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Starting a Business in Spain – Registration of Self–Employment (Autónomo)

05/13/2014 Rafael Guerrero

Starting up a business in Spain requires careful consideration to ensure you meet all the compliance requirements. It’s easy to get carried away and rush into starting up your business without taking the time to research the Spanish environment, or even without seeking professional advice.

As setting up a registered company in Spain is a lengthy and costly process, many people decide to start trading as a self-employed individual and set up a limited company if necessary further down the line. If you have considered all the options and concluded that self-employment is the best way for you, this is what you should expect.

Registering with the Tax Office

It’s important that you inform the tax office that you will be commencing a business activity before you start trading. This is done via a census return (forms 036 or 037) where you inform the tax office of your personal details, date of commencement of trade, description of activity, VAT liabilities and personal income tax method applicable to your trade.

The only real requirements are:

a NIE (a foreigner identity number).
a Spanish bank account (for the social security charges).
a work permit (if from outside the EU).

Registering at the Social Security Office

After you have registered with the tax office, you then need to notify the social security office of your commencement of trade and register as a self-employed individual (Regimen Especial de Trabajadores Autónomos: RETA). From the moment you register, you will be liable to pay your monthly national insurance contributions so this must be factored into your monthly expenses.

Autónomo status is the Spanish equivalent of self-employed or freelance and in addition covers people operating (unincorporated) small businesses. Anyone engaged in any type of independent economic activity in Spain is obliged to register as autónomo, whatever their profession. The Spanish law is quite strict regarding this and everyone is obliged to register as self–employed, whatever their level of earnings.

However, it may be possible to opt out of paying autónomo social security if your earnings are sporadic and do not provide you with a proper living. Contact us to arrange a consultation in person or over phone/email if you need advice on whether you qualify for this exemption.

Other Requirements

Those are the bare minimum requirements for registering as self-employed but there may be other steps to go through, depending on the type of business. For example, anyone opening premises to the public will require an opening licence called a licencia de apertura. This is obtained from the local town hall and will be granted according to local bylaws.

Ongoing Obligations Applicable to all Autónomos

The obligations applicable to all autónomos are as follows:

Personal Income Tax and VAT (IVA) returns on a quarterly basis.
Keeping up with social security payments (monthly).
Issuing properly drawn-up invoices, including VAT where applicable and income tax retentions where appropriate.
Keeping accounting records according to the legal standard including income accounts, expense accounts, supporting invoices for expenses and accounts of capital items. These accounting records will be absolutely essential if you are selected for inspection by the tax office.

Spanish Tax Return (RENTA 2022)

Spanish Corporate Tax 2022

Employment, Payroll and Dismissal

Spanish VAT (IVA)

Starting a Business in Spain – Registration of the Business and Formation of the Company

Tax Advice for the Self–employed in Spain

Spanish Inheritance

05/13/2014 Rafael Guerrero

Losing a loved one is overwhelming. We will help you to calmly navigate through the legal side of this difficult time, working at all times to safeguard your interests, keeping you informed and making sure you get what is rightfully yours.

What are the steps to claiming an inheritance in Spain?

The Central Registry of Spanish Wills in Madrid should be contacted to establish the existence of a Spanish will. If a Spanish will exists, the deceased’s death certificate will be required in order to apply for a legal copy of the will. A valuation of the deceased’s estate in Spain will also be required. Following this, the estate can be administered in Spain. Only a notarised copy of the death certificate stamped with the apostille seal is required.

What happens if there is no Spanish will?

If no Spanish will has been made and there is only a foreign will or intestacy, before the administration of the estate in Spain can proceed the following documents will have to be translated, notarised and apostilled:

The death certificate.
The foreign will.
Grant of Representation or equivalent.
It may also be necessary to provide a Certificate of Law to explain the law of intestacy in a particular country.

What is the process for inheriting property?

The legal formalities of transferring property to beneficiaries in Spain are completed before a Spanish Notary. The title deed of the property being transferred must be submitted to the Spanish Tax Authorities to pay Spanish Inheritance Tax. It is then presented to the Land Registry Office and banks so that the ownership can be changed into the names of the heirs.

Important Changes to Spanish Inheritance for Expats

Spain’s New Inheritance Tax Law for Non-Residents of Spain

The EU Court Rules that Non-resident Inheritance Tax in Spain Is Illegal

Spanish Inheritance Tax

Spanish Wills

Spanish Inheritance Tax

05/13/2014 Rafael Guerrero

Spanish Residents

Spanish inheritance tax is applicable if you are resident in Spain. Allowances are available depending on the relationship with the deceased. In the first instance the State rules apply but these can be amended by the different autonomous communities, providing conditions set by the relevant autonomous communities are met.

Non-residents

As a non-resident you are liable to Spanish inheritance tax if you inherit any property situated in Spain, irrelevant of whether or not the owners of the property were Spanish residents. The only exception to this is property owned by a company.

Expenses

Some expenses may be deducted from the value of the inheritance:

Burdens and encumbrances imposed directly on the asset which reduce its value (e.g. pensions, annuities and long leases).
Duly documented debts (e.g. mortgages, pledges, state and local taxes).
Certain expenditures (e.g. medical costs; and expenses with regard to burial, cremation, and inheritance-related litigations).

The State Rules

The tax rates differ depending on the value of the amount inherited. These range from 7.65% on the first €7,933 and up to 34% on €797,555 and over. Beneficiaries are divided into four different groups and the more remote the beneficiary’s relationship to the deceased, the lower the tax allowance and the higher the tax rate.

The four groups are:

Group 1: natural and adopted children under 21.
Group 2: natural and adopted children aged 21 and over, grandchildren, parents, grandparents, spouses and unmarried partners registered as a pareja de hecho (domestic partnership) in Andalusia or Catalonia.
Group 3: in-laws and their ascendants/descendants, stepchildren, cousins, nieces/nephews and uncles/aunts.
Group 4: all others including unmarried partners unless registered as a domestic partnership.

Since the autonomous communities may modify their own rates and allowances, these groups may differ from one locality to another.

Resident or Non-resident

There is a reduction in the amount of Spanish inheritance tax to be paid when the deceased was a resident and the property involved is the family home. The reduction ranges from 95% to 99% of the value of the property and represents a significant difference to the amount of inheritance tax payable in Spain.

As a result, you will be required to prove residency using Town Hall certification, utility bills and tax declarations. The deceased must also have been resident for a specified period of time, generally for at least three to five years.

In cases in which the deceased was a Spanish resident but the inheritors are non-residents, if the beneficiaries are close relatives to the deceased, such as children, then 95% of the estate value, up to a maximum of €122,606.47, can be exempt from inheritance tax. However, the inheritor has to make a commitment not to sell the inherited Spanish property for at least 10 years. If they do sell within that time they must pay the non-resident fee plus interest.

Period for Payment

The filing deadline for the inheritance tax return is 6 months from the date of death. Upon submission of form 650, the Tax Agency will calculate the tax payable. Alternatively, the taxpayer can opt for self-assessment, submitting the simplified form 652. The forms can be downloaded from the Tax Agency’s website.

Our Advice

Taking advice from someone who understands the implications of Spanish inheritance tax can help you mitigate taxes. Contact us in order to arrange a consultation, in person or over phone/email. We have experience in reducing taxation in Spain so you can be confident that you are not paying more tax than is strictly necessary, nor will you get caught out with an unexpected tax bill.