Sun, Feb 26, 2012 page11

• Spain’s barter economy wins followers in grip of crisis

  Soaring unemployment has fueled barter trades, with Web sites offering cash-free exchange of goods and services. Even the lowly peseta has made a comeback in two towns

  • By John Stonestreet / Reuters, MADRID
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  It is 10.30am on a chilly winter day in central Madrid and retailer Emanuela Scena is opening up for business.

  Her shop is one of several offering second-hand goods that have sprung up in Spain’s capital during the economic crisis and is packed to the rafters with clothes, books and electrical equipment.

  However, unlike the others, it doesn’t take cash. It is part of a barter economy in goods and services that is gaining ground as the country tips into recession and an already sky-high unemployment rate inches up.

  

  Lucia Maqueda poses next to signs with images of the peseta as she waits for customers inside her fish shop in Villamayor de Santiago, Spain, on Feb. 14.

  Photo: Reuters

  Finding different ways of generating business has also inspired stores in two towns to start accepting the peseta again, encouraging customers more than a hour’s drive away to root through cupboards and drawers for a currency they thought they had surrendered for good in 2002.

  “When we started [in December 2010], Spain was already in crisis. At first people didn’t like the fact that everything we were exchanging was second-hand, but now they understand,” Scena said.

  The store, Abrete Sesamo (Open Sesame), now gets up to 20 customers a day swapping goods for points they earn by bringing in items of their own and paying a small subscription fee.

  People can also buy points just with euros, “but they’re more expensive that way because we want to encourage bartering,” Scena said.

  As a storeholder, Scena is an exception in a small, but growing parallel economy that is being fueled mainly by a clutch of Web sites, paid for by advertising and offering platforms for the cash-free exchange of everything from language classes and dog-walking to furniture and cars.

  It has also encouraged discounting in Spain’s residential property market, which collapsed in 2007 when an asset bubble burst, saddling banks with a mountain of toxic loans and making them less inclined to issue mortgages to new customers.

  PROTECTING CASHFLOW

  Sabino Liebana, whose company atodatinta sells printers and accessories via the Web, is part of the expanding business-to-business barter community.

  During 2010, he paid the monthly rent of 600 euros (US$802) on his Madrid office with goods instead of money.

  “It was mostly printers and inks, and a few computers,” he said. “The landlord rented at the same price to me as to his other tenants. I gave my products to him at a discount, but never below the cost price.”

  He was happy to take the hit, he said, because it meant he could protect his cashflow better.

  “Because of liquidity problems I think it [bartering] is something that will be used by more and more firms, especially in the service industry,” he said, adding he would “rather not say” how much profit he made last year on sales of 500,000 euros.

  He has made about a dozen cash-free transactions in the past six months, mostly for advertising and Web design work and often via the Barcelona-based exchange portal acambiode.com.

  Founded in Spain in 2001, the site covers most of the Spanish-speaking world plus Italy and Portugal. Worldwide it has 310,000 clients, mostly small firms or professionals from across the business spectrum, and 2,000 to 3,000 more are signing up every month, director Jaime Martinez said.

  The 67,000 Spain-based users seal about half a dozen either pure barter or part-cash deals daily worth about 5,000 euros each on average, or close to 10 million euros of business per year.

  The site expanded rapidly when the financial crisis hit in 2008 and is now experiencing another growth spurt that Martinez expects to extend through the slump as more firms look to focus their cash outgoings, on keeping themselves in business.

  “We are seeing a lot more activity in Spain than in previous years,” he said.

  “Bartering is another way of financing your purchases if you have liquidity problems, which means you can save your cash for more urgent matters,” he said.

  One obvious issue for the government is how to keep track of barter transactions. Spain’s tax office could not shed much light on how taxes were assessed but confirmed all barter transactions were liable for tax.

  “The key issue is how the barter exchange is valued. Tax legislation contains very specific guidelines for the fiscal valuation of goods and services, and this is mostly based on market price,” tax office spokesman Luis Gonzalez said, declining to elaborate.

  Martinez said in his business, both domestic and international transactions were taxed just as they would be if they were cash-based.

  However, Jose Maria Mollinedo, vice president of Spain’s Gestha union of tax inspectors, admitted the barter economy was a “totally opaque market [that is] ... impossible to monitor.”

  CHEAPER REAL ESTATE?

  In Spain, signs of funding strains are hard to miss. Since the middle of last month, about half a dozen listed firms have said they are seeking to refinance their debt or secure new repayment terms.

  The latter include commercial property developer Inmobiliaria Colonial and real estate manager and developer Quabit, both survivors of a crash that has seen average prices of existing property fall by 29 percent in just more than four years, industry data shows.

  With mortgage lending down even more sharply, dropping a third in the year to November according to official figures, conditions are ripe for a surge in barter transactions in the real estate market too.

  “We have grown tremendously fast just via word of mouth,” said Eneka Tamayo of Sepermuta, the residential property exchange Web site he runs in the Basque city of San Sebastian.

  Founded in 2008, it has about 6,900 homes posted and gets about 40,000 to 50,000 hits per month. Sellers give guide prices for their property and a wish list of what they are seeking in exchange at the same value.

  Tamayo expects the number of posts to keep rising until the market recovers.

  “Lots of people want to buy and don’t know how, if they don’t have work ... and if the banks aren’t lending,” he said. “If you already have a house, this way you don’t need to raise a lot of extra [money].”

  Tax is levied on barter transactions at 7 percent, the same as on cash-based property sales, but Tamayo says using property exchange works out cheaper.

  “If you sell a home for money, you look for the highest possible price. If you exchange you hold the price as low as possible and so pay less tax,” he said.
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