Working “en negro“, i.e. without divulging your earnings and paying tax on them, is very common in Spain (not surprising, when you consider how complicated and inflexible the tax system is). In fact, I’m often advised by friends and contacts to work in black.
Although it’s one thing to do the odd favour for a good friend from time to time (and if you’re paid in beer anyway, what is there to declare? ;)), in general my policy has always been to avoid working in black.
There are two types of businesses in Spain : those who will need you to declare tax and write them a “factura” (invoice), and those who won’t ask for one. Some might think I’m a fool, but I always try to deal with the first kind, even if it means my services run the risk of being uncompetitive at times compared to all the people working illegally out there. Here’s my reasoning:
- Serious businesses work with facturas. And where do you think the higher profit margins are, with serious businesses or less serious ones?
- Offering to give your services without paying tax devalues your work and implies that you are not a professional, thus restricting the amount you can charge.
- When you pay tax, the best policy is to pass the extra costs on to the business you’re working with so you still get a fair wage. Are you willing to run the risks tax fraud involves just to save your clients money?
People often complain to me that their clients just won’t pay the extra costs of tax rates. My response is that in that case, you’re possibly better off looking for clients who do. There are some of them around. And they tend to be better employers.
This is a personal subject, and there are always exceptions, especially, I think, when you work with end consumers and not businesses. If all you want to do is earn a few bucks giving English classes to friends of friends on a Saturday morning in addition to your day job, you might decide just to skip the whole rigmarole of signing up as self employed altogether. But if you want to do serious business, and especially if you deal with businesses and not consumers, unfortunately you also need to get serious about your accounting and paying your tax.
Photos and text by Penelope
I totally agree with you but admit that when I started teaching English in ‘my’ village in Andalucía there was no way that I could have paid into the system.
I was eyed with some suspicion because they didn’t know me and this is a common problem living in a village.
I was at the time I started the only qualified native English speaker so wasn’t competing with anyone.
However, if another native English speaker, qualified or not, started teaching English and offered much lower prices due to working on the black I would report them.