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July 20, 2016
The paradox of not being the boss of your own business
The procedure of legalizing immigrants was always an issue in Greece. As a result an immigrant without a legal status is often forced into atypical entrepreneurship.
July 20, 2016

He is the actual owner of two barber shops but he is not the boss. This is not the only case where an immigrant with no legal status can’t legitimately own a business or have it registered in his name. Many immigrants who have been residing in Greece for many years, still do not have a residence permit, even though the law to legalize illegal immigrants was passed in 2005. Those who did not get legal papers for one reason or another, or those who entered the country after 2005, got the advantage of applying for political asylum and receiving the famous “pink card” – which is basically a temporary residence permit until the asylum application is processed. The fact is that for many years Greece has set a bad example in regards to dealing with asylum applications and would not proceed with taking urgent decisions; applicants with temporary pink cards have been waiting for years to get processed.

The procedure of legalizing immigrants was always an issue in Greece, as for many years, there was no operative immigration policy in effect. The one that exists today is still not as effective as it should be. Greece, as the first European country which borders with Turkey, is the very first stop for immigrants who want to enter Europe. The Dublin III Regulation for asylum seekers required Greece to hold large numbers of immigrants and refugees. According to this law, which is effective among the European Member States, the country responsible for examining an asylum application is the one where the asylum applicant first arrived in. As most of the immigrants enter Greece from Turkey, Greece is responsible for examining their asylum applications, which requires Greece to host the asylum applicants.

By having the pink card in possession, asylum seekers were allowed to work legally but they could not have businesses registered in their own names. Those who were business- and entrepreneurial- minded, were always seeking ways to acquire their own businesses rather than be employees. Their solution was to find someone (a person with legal status) who they knew very well and could trust, and make that person the legal owner of their business. So, they started opening shops, which in reality were not registered under their names but under the names of legal owners who already had other registered businesses and had legal status to reside and work in Greece. Though the daily running of the business – dealing with customers and creating profits – was the responsibility of the entrepreneur who started the business, he was not the ultimate authoritative person who decided how to plan the business financially, as the person paying the taxes on the business was the one who had registered the business under his name.

The entrepreneur and his legal business partner had no written agreements to define the business strategy, there was only an oral agreement between the two, based on general trust, which enabled the entrepreneur to start his “own” business which was registered in the other’s name. This somewhat resembles the “franchise” type of business but without a formal legal agreement. Due to the unwritten status of the agreement, this sort of business relation was a vulnerable one. The entrepreneur could not increase his sales above a certain level as the registered owner would then have to pay more taxes – and this discouraged the entrepreneur to expand his business. In any situation, the ultimate authority of taking financial decisions was in the hand of the person who had registered the business in his name. The entrepreneur was the “real” owner of the business but in reality he did not have the upper hand in decision making, which was ultimately causing the business to eventually fail.

I met with one immigrant from Afghanistan who is the owner of such a business in downtown Athens.

“I applied for asylum in 2008 and got a pink card but I am still waiting to be called for the second interview!”

When he arrived in Greece back then, he had no job and started selling calling cards for phones in the streets of Athens to other immigrants. After some time, he decided to open his own business but because he was not allowed to do so legally, he came in contact with another Afghan immigrant who had legal status and had his business registered in his name. The legal partner agreed to “hire” his business permit to the newcomer so he could open his own shop and sell mobile phones and related accessories. After a while, some differences were raised between the two, leading the newcomer to break the agreement and close his shop. He found another legal partner and again “hired” his business permit and continued the same procedure but in the end, he was not totally satisfied with his business.

I met with another immigrant, a man from Pakistan, who was in the same situation. He told me his story about how he managed to open a barber shop. Today, he is the “owner” of two barber shops but this time he registered his business under the name of a Greek national.

He showed me his papers and said “Look! I am an employee at my own business and theoretically my boss (Greek national) is paying me my monthly wages and paying taxes for me!’’. He also told me that if he had legal status, he would have expanded his business but because he is not sure about his legal future, he hesitates in doing so.

The only advantage both sides have is that the real owner is not paying the taxes directly and has no book-keeping responsibility, as the registered owner gets some extra money for hiring his business permit without paying extra taxes. Unfortunately, such types of businesses can be found even today. Particularly in downtown Athens, there are businesses opened by immigrants, mostly Asian, who face the same problem. They have shops, mostly selling mobile phones and computer related accessories, but there are minimarkets and even restaurants, which are originally registered under other names and the real owners pay monthly “rent” to the legal owners. Since the real owners do not yet have legal status, they cannot have a registered business in their name. There is no law to legalize these entrepreneurs so that they can start paying taxes directly to the tax authority and play their role in the economic development of the country.

After talking with another asylum seeker who has a pink card, I realized that when a businessman is not feeling sure about his financial future, this can lead to tax irregularities. “Investment is done for profit. It is the law! When a businessman sees that his financial future is uncertain, he will be led to either not paying his taxes properly or hiding his profits in order to avoid paying more taxes,” one immigrant told me. He added, “A healthy business needs a stable business environment in order to be nourished.”Solving this issue of illegal businessmen and entrepreneurs by legalizing immigrants can help in boosting the economy and give people the chance to develop and expand financially. If this strategy of legalizing such immigrants is adopted and they are given legal status, this will lead not only to the increase in tax revenue but to the creation of new job opportunities as well.

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<a href="https://solomonmag.com/author/solomon-mag/" target="_self">Solomon Staff</a>

Solomon Staff

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