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.
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.