Spain has a scant government, but they aren’t worried and have plenty of opportunites
October 17, 2016
By: Bobby Casey, Managing Director GWP
There is a LOT of bad stuff going on right now. As if the no-talent circus known as the US Presidential election weren’t bad enough, the US recently bombed Yemen not long after Saudi Arabia did so. Just found a new study that shows over 55,000 Americans were brutalized by police in just one year.
“Stop complaining and do something!”
Yeah, I’m not stopping the American military industrial complex. We aren’t all characters out of some Stan Lee comic book. Nor am I changing the trajectory of the police state. I’m out. I folded my hand a long time ago and left, because sometimes the fire is too big to put out and the best you can do is save yourself and loved ones.
It’s time to find an escape route, and while I might be a realist, I am also an optimist. There is hope. Where there is economic tumult, there is also economic opportunity. I told you about Italy. Countries in South America are opening up to the idea of foreign investment and business as well after hitting the floor with their socialist regimes.
I originally thought to write about the lack of government activity in Spain, but I think that only paves the way for economic opportunities, and that’s the real story here.
It’s had a program for about 3 years to entice entrepreneurs to start up there, but nothing sweetens the pot like a scant government marginally run by their conservative party.
For now, Spain is actually OK. I don’t buy into the idea that they are booming and doing great, because some of that has to do with residual effects of pre-standoff policies, but they are on task to grow around 3%.
“Investment in capital stock such as factory equipment jumped 2.2 percent in the second quarter as exports climbed 4.3 percent. The economy grew 0.8 percent — more than twice the euro zone’s pace of 0.3 percent — while adding 484,000 full-time jobs compared with a year earlier.
“More flexible employment laws and falling labor costs have helped Spanish companies to grow as they also benefit from external factors including lower oil prices and European Central Bank stimulus.” (Source: Bloomberg)
Of all the concerns Spaniards have, the lack of government isn’t among them. Some people have become so jaded, they wonder out loud if government is even necessary.
To be fair, despite the needle moving on employment, they do still have an abysmal unemployment rate and their deficit has drawn the [unwanted] attention of the EU, so this isn’t a totally stateless fairytale come true either.
“Spain’s central bank says the deficit for this year and next will be 4.9 per cent and 3.6 per cent of annual GDP, respectively — well above the 3 per cent level permitted by the EU. Any sanctions could eat into economic growth and investor confidence.” (Source: Huffington Post)
I don’t think this is a time for trepidation from investors. Now is the time for careful monitoring and consideration. In fact, all that being said, I think it’s time to dust off that old policy from 2013: Ley de Emprendedores, or Law of Entrepreneurs.
“The legislation created five visa categories, covering investors who buy at least 500,000 euros (about $625,000) of real estate; entrepreneurs who plan to establish businesses; highly skilled professionals; researchers, scientists and teachers; and employees and trainees. Once approved, recipients are allowed to move freely through most European Union countries.” (Source: NYT)
Unlike many other government programs and bureaucracies, this is a real fast track. 10 days, as a matter of fact! And they have been meeting that deadline. This isn’t some lottery, either. This is open to anyone, with no limits on the number of applicants or approvals. Moreover, you do not have to show a minimum business investment. Canada, France and the UK all have their foreign investment programs too, but their requirements are considerably loftier.
Of course you will need to present a business plan that demonstrates how you will sustain yourself and bring in a minimum form of income. They really did try to take the very best of all the different incentives around the world and incorporate them into their plan.
In just a year from its enactment close to 4,000 took advantage of the new visa programs, with a near 50/50 split between real estate and other business ventures.
It hasn’t gotten a lot of steam, yet, but I think that has a lot to do with lack of information and publicity. Still there is more to it than just a piece of paper. There is some start-up backing to this as well:
“[Spain has an] unsecured lending program, which has about €100 million, or $125 million, to lend to innovative small and midsize companies annually. The loans, from €25,000 to €1.5 million, are available to all entrepreneurs, regardless of nationality, who have a business based in Spain (except for those running real estate or financial ventures). The public financing company making the loans, Enisa, doesn’t track applicants’ nationality, said Carmen Cuesta, a spokeswoman, but plenty of foreign-born entrepreneurs have received them since Enisa was created in 1982. Last year, it made more than 600 unsecured loans to entrepreneurs, with an average amount of about €131,000.” (Source: NYT)
One little caution is the exit tax. If you do decide to have a business in Spain for 10 years or longer and decide to claim tax residency in a different country, you could face some fines or fees. Obviously it is disingenuous to say Spain has “NO” government. I does. Just as the US still had a government through the whole “government shut down”. It seems like nothing when you typically are used to having a LOT more.
Overall this is a fantastic opportunity! I’m happy to see so many countries opening up their borders for business. The US still sadly lacks this, and ultimately will miss out on a lot of economic activity because of it. The quick turn and minimal requirements are enough to warrant further investigation, and access to the EU bloc is a nice bonus!
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