Spanish government limits crowdfunding to € 1M, donations capped at € 3000.(translate.google.com)
translate.google.com
Spanish government limits crowdfunding to € 1M, donations capped at € 3000.
http://translate.google.com/translate?sl=auto&tl=en&js=n&prev=_t&hl=en&ie=UTF-8&u=http%3A%2F%2Fwww.elconfidencial.com%2Ftecnologia%2F2014-02-28%2Fel-gobierno-limita-el-crowdfunding-un-millon-maximo-con-aportaciones-de-3-000_94989%2F
12 comments
For a spaniard it's going to be much more easy to create a company in UK and launch the crowdfunding project with the UK company, and then, move the money by the traditional ways (dividends, getting services from a spanish based company, ...). You are not going to avoid taxed but get rid of those stupid limits and obligations.
No need to use the future tense. For a long time it has been a lot easier and cheaper for a Spaniard to open a business in the UK than in his own country.
as an italian and fellow southern european, this has been true for a long time here too.
So now they added a new 20% tax on private bank transfers from UK bank accounts to italian ones.
Just saying: be wary if your government gets inspired.
So now they added a new 20% tax on private bank transfers from UK bank accounts to italian ones.
Just saying: be wary if your government gets inspired.
This is even true for Germany. To form a GmbH here you need to invest at least 25.000 Euros and wait weeks until the paper work gets done.
In the UK you can get a Ltd. up and running within 24 Hours for what is essentially pocket change.
The UK has exceptionally friendly laws and regulations concerning doing business and I wish more European countries would imitate them.
In the UK you can get a Ltd. up and running within 24 Hours for what is essentially pocket change.
The UK has exceptionally friendly laws and regulations concerning doing business and I wish more European countries would imitate them.
> This is even true for Germany. To form a GmbH here you need to invest at least 25.000 Euros and wait weeks until the paper work gets done.
You only need to pay in half of that though (until your GmbH goes bust with debts, that is). And since 2008 there's a mini-GmbH for 1 euro: https://de.wikipedia.org/wiki/Unternehmergesellschaft_%28haf...
You only need to pay in half of that though (until your GmbH goes bust with debts, that is). And since 2008 there's a mini-GmbH for 1 euro: https://de.wikipedia.org/wiki/Unternehmergesellschaft_%28haf...
Things are slowly moving online in Europe, I think, though at varying speeds. In Denmark, you can now form an ApS in about a day, entirely online, without visiting any offices. It's a fairly simple web-form. For a traditional ApS you do need €6.500 in starting capital to incorporate (not a fee, just starting capital for the company's bank account). Options for covering that include state-subsidized loans, and as of the beginning of this year, a transitional form (Iværksætterselskaber), which can incorporate before raising the minimum capital, and then comes up with it later by diverting 25% of profits to the capital reserve until the €6500 threshold is met.
If you just want a registered business and VAT ID but don't need the corporate form, on the other hand, you can do that part for about 100 euros and an even shorter webform.
If you just want a registered business and VAT ID but don't need the corporate form, on the other hand, you can do that part for about 100 euros and an even shorter webform.
> So now they added a new 20% tax on private bank transfers from UK bank accounts to italian ones.
Isn't that against EU laws on freedom of movement of currency?
Isn't that against EU laws on freedom of movement of currency?
the thing is more nuanced: it is assumed you are evading taxes/laundering money and need to prove otherwise.
If you can prove this money is not untaxed income, than you're fine.
Yes, the duty of proof is opposed to the normal (you need to prove you are innocent).
Yes, the duty of proof is opposed to the normal (you need to prove you are innocent).
20% tax on private bank transfers from UK bank accounts to italian ones
How is this legal under EU law of free movement of capital?
How is this legal under EU law of free movement of capital?
Addendum: this appears to be somewhat true:
via http://www.zerohedge.com/news/2014-02-16/money-launderer-unt... original italian news http://www.ilsole24ore.com/art/notizie/2014-02-13/ritenuta-a...
It's a presumption that the transfer is taxable income and a requirement to demonstrate otherwise. That's a very heavy tax enforcement process, but in theory you can get the 20% back if it's not income. If it is income, you should have paid the 20% anyway.
via http://www.zerohedge.com/news/2014-02-16/money-launderer-unt... original italian news http://www.ilsole24ore.com/art/notizie/2014-02-13/ritenuta-a...
It's a presumption that the transfer is taxable income and a requirement to demonstrate otherwise. That's a very heavy tax enforcement process, but in theory you can get the 20% back if it's not income. If it is income, you should have paid the 20% anyway.
Come to France.
You file on the web. You declare your monthly income and pay 24.5% tax, all inclusive of your income taxes. Even if you make no turnover the first months, you benefit fromthe health insurance, and you could even get the €400 survival allowance ("RSA"). If you reach 30k€/yr, you must file a proper company and you'll get the normal 75% tax rate.
I think we have a good system to let people start companies. Website is ugly and we live at the Cobol & Paper age, but we got this little part right. That was brought by Sarkozy.
You file on the web. You declare your monthly income and pay 24.5% tax, all inclusive of your income taxes. Even if you make no turnover the first months, you benefit fromthe health insurance, and you could even get the €400 survival allowance ("RSA"). If you reach 30k€/yr, you must file a proper company and you'll get the normal 75% tax rate.
I think we have a good system to let people start companies. Website is ugly and we live at the Cobol & Paper age, but we got this little part right. That was brought by Sarkozy.
> If you reach 30k€/yr, you must file a proper company and you'll get the normal 75% tax rate.
Ow.
Ow.
I counted all inclusive, such as your health insurance, retirement, unemployment insurance, income tax, company tax. Wouldnt be surprised if the same level of coverage would bring the same fees anywhere else.
Do you really need to transfer much money to an Italian account?
There is no particular need to have a 'local' account - you can pay all your bills with EU/SEPA payments from any european bank, the prices/etc will be the same, and you can do your daily purchases with a non-local card just as well.
There is no particular need to have a 'local' account - you can pay all your bills with EU/SEPA payments from any european bank, the prices/etc will be the same, and you can do your daily purchases with a non-local card just as well.
Or, you know, don't move the money. Or move the bare minimum
In fact, don't even bother with anything there.
And then when the economy is bad it's "big bad Germany's fault!"
Yawn
In fact, don't even bother with anything there.
And then when the economy is bad it's "big bad Germany's fault!"
Yawn
Seriously, Spain being in an economic crisis since so long, they should work on making it more attractive for people to open and run their business there instead of adding new regulations and complicating things for founders.
All the new labor and economic laws created after the crisis have been done thinking in the interest of big corporations and banks. If you are a small entrepreneur you are basically screwed.. No that they don't help you, they are actively trying to make you go bankrupt even before beginning.
In this case if you have a project that can go beyond 1mill € (I can't think of any that could reach that quantity, but that's another question), you'll have to be creative and create a company in the UK or USA to manage it.
Reading the article I realize that what they are trying to do with the new law (that basically makes the crowd-founding unusable for startups), is to protect the small investor. We've had several small investors scams (one of them by Caja Madrid, a big savings bank), in all the cases, the regulators were accused of being too little involved.
I have to agree that is a matter of time before there is a big scam with crowd-founding in Spain. So the Spanish bureaucratic logic says you'd better punish all of them(those dangerous crowd-founders) before a notorious crime is committed. Sad
Edit: added the last paragraph. Edit2: readability and typos.
In this case if you have a project that can go beyond 1mill € (I can't think of any that could reach that quantity, but that's another question), you'll have to be creative and create a company in the UK or USA to manage it.
Reading the article I realize that what they are trying to do with the new law (that basically makes the crowd-founding unusable for startups), is to protect the small investor. We've had several small investors scams (one of them by Caja Madrid, a big savings bank), in all the cases, the regulators were accused of being too little involved.
I have to agree that is a matter of time before there is a big scam with crowd-founding in Spain. So the Spanish bureaucratic logic says you'd better punish all of them(those dangerous crowd-founders) before a notorious crime is committed. Sad
Edit: added the last paragraph. Edit2: readability and typos.
Spain is a horrible place to do business. First hand experience and official data http://www.doingbusiness.org confirm that.
And it doesn't even have a strong safety net and workers rights - the way Spain implemented TUPE is a joke.
I beg to differ (I completely agree with it being a horrible place to do business, on the other hand).
Apart from having free healthcare (although they are trying to change that as well), layoffs are regulated by law (companies must file a special request,ERE, to the government in order to axe more than a percentage of employees, which must be justified), workers are entitled to a severance package of 30 days (it was 45 a few years ago) of pay for each year spent at the company, and for each year working you accumulate three months worth of unemployment benefits.
I'm sure that there are countries which offer better conditions, but I can't say Spain has a weak safety net.
Apart from having free healthcare (although they are trying to change that as well), layoffs are regulated by law (companies must file a special request,ERE, to the government in order to axe more than a percentage of employees, which must be justified), workers are entitled to a severance package of 30 days (it was 45 a few years ago) of pay for each year spent at the company, and for each year working you accumulate three months worth of unemployment benefits.
I'm sure that there are countries which offer better conditions, but I can't say Spain has a weak safety net.
Um I know how Spain treats TUPE which is to say you have no protection on transfer of employer that is not the sign of a country that treats its employees well.
More than a million: two years ago, Double Fine crowdfunding project revolutionised video game industry and revived a genre long-time abandoned by major companies: adventure games https://www.kickstarter.com/projects/doublefine/double-fine-...
It is the best known proof that it works, that people can be heard when someone is ready to listen them. And they will give money for that.
And this, this will probably never happen in Spain.
Edit: > million (reason for this answer).
It is the best known proof that it works, that people can be heard when someone is ready to listen them. And they will give money for that.
And this, this will probably never happen in Spain.
Edit: > million (reason for this answer).
I´don´t mean that crowdfounding doesn´t work, I mean that reaching a million (like Kickstarter projects do) is going to be very difficult for any Spanish startup. There is no culture of giving money to help a business
Not so for "popular" projects, that are promoted via TV programs or so.. those will surely reach 1 mill easily.
On the other side, charity is very popular and people donates money (small and big quantities) when they see a need.
Of course it can always become fashionable, with everybody crowdfounding something, but that´s when a big scam will take place, with a scandal in the media and crowdfounding getting hit hard.
Edit I changed crowdsourcing for crowdfounding
Not so for "popular" projects, that are promoted via TV programs or so.. those will surely reach 1 mill easily.
On the other side, charity is very popular and people donates money (small and big quantities) when they see a need.
Of course it can always become fashionable, with everybody crowdfounding something, but that´s when a big scam will take place, with a scandal in the media and crowdfounding getting hit hard.
Edit I changed crowdsourcing for crowdfounding
In Spain, if you want to have a side business, you need to register as a sole trader. That also means... guess what... you have to pay for the common sole trader's health insurance, 200€/month. Even if your income from the side project is below 200€. Even if you have no other job and you don't make 200€/month.
With one single rule, they've killed most chances of growing businesses locally.
With one single rule, they've killed most chances of growing businesses locally.
I am so fed up with spaniards complaining about this (I'm a spaniard myself). Let me rephrase the rule: if you pay 250 EUR / month, you get full health coverage in the public system, which is amazingly good. How does this sound to americans now?
There are only a couple considerations here: first, they do force you to pay this in any case or you can't do business at all. The rationale is that having health insurance / social security is not optional in Spain. Thus the illegality of doing business / working without paying that. I would leave this untouched.
The other consideration is that you have to pay this even if you have a salaried job and your employer is already collecting from your salary and doing the contributions for you. I would make it unnecessary to pay the extra 250 EUR/month in this case, it doesn't make sense, except for people with very low salary (for whom no social contribution is mandated for their employer), in which case I would keep the need of contributing separately, or it's a huge loophole to avoid contributing.
A socially-oriented state has some cost, you know. Having to pay 250 EUR/month when you do business is such a ridiculously low price to pay for near-universal health care.
There are only a couple considerations here: first, they do force you to pay this in any case or you can't do business at all. The rationale is that having health insurance / social security is not optional in Spain. Thus the illegality of doing business / working without paying that. I would leave this untouched.
The other consideration is that you have to pay this even if you have a salaried job and your employer is already collecting from your salary and doing the contributions for you. I would make it unnecessary to pay the extra 250 EUR/month in this case, it doesn't make sense, except for people with very low salary (for whom no social contribution is mandated for their employer), in which case I would keep the need of contributing separately, or it's a huge loophole to avoid contributing.
A socially-oriented state has some cost, you know. Having to pay 250 EUR/month when you do business is such a ridiculously low price to pay for near-universal health care.
> The other consideration is that you have to pay this even if you have a salaried job
That's the part I meant was unfair. To the rest I agree: When you earn money, you have to paid fees to get your health security, I agree it's normal.
That's the part I meant was unfair. To the rest I agree: When you earn money, you have to paid fees to get your health security, I agree it's normal.
That would be logical. However, this is not how things works here in Spain.
A childhood friend of mine is now really worried since nearly 80% of his new videogame funding comes from crowdfunding. This measure will easily throw down the drain his and his 20 employees jobs.
He better changes the mother company (the one doing the crowdfounding) to the UK and then "contract" the Spanish agency to do the actual coding.
As far as I can tell, this doesn't affect Kickstarter and such, since you're not legally investing, but buying a product. So if that's the case, he should be on the safe side.
A shame of law, however, since it's only meant to discourage small scale investing.
A shame of law, however, since it's only meant to discourage small scale investing.
The same bill mentions new crowdfunding platforms must have:
- At least € 50000 on capital stock
- A civil liability insurance that covers up to € 150000 per year.
Also individual donors must not donate:
- More than a total of € 6000 per year on crowdfunding projects
- More than € 3000 per year on a single crowdfunding project
Funnily enough, political parties in spain can:
- Get donations from individuals for up to € 100.000 yearly.
- Foundations or associations owned by political parties (think tanks) can receive limitless donations.
- At least € 50000 on capital stock
- A civil liability insurance that covers up to € 150000 per year.
Also individual donors must not donate:
- More than a total of € 6000 per year on crowdfunding projects
- More than € 3000 per year on a single crowdfunding project
Funnily enough, political parties in spain can:
- Get donations from individuals for up to € 100.000 yearly.
- Foundations or associations owned by political parties (think tanks) can receive limitless donations.
I'm born and breed in Spain and I couldn't agree more with im_dario23 talking about the 70% and ArenaSource talking about protecting banks. In my honest opinion, banks get too much protection in Spain (compared to countries of northern Europe, which act in a more ethical way thinking more about the citizen) and this smells like a new way for banks to kind of "take some profit from crowdfounding". It seems that no sooner did the Spanish government realize about the money from crowdfounding, they tried to made up a tax/limitation for it (the thing itself shows how out-of-date Spanish politicians are... that they try to create this limit now when crowfounding it's been out there for some years now). That's so spaniard... but this is just my opinion. I'd like to read more about yours and your regulations all over the world. Great page news.ycombinator. Regards from Spain
Hmm, this sounds like the sort of regulation that should be considered, and then not applied (i.e. make a law that prohibits these regulations), at an EU level, to protect Europe's collective interest in getting crowdfunding for its projects.
Anyone knows why anyone would impose these limits to crowdfunding?
We are in talks to have the same kinds of limits in France.
I don't know about Spain but here it is essentially a need for people in charge of the "digital economy" to somehow feel useful and show that they are "regulating" something. In this case they must feel more justified because it circumvents traditional actors (i.e. banks) and involves money.
It is kind of amusing because this is a sector where most EU countries enjoyed a more liberal regulatory context before startups started to spawn in the US. And now that there is a boom, regulations are added to prevent it from developing, effectively removing any possible european competition to US companies in the space.
I don't know if this will affect the likes of Kickstarter though, if they don't have any physical presence in Spain I don't see how the government is going to know about it.
I don't know about Spain but here it is essentially a need for people in charge of the "digital economy" to somehow feel useful and show that they are "regulating" something. In this case they must feel more justified because it circumvents traditional actors (i.e. banks) and involves money.
It is kind of amusing because this is a sector where most EU countries enjoyed a more liberal regulatory context before startups started to spawn in the US. And now that there is a boom, regulations are added to prevent it from developing, effectively removing any possible european competition to US companies in the space.
I don't know if this will affect the likes of Kickstarter though, if they don't have any physical presence in Spain I don't see how the government is going to know about it.
>I don't know if this will affect the likes of Kickstarter though, if they don't have any physical presence in Spain I don't see how the government is going to know about it.
Well, obviously they will known when you receive your funds for your project, else you will be tax avading if you don't report it.
Well, obviously they will known when you receive your funds for your project, else you will be tax avading if you don't report it.
I was thinking of the backers.
Obviously if you are in need of a significant crowdfunding campaign you'll probably have to relocate to a friendlier place in the EU, at least temporarily (I guess if you are looking for more than 1M euros it might be worth it).
Obviously if you are in need of a significant crowdfunding campaign you'll probably have to relocate to a friendlier place in the EU, at least temporarily (I guess if you are looking for more than 1M euros it might be worth it).
>I was thinking of the backers.
I don't think they care about the backers.
I don't think they care about the backers.
Are you implying the government sees funding money as taxable ? If so, on what basis ? Incomes ?
Of course it's taxable - if you give someone $20 for their project and get a t-shirt in return, then that is taxable just as any other deal, and even if there is no profit/taxable net income, then VAT applies for the transaction.
If crowdfunding was like purchase of shares (which it isn't), then it wouldn't be taxable initially, but would have a capital gains tax when you sell those shares.
Most of the crowdfunding projects are in essence similar to preorders, and thus would be taxable as any other sales - if there are true donation projects, then they'd need to file for nonprofit status to be able to get tax-exempt donations.
If crowdfunding was like purchase of shares (which it isn't), then it wouldn't be taxable initially, but would have a capital gains tax when you sell those shares.
Most of the crowdfunding projects are in essence similar to preorders, and thus would be taxable as any other sales - if there are true donation projects, then they'd need to file for nonprofit status to be able to get tax-exempt donations.
Thanks.
To be honest, in EU most things are taxable. Most EU countries will tax you on your lottery winnings, which to me is just weird and unacceptable,but this is how things work here.
The trick is to know when the tax needs to be paid and what it needs to be paid on.
This is why accountants are important. They know the system and paperwork and words; they know how you can pay tax in one form cheaper and later instead of expensive and now.
I don't think UK taxes lottery winnings.
This is why accountants are important. They know the system and paperwork and words; they know how you can pay tax in one form cheaper and later instead of expensive and now.
I don't think UK taxes lottery winnings.
link showing DanBC is indeed correct (http://www.national-lottery.co.uk/player/p/help/playinginsto...)
though UK lottery winnings will still be taken into account for inheritance tax if the winner dies within 7 years.
though UK lottery winnings will still be taken into account for inheritance tax if the winner dies within 7 years.
that's for parents safety
Yeah I know UK doesn't, that's why I said "most" EU countries, and not all of them.
I believe you've got it backwards. The EU countries that don't tax lottery winnings are actually members of a pretty small club. Most of the world does tax lottery winnings.
In the past 5-10 years there have been several scandals regarding investment instruments: the sale by banks of shady stocks, the sale "guaranteed capital preservation" funds which ended up not being guaranteed (read Lehman Brothers instruments), "investment" firms offering investment in collectables (stamps, art, etc) which ended up being ponzi schemes, etc.
In the past, people who have been hit by these scandals go to the government/financial regulator to claim their losses. If the government doesn't cover X% there tends to be a big backlash from left wing media and politicians.
All the government is doing is hedging their potential future loss in case some of these crowdfunding campaigns end up being "scams". Spain is very much a country that likes socialise private capital losses.
In the past, people who have been hit by these scandals go to the government/financial regulator to claim their losses. If the government doesn't cover X% there tends to be a big backlash from left wing media and politicians.
All the government is doing is hedging their potential future loss in case some of these crowdfunding campaigns end up being "scams". Spain is very much a country that likes socialise private capital losses.
To protect the interests of traditional and powerful companies: Banks
To prevent fiscal fraud. Spanish government has a big problem with people not paying tax (partially because the tax rules in some cases are completely absurd).
70% of Spanish fiscal fraud is from rich people and corporations.
To regulate crowdfunding because of fiscal fraud is pure bullshit. The biggest fraudsters aren't the usual target of crowdfunding campaigns (lots of small contributions).
To regulate crowdfunding because of fiscal fraud is pure bullshit. The biggest fraudsters aren't the usual target of crowdfunding campaigns (lots of small contributions).
I'd love to see the details of those stats - can you point me to the source where it gives the 70% figure?
I quite don't understand the article. Does 70% refer to the number of infractions or the total monetary volume of fiscal fraud? If this is a volume number, is this the case "80/20" rule where 80% of fiscal fraud volume originates from a small fraction of the wealthy?
This is an article, but can't find the report. Is there a report one can download? Or is it just an opinion piece?
This is an article, but can't find the report. Is there a report one can download? Or is it just an opinion piece?
As long as I know, it refers to the total monetary volume of fiscal fraud. It would be a "80/20" rule case but this is not the point.
The point is that this government rules with a twisted logic. They assume the biggest fraction of population originates the biggest fraction of fraud. For them, everything is low and middle classes' fault.
The point is that this government rules with a twisted logic. They assume the biggest fraction of population originates the biggest fraction of fraud. For them, everything is low and middle classes' fault.
I recently read this and it seems to me that fraud is quite popular regardless of the social status http://www.businessweek.com/articles/2014-01-30/spains-growt...
To protect investors in a crowd funding campaign. Crowdfunding could be used as an instrument to avoid liability to investors. Limiting it limits the potential for fraudulent crowd funding campaigns.
Also: taxes
Also: taxes
I have legal question:
If there is campaign organized on Kickstarter or similar site, who is legal entity responsible for the campaign? This services usually collect the money and do not pass it until some conditions are met. We could argue that recipient is just subcontractor hired by Kickstarter.
If there is campaign organized on Kickstarter or similar site, who is legal entity responsible for the campaign? This services usually collect the money and do not pass it until some conditions are met. We could argue that recipient is just subcontractor hired by Kickstarter.
Spaniard here. In Spain you have to look at the law in two ways (due to their stupid nature and that they are created following the interests of powerful people):
First you look at the law and see the legal holes in it (usually huge holes). Then you see how to directly avoid the law due to the poor enforcement when there is a direct violation.
For your question you need to apply both, most hacienda inspectors (spanish IRS) will be clueless of that kind of tactics for years. They usually only "learn" after a hole has been open for years or has been used by too much people.
I guess that in most countries people try to do this in a way or another. But in Spain some laws are so stupid that you have no option but to avoid them..
If there is one thing that a crowdfunding platform will hire lawyers for, it is to make absolutely certain that there is no possibility of them having any sort of legal responsibility after they hand over the money to a project creator.
Depends on the T&C of the platform. I worked at a platform, and our legals were very clear (and very cleverly constructed) to create a legal dependency from donor to project owner. We were just the marketplace, all liability for carrying out the project was on the project owner, and could (only) be enforced by the donor.
Legal responsibility for finishing the project and tax accountability could be separated. Anyway this is going to be just another accountancy nightmare.
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Seems like a great opportunity for Bitcoin, if Bitcoin can overcome the many other hurdles it faces: anonymous crowdfunding, capable of circumventing ridiculous laws like this.
"capable of circumventing ridiculous laws like this"
Dude, by definition you are arguing that it's great for criminal uses.
Dude, by definition you are arguing that it's great for criminal uses.
When a law is ridiculous, the term legal is meaningless.
No it's not
It's meaning is quite clear.
That's not to say you can't argue that it should be ignored but please have a grown-up argument about it rather than resorting to rhetoric.
It's meaning is quite clear.
That's not to say you can't argue that it should be ignored but please have a grown-up argument about it rather than resorting to rhetoric.
If by criminal you mean "in contravention of that which is decreed by state governments" then I think we should all be delighted that Bit/altcoins have such potential. It's about time the human race threw off the shackles of these by and large corrupt, wasteful, self-annointed states.
The Sex Pistols as political philosophy!
How about Dead Kennedys?
But seriously, that was an extraordinarily shallow if not downright stupid comment. Not only have you equated a serious political statement with a punk band based on obviously superficial understanding of either punk as a music genre or anarchism as a political philosophy, you've completely failed to understand the main point, somewhat obfuscated by talk on Bitcoin, of his argument, namely---basing your moral reasoning on what formal coercive authorities formally declare as good or wrong is a horribly low standard of moral reasoning.
But seriously, that was an extraordinarily shallow if not downright stupid comment. Not only have you equated a serious political statement with a punk band based on obviously superficial understanding of either punk as a music genre or anarchism as a political philosophy, you've completely failed to understand the main point, somewhat obfuscated by talk on Bitcoin, of his argument, namely---basing your moral reasoning on what formal coercive authorities formally declare as good or wrong is a horribly low standard of moral reasoning.
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Less philosophy, more inevitability really.
As cryptocurrencies grow the power of governments to tax will diminish. I think it'll be similar to music and movie piracy - they will be simply used so widely that it will be impossible to fight. Embattled governments will turn to deflation and increase the tax burden on those who continue to use state currencies, increasing even further the incentive to switch to cryptocurrencies. With only worthless fiat to pay armies and bureaucrats, governments may well collapse.
What comes next I have no idea.
As cryptocurrencies grow the power of governments to tax will diminish. I think it'll be similar to music and movie piracy - they will be simply used so widely that it will be impossible to fight. Embattled governments will turn to deflation and increase the tax burden on those who continue to use state currencies, increasing even further the incentive to switch to cryptocurrencies. With only worthless fiat to pay armies and bureaucrats, governments may well collapse.
What comes next I have no idea.
That seems pretty unlikely to me; much taxation is based around physical location and economic relationships, not control of the currency. My employer pays taxes not because the government controls the money, but because they rent an office in Copenhagen, do business there, and employ about 200 people, and it's pretty hard to hide all that. For one thing, the employees want to be counted as employed too, or else they wouldn't be eligible for pensions or various other aspects of the social system, and would complain loudly if the company failed to register its employees and pay taxes.
Also, things like car tax are successfully collected even on entirely black-market sales through this simple expedient: drive around the city scanning license plates, and check whether the car is registered. The same is done with apartments: do you own a $1m apartment in the center of Copenhagen? Your income taxes better explain where you got that much money. Paying for the apartment in Bitcoin won't help you hide the physical apartment.
I don't see cryptocurrencies as all that fundamentally different than cash (or even gold) for those kinds of purposes, which are already fairly easy to use for black-market transactions. The availability of money is not what's keeping my employer from paying me under the table; if they could get away with it, they could slip me USD or EUR bills under the table. And in a handful of small-scale occupations (e.g. hiring a house cleaner) people do so. But for most larger-scale stuff the cash itself is not the limiting factor; the limiting factor is that you do other things that get you noticed. Even that part is pretty classic: Al Capone was famously taken down on tax-evasion charges because he was clearly living a lifestyle above what he was reporting. If you buy a mansion and Lambo with your Bitcoin, you had better have your taxes in order.
Also, things like car tax are successfully collected even on entirely black-market sales through this simple expedient: drive around the city scanning license plates, and check whether the car is registered. The same is done with apartments: do you own a $1m apartment in the center of Copenhagen? Your income taxes better explain where you got that much money. Paying for the apartment in Bitcoin won't help you hide the physical apartment.
I don't see cryptocurrencies as all that fundamentally different than cash (or even gold) for those kinds of purposes, which are already fairly easy to use for black-market transactions. The availability of money is not what's keeping my employer from paying me under the table; if they could get away with it, they could slip me USD or EUR bills under the table. And in a handful of small-scale occupations (e.g. hiring a house cleaner) people do so. But for most larger-scale stuff the cash itself is not the limiting factor; the limiting factor is that you do other things that get you noticed. Even that part is pretty classic: Al Capone was famously taken down on tax-evasion charges because he was clearly living a lifestyle above what he was reporting. If you buy a mansion and Lambo with your Bitcoin, you had better have your taxes in order.
I have been told that Spain has a big black market economy, it is part of ordinary life there to pay for say a car with "black money".
However I think even there the idea of setting up a tech company with more than a million euros of illegal currency that can't appear on your books might be a little challenging.
However I think even there the idea of setting up a tech company with more than a million euros of illegal currency that can't appear on your books might be a little challenging.
Where do you think the term"Spanish practices" came from :-) of course the politically correct term is now "quaint andalusian customs"
When I worked for a big telecom JV it was an open secret that everyone thought that Telephonicas dominance in South America was not all above board
When I worked for a big telecom JV it was an open secret that everyone thought that Telephonicas dominance in South America was not all above board
I'm an spaniard living in Spain. Yes, there is too much black market economy here, but I've never seen it with cars. People here usually don't pay VAT to the plumber, the electrician, etc.
EDIT: I'm talking about new cars. I guess the used car market is mostly black, but I don't know as I never bought or sold a used car.
EDIT: I'm talking about new cars. I guess the used car market is mostly black, but I don't know as I never bought or sold a used car.
On used cars is mixed. You need to pay taxes based on sell value, with a lower limit based on the blue book equivalent we have here. People just declare a bit less than blue book value and pay the minimum.
But yes, most of Spain's submerged economy is via services without invoices (no VAT, no IRPF).
But yes, most of Spain's submerged economy is via services without invoices (no VAT, no IRPF).
yes I meant used cars. I'm the sort of cheap-ass who wouldn't even consider buying a car new.
Bitcoin is not anonymous. Is pseudonymous.
Beware! Spanish government wants to limit real crowdfunding, i.e., equity crowdfunding, not Kickstarter-like funding.
Not that it changes the story a lot, but I just wanted to make that clear.
Not that it changes the story a lot, but I just wanted to make that clear.
Brain drain has come so far in Spain it is now self-reinforcing.
... because you just can't trust income that's not silver bullion and was not preceded by genocide.
Governments like this should just fuck off and let people take their own risks. Jesus. If you're worried about people getting ripped off, why don't you just run a campaign giving advice on how to choose to spot scams? Why not treat people intelligently? Oh no, sorry, something scary and different that you don't understand? Kill it!
Old dinosaurs.
Old dinosaurs.
Because most of that people will come running to the government institutions when they get ripped off, will complain in the newspapers that the government has allowed this to continue for far too long, etc, etc, etc.
To follow HN's mandatory analogy policy, it's like when PCs had too many options and users were shooting themselves in the foot and then Apple came along and simplified things by removing those options. Some are mad to this day, others love how they aren't caught in difficult situations.
To follow HN's mandatory analogy policy, it's like when PCs had too many options and users were shooting themselves in the foot and then Apple came along and simplified things by removing those options. Some are mad to this day, others love how they aren't caught in difficult situations.
In your analogy, there's still competition between Linux and Apple. It's not like a designers union passed a law that no more than 3 parameters per app should be available to users.
Within Schengen, there is increasingly competition between governments, too. You can choose anything from a big-government state like Sweden to a small-government state like Latvia, and differences on many other axes as well. Especially true in tech, where things are getting pretty integrated and mobile (and converging on English as the lingua franca).
The problematic part for the big-government states is that there is nothing preventing the Swede from going to government paid school & university in Sweden, making his millions in Latvia and retiring to Spain while still getting his Swedish government pension.
The state pensions these days are tied to where you worked and paid taxes. At least that's the case in Denmark (not as familiar with Sweden). If you work in Denmark 40 years, you're entitled to a full state pension. If you work 20, you're entitled to half of one. If you work 4, you're entitled to 10%. You don't get it solely by citizenship. There is some basic welfare support for those who live in the country, though, e.g. if you're a Danish citizen who lived abroad and ends up back in Denmark dirt poor aged 70 and lacking a pension from elsewhere to support yourself, you won't be on the street. But that is relatively uncommon.
Generally so far it hasn't been a major issue, though things are being continually tweaked, and there are some tax shenanigans especially at the corporate level. But Scandinavia has been fairly successful in the inter-country competition for being seen as a nice place to live. It's pretty uncommon for people who study at university here to pursue careers elsewhere for more than a short period of time, because most Scandinavians prefer to live somewhere with a functioning civil society and government, low levels of crime, good support for raising children, and generally a working social system.
Generally so far it hasn't been a major issue, though things are being continually tweaked, and there are some tax shenanigans especially at the corporate level. But Scandinavia has been fairly successful in the inter-country competition for being seen as a nice place to live. It's pretty uncommon for people who study at university here to pursue careers elsewhere for more than a short period of time, because most Scandinavians prefer to live somewhere with a functioning civil society and government, low levels of crime, good support for raising children, and generally a working social system.
So Sweden's government will have to become more Latvian.
Looking at the direction of net migration, I think Latvia is currently losing that competition: people who attend university in Latvia go to pursue careers in Sweden much more often than the reverse. In fact I would guess that the "low-tax" strategy is partly motivated by an attempt to combat the brain drain. If they weren't losing so badly, they could probably afford to be a higher-tax, higher-service society, but right now they have to compete on price.
and It is why the coop is in such trouble in the UK some greedy rich pensioners invested in hi yielding bonds (PIBS) thinking oh 7%/8% yield with out understanding their responsibilities.
They whined about having to take a haircut to the press and MP's and the coop had to sell off its family jewels to private equity vulture funds who are gong to screw over the holders of PIBS anyway
They whined about having to take a haircut to the press and MP's and the coop had to sell off its family jewels to private equity vulture funds who are gong to screw over the holders of PIBS anyway
The Spanish government is the one that puts taxes on people using their own solar panels for personal consumption:
http://www.thelocal.es/20131112/spains-solar-police-to-kick-...
It must be one of the most anti-progress political moves I've seen.
http://www.thelocal.es/20131112/spains-solar-police-to-kick-...
It must be one of the most anti-progress political moves I've seen.
I know this law well, it's not a tax but a grid fee – you pay a c/KWh fee if panels are connected to the grid and/or use the grid for alternative supply, but not for off-grid panels. The fee doesn't specify if the panels are for personal or industrial use. Something very similar to what the state of Arizona does. That article doesn't do a very good job of explaining the raison d'être of the so-called "tax".
I'm so conflicted in how I feel about Libertarians lately. I've always been sympathetic to many the ideas, especially those that relate to moral values rather than economics.
OTOH "I love the music but I can't stand the scene."
OTOH "I love the music but I can't stand the scene."
I've always found it rather puerile, for exactly the lack of understanding and subtlety displayed by OP. It's no wonder to me that it's so popular with engineers, it's an expression of the same mindset an engineer has when he sees a problem from afar and is convinced that he has the perfectly modeled solution.
Now if only those pesky humans and their idiosyncrasies would conform to the ideal behavior...
Now if only those pesky humans and their idiosyncrasies would conform to the ideal behavior...
If you want to represent "humans and their idiosyncrasies" in terms that can be understandable to a classical liberal economist...
Government itself is an emergent phenomenon. Rent seeking, regulatory capture or other market distortions are not the only emergent elements of government. Legislation, elections and all the other basic components of democratic government are themselves emergent, changing in response to "market" forces. I don't personally think this is the best framework for thinking about these things, but even within the framework it is possible to consider them.
Government itself is an emergent phenomenon. Rent seeking, regulatory capture or other market distortions are not the only emergent elements of government. Legislation, elections and all the other basic components of democratic government are themselves emergent, changing in response to "market" forces. I don't personally think this is the best framework for thinking about these things, but even within the framework it is possible to consider them.
You're obviously not familiar with the massive economic literature on the many, many various ways governments distort economies, create waste and hamstring growth - all while often utterly failing to achieve stated goals.
This isn't to say that governments aren't providers of certain goods (national and personal security, protection of property, legal systems, systems for pricing and controlling externalities) that are critical for growth.
This isn't to say that governments aren't providers of certain goods (national and personal security, protection of property, legal systems, systems for pricing and controlling externalities) that are critical for growth.
You're obviously not familiar...
So to combat my personal opinion that advocates of naked Libertarianism are essentially juvenile, you provide a naked display of naive realism:
The three "tenets" of naive realism are:
That I see entities and events as they are in objective reality, and that my social attitudes, beliefs, preferences, priorities, and the like follow from a relatively dispassionate, unbiased and essentially "unmediated" comprehension of the information or evidence at hand.
That other rational social perceivers generally will share my reactions, behaviors, and opinions—provided they have had access to the same information that gave rise to my views, and provided that they too have processed that information in a reasonably thoughtful and open-minded fashion.
That the failure of a given individual or group to share my views arises from one of three possible sources—
- the individual or group in question may have been exposed to a different sample of information than I was (in which case, provided that the other party is reasonable and open minded, the sharing or pooling of information should lead us to reach an agreement);
- the individual or group in question may be lazy, irrational, or otherwise unable or unwilling to proceed in a normative fashion from objective evidence to reasonable conclusions; or
- the individual or group in question may be biased (either in interpreting the evidence, or in proceeding from evidence to conclusions) by ideology, self-interest, or some other distorting personal influence.
From https://en.wikipedia.org/wiki/Na%C3%AFve_realism_(psychology...
So to combat my personal opinion that advocates of naked Libertarianism are essentially juvenile, you provide a naked display of naive realism:
The three "tenets" of naive realism are:
That I see entities and events as they are in objective reality, and that my social attitudes, beliefs, preferences, priorities, and the like follow from a relatively dispassionate, unbiased and essentially "unmediated" comprehension of the information or evidence at hand.
That other rational social perceivers generally will share my reactions, behaviors, and opinions—provided they have had access to the same information that gave rise to my views, and provided that they too have processed that information in a reasonably thoughtful and open-minded fashion.
That the failure of a given individual or group to share my views arises from one of three possible sources—
- the individual or group in question may have been exposed to a different sample of information than I was (in which case, provided that the other party is reasonable and open minded, the sharing or pooling of information should lead us to reach an agreement);
- the individual or group in question may be lazy, irrational, or otherwise unable or unwilling to proceed in a normative fashion from objective evidence to reasonable conclusions; or
- the individual or group in question may be biased (either in interpreting the evidence, or in proceeding from evidence to conclusions) by ideology, self-interest, or some other distorting personal influence.
From https://en.wikipedia.org/wiki/Na%C3%AFve_realism_(psychology...
I disagree. There are many things that are illegal because they are bad for society.
"crowdfunding" is completely unregulated, and just like other startups that decide regulation isn't a good idea (Mt Gox, airbnb, that unlicensed taxi thing, etc etc), things rarely end well.
For every 1 legitimate crowdfunding campaign, there's probably 100 that are just there to scam people out of money. And when people are increasingly scammed out of money, who will they look to to compensate them? Their government.
"crowdfunding" is completely unregulated, and just like other startups that decide regulation isn't a good idea (Mt Gox, airbnb, that unlicensed taxi thing, etc etc), things rarely end well.
For every 1 legitimate crowdfunding campaign, there's probably 100 that are just there to scam people out of money. And when people are increasingly scammed out of money, who will they look to to compensate them? Their government.
and who will regulate the regulators? In recent history, it appears no one will. Will things end well with respect to that? History tells us no.
No, people should just do their homework and choose the crowdfunding platforms with the best reputation (which will be the one which force funding seekers to verify themselves with the best identity platform). There should be a free market so crowdfunders can compete to offer the best reliability.
Honestly, there's no need whatsoever to regulate this whatsoever. The market will evolve of its own accord until it's "good enough." Regulation will be impotent at best and destructive at worst.
This is the exact same thing that happened with banks. People got angry because banks went bust, and the government stepped in to insure them with public dollars (i.e. take risks that no private citizen would take with their own money.) How did that turn out eh? 100 years down the track and people still fail to do their homework because they can trust the government will pay. And everyone loses.
Honestly, there's no need whatsoever to regulate this whatsoever. The market will evolve of its own accord until it's "good enough." Regulation will be impotent at best and destructive at worst.
This is the exact same thing that happened with banks. People got angry because banks went bust, and the government stepped in to insure them with public dollars (i.e. take risks that no private citizen would take with their own money.) How did that turn out eh? 100 years down the track and people still fail to do their homework because they can trust the government will pay. And everyone loses.