentially most interesting development is Ferrovial’s take-over bid for Australia’s Transfield Services, as it is a stepping stone to China...'. William Chislett looks at Spanish civil engineering, construction and infrastructure companies which are winning still more big contracts abroad. (From the elCano Royal Institute).
'The continuing crisis of the Spanish economy has meant that many national carriers have decided to move to Eastern European countries to establish subsidiaries and to hire staff applying their local labour and social laws, which are much less demanding than the Spanish legislation...'. The lorry drivers' website InfoTransport claims that Rumanian drivers are replacing Spanish ones because of cheaper prices, lower taxes, smaller margins and so on. Besides, under European law, it's legal.
Unemployment in Spain in September, by province, according to the EPA (From Classora).
'The Ministry of Industry is sure that home energy-consumption will not be developing in Spain because among other things, owners will have to pay a 'sun-tax' if they are connecting to the electrical network. The Secretary of State for energy, Alberto Nadal, says, with some sarcasm, that "anyone can put solar panels on their roof, no problem for that", first passing by the cash register: since there will be support toll. "The thing is, if you are connected to the general network, that's to say, to the system, then you have to contribute to the cost of the system just like everyone else", said the Secretary of State...'. Found at El Periódico de la Energía. Unless Europe has something sensible to contribute?
Politics:
The Andalucian branch of the UGT union (UGT-A) has broken relations with the Junta, the PSOE and even with Izquierda Unida. According to El Mundo. The union says it feels 'victimised' by the continuing investigations into its affairs (this, after the Junta claimed the return of 15.3 million euros from the UGT-A following 'irregularities').
To call for early elections or to try and weather things out. Mariano Rajoy's dilemma according to this report.
The tone of the articles in El País regarding Podemos seems to have changed, says an opinion piece in Diagonal. The newspaper used to be a beacon of reasonable views and honest reporting, it says, but this is now changing towards a strident Government-controlled rag with little or no credibility. Harsh stuff!
Pedro J Ramírez was the director (and founder 25 years ago) of El Mundo. After some clever footwork from the Government over a coffee at the owner of the newspaper's office (the Italian company Unidad Editorial), Ramírez was 'let go' with a suitable golden handshake and a more pro-Government editor was found to please all parties involved (that, together with extra institutional advertising and some political help in fresh funding for the paper). Ramírez was allowed to write a Sunday editorial until this past weekend, when his column was abruptly 'pulled' and his office requisitioned. Here's the article they didn't like – a sharp criticism of the political inertia shown by Mariano Rajoy.
The Times of London doesn't like Podemos. (article featured here). An El Mundo essayist (surprisingly, and in a cleverly worded article) does (here).
Corruption:
The Luxembourg scandal – where many large companies have quietly set up subsidiary offices, paying very low taxes and, with creative interior billing, manage to pay almost no taxes at all in other countries where they operate – has received a major disclosure recently. The Guardian runs an extensive exposé titled: 'Luxembourg tax files: how the tiny state rubber-stamped tax avoidance on an industrial scale' and Business Insider lists the companies involved here. El Confidencial covers the story for the Spanish readers, saying that over 300 multinationals are involved in the report from the International Consortium of Investigative Journalists which runs to 28,000 pages. All of these companies use one of the 'Big Four' accountants, and just one revealed, PricewaterhouseCoopers, is said to have arranged tax savings of around 700,000 million euros between 2004 and 2010. A quote from the ICIJ exposé: 'Companies have channelled hundreds of billions of dollars through Luxembourg and saved billions of dollars in taxes. Some firms have enjoyed effective tax rates of less than 1 percent on the profits they’ve shuffled into Luxembourg'. The new President of the European Commission, Jean-Claude Juncker, was the Prime Minister of Luxembourg when many of these fiscal advantages were approved by the Government, says El Diario, and, as Infolibre notes, Spain's own Minister of Finance Luis de Guindos was director of the financial division of PwC between 2008 and 2010. We are left with just three more links in this paragraph, the first from Twitter reminds us of the plan to create wealth, jobs and employment reforms from the 'Consejo Empresarial para la Conpetitividad' (mentioned in BoT 88) with the comment 'In other words, the big companies that on Monday asked us to fight against the Black Economy in Spain are the same people who pay 1% in Luxembourg'. The second, Britain's Private Eye returns to the story noting that '...the practice explains why the ratio of foreign investment to GDP in Luxembourg is the highest in the world at 4,700 percent (compared to the UK, itself fairly high, at around 50 percent)'. And lastly, an article about the Spanish presence in Luxembourg from El Diario here.
'Since taking office in late 2011, Rajoy’s government has been embroiled in one sordid political scandal after another. In the latest episode, the Punica Affair, more than 100 politicians have been arrested and charged with varying acts of white collar crime, including taking kick backs from private sector companies. Payment often came in the form of cash-stuffed envelopes although ... it could also include completely free-of-charge construction work on a politicians’ property, luxury holidays, hunting trips and even an intimate evening or two with a high-class prostitute. Most of the politicians involved in the scandal are – or at least were – members of the governing Popular Party. The rest belong – or at least belonged – to the other partner in Spain’s (until now) two-party system, the not-really-socialist-at-all party, the PSOE...'. From Wolf Street.
The Economist editorialises over Spanish corruption, here talking of some of the principals '...Most, like Mr Granados, belong to Mr Rajoy’s centre-right Popular Party (PP). But the main opposition party, the Socialists, faces corruption scandals too. So do the governing coalition in the region of Catalonia and the country’s two largest trade unions, the Unión General de Trabajadores (UGT) and the Comisiones Obreras (CCOO)...'. Corruption at a national level isn't necessarily the first issue, as the magazine notes: '...The real problem, says Fernando Jiménez of Murcia University, is patronage: regulatory agencies and town halls are staffed by political appointees...'.
'The glass is full and water is spilling over the edge. Corruption, as we see all too clearly, has reached the limit. Each and every one of our administrations and institutions of this so-called Democratic State have been affected. What is now called la casta, i.e. the power that runs this country, in other words 'the judicial / financial / political / media' power, has dropped all pretence at discretion and the degree of impunity is scandalous. Indeed, according to all accounts, this country has beaten all records of white collar crime in the Western World. At least until the next elections come around, we will continue to suffer this moral and ethical degradation of a dehumanized leadership'. This is the introduction, at Urbanismo Patas Arriba (a good source for relentless stories of urban corruption), to an article on the media and judicial support for our 'kleptocracy' (Wow!) at Rebelión.
'Princess Cristina could now face trial as tax fraud charges against her have been upheld by the Palma de Mallorca high court. The court has, however, dropped the money-laundering charges that were against her. The charges upheld against the Infanta – the sister of King Felipe VI – relate to business dealings by her husband, Iñaki Urdangarin...'. Found at The Olive Press.
'Massive anti-corruption raids have been carried out across Andalucía, the Canary Islands and Extremadura on Tuesday, resulting in at least 30 arrests. Technicians, senior municipal officials and politicians were among those arrested, to add to the 51 arrested at the end of October. Judge Mercedes Alaya – the standing judge for the ERE trial – demanded the arrests as part of Operation Madeja, which is investigating alleged cash payments for work contracts...'. From The Olive Press. More on this at ABC.
The 'Edu Scandal' – European funded employment courses – are investigations by the police national fraud unit (UDEF) has found cases in seven of Andalucía's eight provinces – indeed, 90% of all employment courses so far denounced have been stripped, apparently by the provincial work delegations. Story at Andaluces.es.
The President of Exremadura is José Antonio Monago (PP), who has been found to have visited his girlfriend in the Canary Islands some 32 times between May 2009 and November 2010, at a cost to the Public Purse of some 10,000 euros. Monago initially said that he went to meet with senior Canary politicians (who all agreed that they never saw him once), but later said he would pay back the money involved. El Mundo introduces us to the Columbian girlfriend, a model called Olga María Henao, who says that she went out with Monago for two and a half years. The story has another twist, as a second boyfriend of Ms Henao has now been revealed: Carlos Muñoz, a deputy for the PP in Teruel, also cadging free flights from the Public Purse to see his girlfriend. Sr Muñoz has since resigned from public office.
Some humour from Rokambol: 'Extremadura President Monago met with over seventy Canarian parliamentarians in the bedroom of his girlfriend in Tenerife: the PP insists that the many visits were work-related'...
A childhood friend of Francisco Granados has been accused of a central role in a ‘bid-rigging’ scandal following a massive anti-corruption crackdown. Builder David Marjaliza was linked to Granados when large transfers between their Swiss bank accounts aroused suspicion of ‘aggravated’ money-laundering. Francisco Granados, former number two in Madrid’s PP under Esperanza Aguirre, has been arrested after February’s revelation that he held a Swiss bank account containing €1.5 million. Found at The Olive Press.
The FROB is now under investigation for apparently destroying material to do with the Caja de Ahorros del Mediterranéo, the now defunct CAM.
Around a hundred false companies, from Madrid, Valencia, Alicante and Murcia, have been discovered by the police to have defrauded Social Security of some 10.6 million euros. 612 people have been arrested.
From David Jackson comes a familiar tale: 'A senior official in the Seville Social Security office is on trial for continuing to accept his Mothers pension for 19 years after she passed away. Mum died in 1992, but R.A.S.M., ex-head of Social Security Administration number 1 in Seville continued to forge her pension on the yearly form. She was receiving two pensions, an OAP state pension and a widow's pension from the military. The son apparently pocketed 137,582€ over the last two decades...'.
...and then there's a fascinating form of crookery in the 'números tóxicos' the toxic phone numbers that charge totally absurd prices. They are all five digit numbers – there's a list of them here. Why are they legal?
Catalonia:
The Catalonian straw poll this weekend: Well, it was all a complete farce according to the Government and a total victory according to the Catalonian President Artur Mas (81% voted 'yes' to an independent state in the non-binding referendum or 'public consult'). At least, the process was peaceful. 2,237,000 people voted on the two questions 'Would you like Catalonia to be a State?', and, if answering 'yes', then 'Would you like it to be an Independent State?' (81% voted 'yes' to both questions, 10% voted 'yes' to the first, 'no' to the second and just 4.5% voted against Catalonia changing its current status).
The British Prime Minister David Cameron blithely showed his support for a 'united Spain', according to El Mundo, perhaps anxious to put a favourable spin on things.
'A day after Catalonia held its informal vote on self-rule, regional leaders said they would use the positive results to try to convince not just Madrid but also the rest of the world about the need for a new, more official referendum on independence. “There is a battle to win, which is the international battle, the battle of the states,” said Catalan government spokesman Francesc Homs on Monday morning...'. From El País in English.
The Catalonian president is currently in conversations with other party leaders in the region to consider calling early elections as a plebiscite over independence. More at El País.
Tax
'...Perhaps the most chilling aspect of Finance Minister Montoro’s pending fiscal reform package is the “deemed disposition” part, called an “exit tax” imposed on assets if and when one ceases to be a fiscal resident of Spain. That is all assets, held in Spain and outside (read asset declaration reports) are then considered to be subject to capital gains tax, with an impossibly complex way of calculating just exactly what are such gains. One would be forced to declare market value of all assets, shares, trusts, property, art, antiques, etc. versus the values at the time of acquisition (does this extend to shares, etc. acquired before becoming a fiscal resident? - look for the fine print when it emerges. Apparently, it has to go back to the original date - maybe years before one came to Spain). It seems there isn’t any threshold, such as with the wealth tax, so that someone having quite modest assets anywhere would be hit with the CGT Exit tax. If someone leaves without selling their property they could be stuck with paying the equivalent of CGT as though the property had been sold. Maybe again when it is...'. (From a correspondent, based on information from LexTax Consulting).
Preliminary notes from the Petitions Committee session in Brussels (Nov 11) regarding the unfair Spanish worldwide asset declaration, from an observer: 'In short from the perspective of those concerned about the AD exercise it went very well. The Petition will be kept open, the Commission is engaging with the Spanish authorities, and this will continue, also seeking further information from those who complained. The Swedish Chairperson was very able and sympathetic. The two principal interventions on the side of the petitioners’ cause were Alejandro del Campo, a lawyer and tax consultant from Mallorca and Anthony Valcke of the ECAS - European Citizens’ Advice Centre - who mentioned AUN's role in taking the matter to the EU Parliament and Commission. Russell Thomson, former British Consul for Valencia, was inscribed to speak but thanks to some glitch was stuck outside in the cold, awaiting a pass and escort until after the committee had completed its consideration of the issue.
Jacqui Cotterill, the Deputy-mayor of Parcent (Alicante), present for another petition, also spoke briefly on the issue expressing her support and concern about the effects of the AD exercise which was causing great distress in the ex-pat community to the extent that many are now looking to leave Spain, or at least cease being fiscal residents.
The MEPs who supported the discussion agreed there was discrimination and probably a degree of violation of citizens’ rights and several EU norms. The Spanish MEP’s, who seem to have been briefed by some team from Madrid, essentially took the opposite line, but pointed out that Spain would cooperate with the Commission in its ongoing probe'.
'The Spanish Government has finally agreed to soften the blow, in the new tax reforms, on second hand home sales. An amendment to the draft Income Tax bill has been filed in order to mitigate the effect of deleting the adjustment coefficient – a leeway to limiting the big capital gains of the 80s – and the monetary correction indices – which take into account revaluation due to inflation – on capital gains obtained on the sale of homes purchased before December 1994...'. From Kyero.
Courts
A judge has made a formal complaint against Hacienda for granting an amnesty towards tax-dodgers. The instructions to give a 'second chance' came from the Zapatero Government in 2010 which had just been presented with a document from the Monegasque whistle-blower Hervé Falciani revealing 659 major Spanish fortunes which were 'evading their fiscal responsibilities' over in a bank in Switzerland. They were thus able to pay off their taxes and to receive absolution from the Tax-Authority. The story at El País.
Essay:
From We Can (Podemos) to Let’s Win (Ganemos)
José Luis Cano
I dare say that most of the foreign community resident in Spain will have paid little attention to the political turmoil that is taking place at this minute in the country that they have chosen to live in. Nonetheless I would advise the average ex-pat to occasionally divert their attention from their Sunday roast and inform themselves of how the political horizon in this country is likely –by all accounts – to experience a radical change in the near future. So allow me to illustrate, to the best of my ability, what is happening in the battlefield of Spanish politics.
Less than 10 months ago the name Pablo Iglesias meant little or nothing to most people, even Spaniards, who might have thought more of the name belonging to the forefather of the socialist movement in Spain instead of the pony tailed professor of Political Science who has taken Spanish politics by storm. Indeed, Podemos (We Can) was only constituted as a political party in January of this year and four months later it obtained five seats in the European Parliamentary Elections, and Pablo Iglesias seems to be the driving force behind this group of academics who are promising the Spanish people that politics can be different. Since their triumphal arrival Podemos has gone from strength to mesmerizing strength and in a C.I.S (Sociological Investigation Centre) poll carried out only last week Podemos appears as the party that would win a general election if it took place at this moment.
Political pundits are in a spin and the main parties P.P. (Partido Popular) and P.S.O.E. (Partido Socialista Obrero Español) are pouring all their fear laden venom upon the ill attired leader of Podemos.
So, bearing in mind their meteoric rise in the political arena, in a country thoroughly fed up with the corruption and the inability of the main parties to find solutions to the many problems found in Spanish society, Podemos have made what could be considered a cautious decision not to concur to the forthcoming local elections in May of next year. It would be dangerous for the new party, after their recent success, to jeopardize their brand if they didn’t get a similar success at local level: in comes Ganemos.
Although the support that Pablo Iglesias has obtained seems to come from all aspects of the political spectrum, Podemos is mainly nurtured by left wing voters who are most affected by current unemployment and the economic crisis. Parties such as Izquierda Unida (United Left) have lost a great deal of their voters who have found that Podemos best represent their interests. It is among this segment of society that Ganemos (Let’s Win) has sprung from with the prospect of organizing themselves under the umbrella of the Podemos philosophy to concur to the local elections of 2015.
Ganemos seems to be a disorganized organization which will operate in isolated cells which will have no connection with any other cell; that is to say that Ganemos in Mojacar - if it exists - will have no connection with any other Ganemos in any other village or town in Spain apart from their similarity in political views and ethics.
Can Ganemos win as their name implies? Well, only future events can answer that and I for one will watch with interest and baited breath.
Various:
How much of your wage goes to taxes? A comparison of all countries (for average wages).
Another artist, this time a photographer called Colita, has now refused to accept the National Prize for Photography (worth 30,000 euros) because of the Government's politics. She says in a letter to the Minister 'I don't fancy appearing in a photo with you, Sr Wert'.
A bleak and powerful song about Spain today, subtitles in English: 'España de mi Infancia'.
'A lack of funds for staff has left Spain with five new prisons, built at a cost of over €1.1 billion standing empty, including the world's largest vacant prison near Málaga which features a solar heating plant and a football pitch. Spain's economic crisis has left the country with unused airports and empty motorways, built to handle traffic which never came. Now a similar situation has been revealed in its prison system: five new prisons plus 26 units in existing facilities stand empty apart from the occasional security guard patrolling the fences...'. From The Local.
A small hamlet, a pedanía of Almodóvar del Campo (Ciudad Real), was isolated – no one in or out – this past Saturday to allow a private hunt to take place. Residents of the settlement, Minas del Horcajo, were obliged to stay indoors (even the celebration of a silver wedding was summarily cancelled) as both private security and agents from the Guardia Civil patrolled the area. Ciudad Real is a bucolic province famous for its hunting activities...
'How to Apply for Healthcare in Spain' – an article from Raymundo Larraín Nesbitt at Spanish Property Insight.
Found at The Daily Mash: 'EU threatens to send expatriate grandparents home' (Humour).
'The palace-fortress of Monterrey (O castello de Monterrei) sits in a commanding position on the outskirts of the city of Verín in the province of Ourense. During the Middle Ages, the castle was of major strategic importance due to its close proximity to the Portuguese border...'. Found at Journey to a Dream.
A fantastic virtual walking-tour of the Alhambra. Here.
Simon Harris, the Catalan writer from Nottingham. From Spanish Eyes, English Words.
Letters
Dear Lenox,
Just a small correction. Javier Marías, whom you describe as a musician, is a novelist. I attended a public interview with him in Madrid, at which he said he would have accepted the Nobel for Literature (which he may well get someday), because it wouldn't have been awarded by the present Spanish Government. By the way, let me strongly recommend his new novel "Así empieza lo malo".
Best Wishes, Bill
Finally:
Gerardo Núñez, great jazz flamenco guitarist. Here he performs 'Chicken Dog'.
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