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Business Over Tapas (01st March14)

By Lenox Napier and Andrew Brociner

miércoles 22 de octubre de 2014, 11:21h

A digest of this week's Spanish financial, political and social news aimed primarily at Foreign Property Owners: with Lenox Napier and Andrew Brociner - For subscriptions and other information about this site, go to businessovertapas.com - email:  [email protected]  

Note: Underlined words or phrases are links to the Internet. Right click and press 'Control' on your keyboard to access.

Editorial:

Friday, February 28th, is the Día de Andalucía. Spain's largest and poorest region, run by the PSOE (into the ground, some might say) since the autonomy was created out of eight provinces following a referendum back in 1980. (with an unsuccessful vote against from the Almerians). Now, in the steps of Felipe Gonzalez, a new saviour is rising from the dry earth. The youthful (if unelected) leader of the Junta de Andalucía is Susana Díaz. She could become the great hope of the PSOE when Alfredo Pérez Rubalcaba finally falls on his sword. Meanwhile, down in Andalucía, we all take another day off...

Housing:

Homes for sale in Andalucía with up to 75% off their marked price. That's the story over at Expansión!

'A businesswoman from Shanghai who spent €520,000 on flats in Barcelona and Madrid has become one of the first Chinese nationals to get a Spanish residency via the new “Golden Visa” law that offers Spanish residency permits to non-EU nationals in return for real estate investments of €500,000 or more...  (The woman got) in touch with a firm of solicitors in Spain for conveyancing and residency services. These lawyers expect “more than 100 operations of this kind in 2014, with a total value in excess of 50 million Euros,” according to statements to the Spanish press...'. From Mark Stücklin's Spanish Property Insight.

The British Embassy's Facebook page 'Brits Living in Spain', says that 'Latest stats show that Brits bought 5,204 properties in Spain during 2013 – up by 26% on 2012'. The most popular areas were Andalucía 32%, Valencia 29%, Canary Isles 14% and Murcia at 13%. 

'The hundreds of thousands of empty homes across Madrid has spawned a black market for cheap housing in which groups illegally break into, and then let, repossessed properties.

Almost all the cases involving the properties, most of which now belong to Spanish banks, are identical, said Vicente Pérez, from a residents group, the Federación Regional de Asociaciones de Vecinos de Madrid: "Somebody goes and kicks in the door. Once he's in, the others come – and they sell the place."

While prices vary greatly, it generally costs from €1,000 (£830) to €2,000 to "buy" a repossessed property...' From The Guardian.

'With the majority of tourist rentals failing to comply with regulations, regional authorities are reported to be going after illegal tourist rentals in greater numbers, and now require all owners to include their registration number in all adverts. The Generalitat, Catalonia’s regional government, has started proceedings against the owners of 1,362 properties rented out to tourists, and carried out 3,739 inspections, say press reports. Fines on illegal rentals go from 3,000 to 30,000 Euros.

In 2013, the number of tourist rentals registered with the authorities amounted to 150,000 beds, up from just 27,000 at the start of the year. The Generalitat is working on a “real and effective” audit reported to be “pioneering” in Spain. Last year they registered 25,691 tourist-use homes, and 205 tourist apartment complexes...'. From Mark Stücklin's Spanish Property Insight.

'As we have mentioned on numerous occasions, Spanish banks have been left with an array of troubled property loans after many mortgage holders defaulted on their payments and effectively gave up their properties. There are literally thousands of empty homes across Spain although there is a worrying trend in black market trade in Spanish homes. This is something which could be replicated across other troubled European countries and is now headline news in some areas of Spain...'. Article at Property Forum.

Finance:

From El País in English: 'Spanish exports hit record levels last year, which helped reduce the trade deficit to its lowest recorded level, the government said Friday.

Overseas shipments in 2013 climbed 5.2 percent from a year earlier to 234.239 billion euros, the highest level since records began in 1971, the secretary of state for trade, Jaime García-Legaz, told a news conference. Imports declined 1.3 percent to 250.195 billion euros as domestic demand remained weak. As a result, the trade deficit narrowed 48.1 percent to 15.955 billion euros...'.

'Moody's credit rating agency has taken the step that the Government was hoping for, to consolidate the improvement of the risk premium. It has announced that it has adjusted the Spanish rating from Baa3 to Baa2 which relieves Spanish bond issues and gives a boost to the country's markets...'. From El Mundo.

'...Spain owed 961,555 million euros at the end of 2013, between Treasury Bills, loans and other liabilities. This works out as 94% of the country's GDP, the highest level in the past 100 years, almost a billion euros ('a trillion' in English parlance). The volume of liabilities has doubled with the crisis. In the past two years, it has sky-rocketed in 230,000 million: about 24% of GDP...'. The chilling figures mentioned here are part of an article in Sunday's El País, which asks – who do we owe this money to?

'Jaime Echegoyen, the former head of Barclays Plc’s retail banking unit in Spain, is being proposed as chief executive officer of Sareb, the nation’s bad bank.

Sareb chairwoman Belén Romana is putting Echegoyen forward for the post amid a reorganization to improve portfolio management and adapt to market changes, it said in a statement. It’s the first time a CEO has been appointed and follows the resignation of Walter de Luna as director general last month...'. From Bloomberg.

'...Bad loans as a proportion of total lending in Spain rose to a record 13.6 percent in December, compared with 13.1 percent in November as companies and consumers kept missing payments in an economy that’s still not growing fast enough to create new jobs...'. Same source as above.

'The European Commission has said economic recovery is "gaining ground" in the EU as it revised up its growth forecasts for 2014 and 2015. The Commission said the 18-nation euro-zone would grow by 1.2% this year and 1.8% next year. In both cases, the figure was 0.1 percentage points higher than in earlier predictions...'. From the BBC.  Meanwhile, El País in English, focusing on Spain, says: 'The Spanish economy will grow 1.0 percent this year, with growth accelerating to 1.7 percent in 2015, according to the European Commission’s winter forecasts released Tuesday. The growth forecast for 2014 is twice as much as Brussels had previously estimated, and improves on both the International Monetary Fund and the Spanish government’s own predictions, which are for growth of 1.0 percent this year and 1.5 percent next year, as revealed on Tuesday by Prime Minister Mariano Rajoy...'.

Corruption:

The Gürtel/Bárcenas case explained, with The Olive Press: 'An overwhelming two out of three Spaniards believe political corruption affects their daily lives, the highest such figure in Europe, according to a recent survey by the EU commission.

Some 95% believe corruption in Spain is institutionalised and 77% believe it has got worse over the last three years. It is little wonder considering both leading political parties have been mired in allegations of corruption over the past decade. And since the notebooks of the former Popular Party (PP) treasurer Luis Bárcenas went public exactly a year ago, it has become international news.

Domestically, the so-called Gürtel corruption case has been making headlines since 2009.

However, as yet only two people have been convicted in relation to it and one of them, incredibly, is the Judge who launched the investigation and summoned the arrests of 25 suspects in the first place...' (see 'Courts' below).

According to Wednesday’s El Mundo, Luis Bárcenas and his wife Rosalía Iglesias failed to pay to Hacienda 11,5 million euros in taxes between the years of 2000 and 2011. Bárcenas is currently in jail as an inquiry into illegal party finance rumbles on.

Elpidio José Silva, the judge who sent the ex-President of Caja Madrid, Miguel Blesa, to prison twice, is now himself an outcast, following his work against corruption at the highest levels of the financial elite. He is under an inquiry with no support beyond that of the General Public, tired of the corrupt state that this country has now become. A new book by the judge, 'La justicia desahuciada. España no es país para jueces' (Justice foreclosed, Spain is no country for judges) is available from Cazarabet.  An interview with the judge is at El Huff Post here. Here's a quote: 'The Bárcenas Case is like cycling to Paris on a tricycle. You'll never get there!'. 

Tax:

'They were not forced to leave the province of Almería in the 50s, 60s and 70s, looking for a job that practically did not exist back then - as now. Then, after years of sacrifices and efforts in some European country, they could return to Almería to enjoy their old age. However, the returning emigrants have run into another problem, besides the current serious economic crisis, with the decision of Hacienda to fine and apply interest on late payments following the non-declaration of pensions received from abroad, many of which are exempt from taxation in Spain...'. Local Almería newspaper El Ideal carries a story with much larger repercussions than for merely returning local emigrants. The newspaper version headline reads: 'Fines of up to 30,000€ for not declaring foreign pensions'.

Politics:

The 'State of the Nation' debate held this week produced few surprises. The president said that everything is getting better, the opposition leader said that the workers are getting 'shafted'. Indeed, President Rajoy said afterwards that he thought PSOE leader Alfredo Pérez Rubalcaba was appearing in the wrong debate. In fact, some modest tax changes are expected next month and that the Government plans to lower social security contributions for companies taking on workers on a permanent basis (under certain conditions). A write-up at El País in English here.

'During the annual debate on the state of the nation, Spanish Prime Minister Mariano Rajoy said people earning less than €12,000 a year will pay no income tax from 2015. Rajoy also announced that social security contributions on new employees on permanent contracts will be reduced to a flat rate of €100 a month for the first two years. Separately, new figures from Spain’s national statistics institute INE show that the number of new mortgages in 2013 shrank by 27.8% compared to the previous year'. (Open Europe newsletter) More at RTVE Irish Times NYT Expansión
'International inspectors say the armed Basque separatist group ETA has put some of its weapons "beyond use". The International Verification Commission, in the Basque city of Bilbao, says a small part of the ETA arsenal is now under seal. The Spanish government has refused to negotiate with ETA and it dismissed the disarmament move as "theatrical"...'. From the BBC. The weapons were described as a very small number of arms and, according to Spanish sources, the two masked etarras then packed them up and took them away with them after the photo opportunity.

¿Hay Derecho? Is a political blog. It runs an article about the similarities between the two leaders in Andalucía, PSOE leader Susana Díaz and the PP's new wunderkind Juan Manuel Moreno. Both young, untried outside of politics, and both chosen as the two viable alternatives to lead the good people of Andalucía into the future by their indulgent bosses.

The Minister of the Interior is Jorge Fernández Díaz, evidently a God-fearing man. On Monday he conferred the Police Golden Medal for Merit to, uh, Nuestra Señora María Santísima del Amor. The same minister decorated another virgen in 2012, the Virgen del Pilar, with the Gran Cruz de la Guardia Civil. Unlikely story at El Huff Post. 

Spain is reeling in shock from a 'mockumentary' that appeared on Sunday TV on 'La Sexta' called 'Operación Palace' that showed a different version of the 23F, the famous failed coup d'etat from February 23rd 1981. In this version, the King, the American ambassador and several senior politicians were all 'in' on the coup. The show, made by Jordi Évole, was watched by more than five million entranced viewers. All lies, of course. Or was it? The video here.

'Muslim groups are demanding Spanish citizenship for potentially millions of descendants of Muslims who were expelled from Spain during the Middle Ages.

The growing clamour for "historical justice" comes after the recent approval of a law that would grant Spanish citizenship to descendants of Sephardic Jews expelled from Spain in 1492...'. From the Gatestone Institute (it's as if they didn't see this one coming)!

Courts

Princess Cristina saw the judge on February 8th to answer questions about Aizoon, the company she directs together with her husband Iñaki Urdangarin. Her answers were apparently evasive, as El Mundo reports: 'I don't know' – 412 times. 'I don't remember' – 82 times. 'I don't know' – 58 times... etc.

A popular Spanish policewoman, popular that is with the British television watching public, is Olga Lizana, based in Madrid, whose job is to catch foreign crooks on the run in Spain. Last year her department caught 270 foreign criminals, wanted in their various countries, of which 40 were Britons. El Mundo interviews her here.

'Suspended High Court Judge Baltasar Garzón reacted angrily on Tuesday to news that the Spanish Supreme Court had issued a report stating its opposition to granting him a pardon.

“Enough is enough,” he told El País from Mexico on Tuesday. “They need to leave me alone!” Garzón, who came to prominence in 1998 after issuing an arrest order against former Chilean dictator Augusto Pinochet, under the principle of universal justice, was removed from office for 11 years in 2012 for ordering wire-taps of conversations between jailed leaders of the Gürtel corruption network and their lawyers..' From El País in English.

Essay:

Oliva home sellers face massive and 'unfair' tax bills. (the source of this article is unknown)

Council calls it 'daylight robbery' and says it will kill the town's property market

OLIVA (Prov. De Valencia) home-owners planning to sell up will lose an even bigger chunk of the proceeds in taxes and could even make a loss thanks to a greedy new move by the regional government.

Tax on 'asset transfer' – known as Impuestos de Transmisión Patrimonial – will rise to between 40% and 50% of the catastral value, or the basic rateable value upon which annual IBI property duties are payable.

Although other town councils are affected in a similar way, Oliva has been the hardest hit as the regional government seeks to claw back more money.

The local councillor for treasury Ana Morell says the Generalitat – led by Alberto Fabra (PP) – has seen a fall in its tax income through home sales because fewer people are buying and selling due to the financial crisis, and has decided to resolve it by increasing transfer duties to the point where practically any profit is wiped out.

Morell has written to the regional government calling the move 'daylight robbery' and 'discrimination', saying it is unfair that 'the efforts of hard-working residents' will merely go towards 'paying for the appalling financial management' of the Generalitat.

She says the move goes against Oliva's own strategies – the council having been striving to ensure the recent catastral review does not translate into higher IBI payments for hard-pressed residents.

Morell adds that the local authorities have brought down the Plusvalía, or capital gains tax payable to the council for property sales, and has reduced its debt down to 59% - 'far below the legal maximum'.

The transfer tax hikes mean that where a property has a catastral value of €25,000, the seller would previously have paid €3,200 to the Generalitat but will now pay €5,000.

This is in addition to 21% of the difference between the value when purchased and the sale price in capital gains tax, irrespective of any mortgage on the home.

A house or flat with a catastral value of €50,000, which would be a typical townhouse or three-bedroomed apartment, will now attract a transfer tax of €10,000 instead of the previous €6,400.

And a home with a catastral value of €100,000 will cost the seller €20,000 in tax to the regional government instead of the €12,800 he or she would have paid until now.

If a home was bought for €120,000 and now sold for €180,000, and has a catastral value of €80,000 following the recent review, the seller would pay 21% of the difference, or €12,600, in capital gains, plus a further €16,000 in transfer tax to the Generalitat.

Out of the €60,000 profit obtained, the owner would be left with €31,400, or just over half.

Oliva council says this is 'unjust' as the regional government is 'suffocating residents' who are already struggling to make ends meet.

They believe it will lead to a flood of home-owners withdrawing their properties from sale, causing financial problems for local estate agents and leading to tax income from purchases plummeting.

From Las Provincias: 'The Oliva Government has issued a statement accusing the regional Ministry of Finance of allowing an increase on the patrimonial transmission tax for the town. In brief, the Councillor for Finance in Oliva, Ana Morell, criticized the decision of the Consell to 'impose a double coefficient value in the city of Oliva'. She said that this is a coefficient 'which is used to calculate the tax on Patrimonial Transfer which is paid to the Generalitat whenever a dwelling is acquired'...'.

Various:

Forty three senior ex-politicians are now in the electricity game, according to El Mundo, who helpfully names them all. After all, the power companies' business comes from political decisions notes the paper, which also provides their stipends...

What with the cuts, strict economies and the like, patients at the General Hospital in Alicante must now provide their own towels, blankets and sheets. The laundry department has cut its workforce from ten to five employees... (El Mundo, here).

 

Approximately half of all Spaniards boycott products made by companies they don't approve of. Coca Cola being one of the latest, after firing part of its workforce. El Diario has more.

La Sexta – becoming the television channel to watch – has made a program outlining the six greatest myths about foreigners. They take our jobs; they are glutting up the health service; they don't adapt to our customs; they live from subsidies and they contribute to lower the level of education. The article and video here.

'Former Spanish Prime Minister José Luis Rodríguez Zapatero, mocked for his lack of foreign language skills when in power, has said demanding fluency in English would exclude the "sons of workers" from positions of responsibility'... From The Local. He's right, too. Few of them can manage more than a few words (remember Ana Botella's 'Cup of cafe con leche'?). Indeed, the only senior Spanish politicians who speak perfect English (and spring to mind) are PP heavyweight Esperanza Aguirre and the Catalonian leader Artur Mas.

A Spanish lorry on the Dakar rally was stopped while in France and found to have a whopping 1.4 tons of cocaine in the back. The truck belongs to Épsilon Team, whose director is currently helping the police with their enquiries... Story at El Mundo.

While many countries are in passionate debate about GM crops, Spain has quietly gone ahead, growing GM corn in quantity in both Aragón and Catalonia – perhaps 80% of the entire European production. In 2010, Wikileaks released a letter from the Spanish Ministry of the Environment to the Americans asking them to put pressure on Brussels to allow the free use of GM crops. The 2009 cable (in English) here. As Público says in its extensive article. 'Spain is different'.

From The Huff Post UK on the UEFA Euro Cup 2016: 'Gibraltar was drawn in the same Euro 2016 football tournament qualifying group as Spain – only to be moved to another for political reasons.

The blind draw in Nice, France, briefly saw the British overseas territory paired up with the current European and world champions in Group C. But European football's governing body UEFA had already announced in December that Gibraltar and Spain would be kept apart amid continuing political tensions over the territory's sovereignty...'.

'An online 'paella police' platform known as 'Wikipaella' has stepped up its campaign to stop the culinary 'prostitution' and 'crimes against rice' that they claim are commonly perpetuated against Valencia's most famous dish.

It is a common sight in tourist areas around Spain: plates of recently defrosted, artificially-bright yellow rice, served direct from the microwave to unsuspecting visitors as 'authentic paella'. The true Valencian paella is in danger of being lost in this sea of cheap imitations, according to a group called Wikipaella who have sprung up to defend the region's defining dish...'.  From The Local.

Unemployment is absurdly high in Spain, with some provinces in the south, like Cádiz, at over 40%. But how does this compare with another country in crisis, like Mexico? Not well, with Mexico (according to a recent Time article) enjoying an unemployment level of just 4.76%.

Flamenco guitarist maestro Paco de Lucía died in Mexico of a heart attack on Wednesday. Here he is playing with friends: 'Entre dos Aguas'.

Finally:

Pictures of the twelve most spectacular abandoned places in Spain. From Escapada Rural. Fantastic!

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