Tax Advice for the Self–employed in Spain
Autónomo is the Spanish equivalent of self-employed or freelance. It also covers people operating unincorporated small businesses. Below Andalucía Lawyers answers some questions you may have about becoming self-employed in Spain.
Who is required to register as autónomo?
Anyone engaged in any type of independent economic activity in Spain, whatever their profession, is obliged to register as autónomo at the social security office and the tax office.
What tax obligations are applicable to autónomos?
1) Spanish Invoices
Autónomos must issue and retain copies of invoices for the work they have done. Additionally, in order to offset your expenses against your income for tax purposes, you must keep invoices of your work-related expenses. These invoices must include the following information:
- The name of the autónomo or business.
- The identification number of the individual (DNI/NIE) or the business (CIF).
- The date.
- A description of the product sold or service rendered.
- The total invoice amount.
- VAT (IVA) where applicable.
2) VAT (IVA) Requirements for Autónomos
There are no VAT exemptions in Spain for small companies. The general rule is that everyone must charge VAT, however low their turnover is. However, some autónomos only offer goods or services which are exempt (exento) from VAT, such as educational services or medical supplies.
VAT is reported quarterly using form 303 at the end of December, March, June and September. The form must be submitted within 20 days from the last day of those months. An annual VAT return (form 390) must also be completed. This is due at the end of January with the final submission deadline being within 30 days of the month end.
You will receive a VAT rebate if the amount of VAT on your expenses exceeds the VAT you have collected on your income. The refund amount is calculated annually not quarterly.
Businesses that provide exempt services don’t have to do the quarterly VAT return and they cannot recover VAT on their costs.
3) Spanish Income Tax for Autónomos
Autónomos must also make a quarterly payment, due within 20 days of each quarter end, of 20% of their profits. This is a payment on account of your personal income tax and is done using form 130.
Once the fiscal year has come to an end, you will have to file a personal income tax return due from May to June known as the RENTA. This return will combine all of your sources of income, including your business profits, and all of the tax reliefs you are due. Read our article Spanish Income Tax Rates 2015-2016 to find out more.
When your final tax liability for the year has been ascertained through this process, you will either have to make a balancing payment or request a tax refund.
A balancing payment will arise if your tax liability is greater than any payments on account already made through the system outlined above. Bear in mind that the maximum payment on account suffered will have amounted to 20% of your business profits, and that the higher earners in Spain are taxed up to 48%.
You may request a refund if the withholding tax suffered exceeded your liability once other reliefs, such as mortgage costs, have decreased your taxable base to an effective rate of tax below 20%.
Autónomos must keep accounting records according to the legal standard, including income, expenses, 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.
The self-employed in Spain are required to pay social security contributions monthly, regardless of their turnover. There are various rates and options open to autónomos depending on their age, circumstances and economic activity classification. They all cost a minimum of approximately €267 a month, unless you can benefit from one of the social security allowances (see below). You can opt to pay more than the minimum charge of €267 per month in exchange for greater benefits such as accident or illness coverage or an increased state pension.
However, it may be possible to opt out of paying autónomo social security if earnings are sporadic and it is not a proper living. Contact us to arrange a consultation if you need advice on whether you qualify for this exemption.
Social Security Subsidies for New Autónomos
Some reductions on the monthly social security payments are available for new autónomos without employees.
If you have never been self-employed in Spain or you haven’t been self-employed in Spain in the last five years you can apply for this discount on your monthly social security contribution:
Months 1-6: 80% discount (you pay approx. €50 monthly if you have opted to pay the minimum social security contribution).
Months 6-12: 50% discount (you pay approx. €130 monthly if you have opted to pay the minimum social security contribution).
Months 12-18: 30% discount (you pay approx. €185 monthly if you have opted to pay the minimum social security contribution).
Additional New Autónomo Subsidy for Men Under 30 and Women Under 35
As above but with a 12 month extension of the 30% discount time:
Months 18-30: 30% discount (you pay approx. €185 monthly if you have opted to pay the minimum social security contribution).
In the case of individuals who are considering becoming self-employed, for some types of grant it is important that any grant application is made prior to the commencement of trade, so please be aware of this and do your research before you start trading.
A good source of information on grants and financial incentives for businesses is the website of the Spanish Ministry of Industry, Energy and Tourism. This contains detailed information about the criteria for grants from central government and those awarded by autonomous communities, municipalities and city councils.
Some of the Spanish Chambers of Commerce also have information, as do the one-stop business creation offices known as Ventanilla Única Empresarial or VUE. Please note that their information is not always available in English. The Madrid Chamber of Commerce has information available in English on its website, which is a useful reference point.
The Dirección General de Política de la PYME, the association of small and medium-size businesses in Spain, is an important organisation in the Spanish business world and can give entrepreneurs a considerable amount of support. If you aren’t a fluent Spanish speaker, find someone who is to help you make contact with them.
Bear in mind that any grant or incentive offered by the state or by an autonomous community is governed by the regulations which the EU has established for all its members. Aid and incentives are permitted only in areas which meet EU criteria, of which details can be found on the Invest in Spain website.
Subsidy for New Autónomos in Andalusia
This subsidy for new autónomos in Andalusia generally only benefits those who were previously unemployed. Contact us or go directly to your local Centro de Apoyo al Desarrollo Empresarial (CADE) office or the Junta de Andalucia’s website to find out more.
Andalucía Lawyers’ Self-employed Services
We offer a Self-employed Tax Package from as little as €50 per month. Find out more:
For more information or if you have any questions please contact us to enquire about our services.
We provide tax advice to private individuals, many of whom are expatriates or non-residents who require thorough tax planning regarding their assets in Spain, whether owned privately or through companies.