On a secluded street in a dimly lit basement, Mikio, a Japanese-Chilean filmmaker and restaurateur, warns a small group of diners to clap raucously and sing Happy Birthday should the police barge into his clandestine restaurant Nikkei.

Mikio, 39, is determined to create the illusion of a private gathering of friends. The basement is decorated with black-and-white photographs of his grandparents. Even a toothbrush is displayed in the bathroom. He runs the place off the books and takes only cash.

"Please don't use my last name," he says, smiling nervously. The owner of the space, an independent film company, has no idea what he is up to.

Economic hardship has inspired a full range of clandestine entrepreneurship in Spain. Higher taxes and unemployment have pushed desperate Spaniards to convert their apartments, lofts and warehouses into jazz clubs, hair salons, restaurants and even flamenco halls. The venues have no listed addresses and are found through word-of-mouth or on Facebook and Twitter.

But underground restaurants seem to be among the most popular among the clandestine offerings.

"To begin with, I did it for fun and to make extra money and because people need innovative low-cost options in a bad economy," says Mikio, a wiry and jovial man who heralds each course by ringing a loud bell made of metal from his family's armament factory back in Japan. "But I prefer to think of it as a social gathering rather than a business."

The missing revenue from those who do not pay taxes may amount to as much as €37 billion ($49 billion), economists say, depriving Spain's debt-ridden government of much-needed reserves. Economists estimate Spain's black economy may be as much as a fifth of its gross domestic product.

Beyond avoiding taxes, Mikio said he was able to keep prices low by buying products in bulk from friends at local wholesale food markets and limiting his portions. On a recent night, the place was crammed with about 18 people.

The assembled diners could barely contain their glee at the price. A sumptuous nine-course Catalan-Japanese fusion meal came to just €23.

Mikio looks outside with unnerving frequency, fearing he will be exposed. Still, he says, he is becoming more relaxed. The place is so much in demand, he even counts some police officers among his customers.

READ FULL SOURCE ARTICLE: 02/02/2013

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