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

by eLobato • 12 years ago

74 99 12 years ago

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letzjuc• 12 years ago

Anyone knows why anyone would impose these limits to crowdfunding?

ArenaSource3• 12 years ago

To protect the interests of traditional and powerful companies: Banks

Jacqued2• 12 years ago

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.

coldtea2• 12 years ago

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.

johnchristopher2• 12 years ago

Are you implying the government sees funding money as taxable ? If so, on what basis ? Incomes ?

adnam• 12 years ago

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).

im_dario2• 12 years ago

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).

antr5• 12 years ago

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.

Joeri• 12 years ago

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

logicchains• 12 years ago

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.

logicallee• 12 years ago

"capable of circumventing ridiculous laws like this"

Dude, by definition you are arguing that it's great for criminal uses.

eyko• 12 years ago

When a law is ridiculous, the term legal is meaningless.

nirnira6• 12 years ago

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.

maninalift3• 12 years ago

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.

pqs2• 12 years ago

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.

walshemj4• 12 years ago

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

pqs2• 12 years ago

Bitcoin is not anonymous. Is pseudonymous.

qwerta2• 12 years ago

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.

iamwithnail• 12 years ago

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.

qwerta2• 12 years ago

Legal responsibility for finishing the project and tax accountability could be separated. Anyway this is going to be just another accountancy nightmare.

brazzy• 12 years ago

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.

omegant4• 12 years ago

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..

ArenaSource3• 12 years ago

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.

muyuu• 12 years ago

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.

riffraff2• 12 years ago

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.

raverbashing• 12 years ago

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

tehwalrus• 12 years ago

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.

frankblizzard• 12 years ago

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.

akumen2• 12 years ago

That would be logical. However, this is not how things works here in Spain.

omegant4• 12 years ago

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.

akumen2• 12 years ago

Spain is a horrible place to do business. First hand experience and official data http://www.doingbusiness.org confirm that.

yrochat• 12 years ago

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).

eLobato2• 12 years ago

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.

omegant4• 12 years ago

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.

alberto_rico• 12 years ago

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.

aragot5• 12 years ago

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.

jng• 12 years ago

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.

joaquindev• 12 years ago

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

eLobato2• 12 years ago

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.

nirnira6• 12 years ago

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.

gtirloni• 12 years ago

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.

aragot5• 12 years ago

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.

walshemj4• 12 years ago

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

higherpurpose• 12 years ago

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.

antr5• 12 years ago

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".

netcan2• 12 years ago

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."

jessedhillon2• 12 years ago

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...

theknown99• 12 years ago

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.

gretful• 12 years ago

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.

nirnira6• 12 years ago

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.

rainmaking2• 12 years ago

... because you just can't trust income that's not silver bullion and was not preceded by genocide.

rainmaking2• 12 years ago

Brain drain has come so far in Spain it is now self-reinforcing.

kaoD• 12 years ago

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.

Spanish government limits crowdfunding to € 1M, donations capped at € 3000.

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