Taxes for freelancers and the self-employed in Spain

The Iberian sunshine comes with a price, especially if you’re a freelancer. Freelance tax in Spain is levied at the same rate as other workers. This is perhaps because there are over 3.3 million people registered as an autónomo in Spain.

The good news is that taxes for entrepreneurs in Spain vary according to the type of work. Furthermore, social security contributions from those who are just starting a business in Spain are now set at a lower rate for the first 24 months.

Below, you’ll find sections on the following topics:

Freelance tax in Spain

Freelancers and the self-employed pay Impuesto sobre la Renta de las Personas Físicas (IRPF) or personal income tax at the same rate as everyone else. The Agencia Tributaria, the country’s tax authority (also called the Hacienda), determines everyone’s tax liability.

If you spend over 183 days per calendar year in Spain, you’re a tax resident. This applies even if you live and work in another country for the rest of the year.

Rates of tax vary between limited companies, called a Sociedad Limitada (SL), and self-employed autónomos. If you’re struggling to work out your tax status, it’s worth reaching out to a financial advisor or legal expert who specializes in helping freelancers in Spain. Companies providing these services in Spain include:

• Balcells Group
• Entre Trámites
• Xolo

Tax for self-employed sole traders and freelancers in Spain

Tax for freelancers in Spain is charged at a progressive rate. As such it varies between 19–47%, according to income earned. Bear in mind that Spain’s regions levy taxes differently, so actual rates vary across the country.

Tax for partnerships in Spain

There are different kinds of business partnerships in Spain. These include the Comunidad de Bienes (a partnership based on the joint ownership of a business, goods, and property) and the Sociedad Civil (a private partnership agreement for a specific business).

In general, partnerships are not taxed at the corporate level. This is because the association lacks a legal personality and isn’t a commercial company. Therefore, each partner must pay personal income tax rather than company taxes.

Different rules apply for partnerships that are considered a “flow-through business entity”; these are taxed similarly to Spanish business entities.

Corporate tax in Spain

Corporate taxes in Spain for limited companies are a flat 25% on profits. Other tax rates may apply, depending on the type of company that is taxed and its type of business, and resident companies are taxed on their worldwide income.

Newly created companies are taxed at a 15% tax rate for both the first tax period in which they obtain a profit and the following tax period. This tax rate does not apply to equity companies (i.e., companies that do not carry on business activity) or to newly created companies that are part of a national or international group.

Registering for freelance tax in Spain

If you already live in Spain or have bought or sold a property, you may be registered with the country’s tax authority already. You can check this by looking up your NIE in the authority’s database.

If you aren’t registered, you’ll need to fill out Form 030 (Modelo 030) and present it to your local tax office. You’ll also need to provide your NIE, passport, and an up-to-date certificado de empadronamiento (census record). You can get this from your local municipal hall. You can also send in the documents online.

To pay freelance tax in Spain, you need Form 036, or a simplified version, Form 037. The Agencia Tributaria explains the difference on its website.

Freelance tax deductions and credits in Spain

When paying freelance tax in Spain, you can claim deductions on your tax return for the following, provided you have proper invoices and receipts:

• Spanish social security contributions
• Spanish health insurance premiums for yourself to a maximum of €500
• Expenses such as accounting and tax services
• Maintenance expenses for business activities
• Professional subscriptions
• Office expenses
• Phone and internet
• Any vehicles that you use for work

In addition, business owners can claim depreciation or amortization on all assets, except land. The tax authority has a table of guidelines identifying the maximum rates per year and the maximum number of years for each asset type. PwC offers a helpfully abridged list on its website.

Deductions when you work from home

For freelancers who work from home, Spain’s tax authority specifies certain partial deductions, such as supply expenses (e.g., water, electricity, gas, telephone, internet). The deduction is 30% of the expenses in proportion to the square meters of the home used for the activity with respect to its total area unless you can prove any other proportion.

This is only provided you registered your home address as your center of economic activity when registering as an autónomo. As an autónomo, if you also partially use a vehicle for business, 50% of expenditures on it are deductible for income tax and VAT.

Freelancers who work from home can claim up to €26.67 per day within Spain (and €48.08 outside the country) for food expenses if you need to eat away from home for business. On an overnight trip, you can deduct €54.34 per day within Spain and €91.35 per day spent abroad.

Be aware that you need to pay by credit card or electronic payments and can produce the receipts. The payments must be for business or working days.

How to file freelance tax in Spain

As an autónomo, after registering with the tax authority, you must declare your income every three months. For example, in January you declare your income for the October to December period and pay 20% of your income as advance tax.

The form here is Modelo 130. You will always need to fill this out unless 70% of the people you work for are businesses that are paying retained tax on your behalf.

If you are paying freelance tax in Spain under the modular system (estimación objetiva, in Spanish), where your income levels are based on estimations rather than actual income, then you have to use Modelo 131. The form must be completed between the first and 20^th days of each quarter: January, April, July, and October.

Then, every April, you must complete two forms: one for the past three months and one corresponding to the previous tax year. This latter tax return (Declaración de la Renta on Modelo 100) summarizes how much tax you have paid during the year. The only way you may be exempt from having to make the declaration would be if you had three consecutive months with no work activity.

VAT in Spain for self-employed people

Freelance tax in Spain extends to the Impuesto sobre el Valor Añadido (IVA), or value-added tax. Like other businesses, freelancers must pay 21%, irrespective of annual turnover. Although, some goods and services such as educational services, artistic endeavors, and some forms of independent writing are exempt.

You have to pay IVA every January. Additionally, you must report your IVA every quarter (Modelo 303) and complete an annual IVA declaration or Modelo 390. You can do all this online through the Agencia Tributaria. If you provide exempt services, you don’t have to submit an IVA return and you cannot reclaim IVA on your own costs.

Additionally, if you earn under €85,000 per year, you can opt out of quarterly IVA returns.

VAT within the European Union

You may be exempt from paying VAT on goods and services if you deal with business customers (i.e., VAT registered) outside of Spain but within the EU. This is because they pay the VAT at their country’s rate at their end.

If you intend on doing this, you need to register with the Agencia Tributaria to receive a special tax number and will need to make quarterly declarations about your intra-community business. If you are selling digital services to consumers within the EU, you have to charge VAT at the rate of your customer’s country.

Social security for self-employed workers in Spain

If you are earning more than the annual Spanish minimum wage as a self-employed worker or an autónomo, you must pay social security contributions. These contributions entitle you to health care and, after you’ve paid into the scheme for 15 years, a pension. You can pay more than the basic amount to get a higher pension or make additional contributions to be covered for accidents or sickness at work.

Self-employed workers must make contributions based on their earnings. The system includes 15 economic brackets, with contribution amounts based on which bracket your earnings fit into. Ultimately, the changes mean anyone earning less than €1,300 will pay less in social security contributions, those earning €1,300 to €1,700 will pay the same, and those earning over €1,700 will pay more.

If you have not registered as an autónomo but have set up your company within the past three years, you can re-apply for the same discounts a new autónomo would receive.

Women returning after maternity can claim a 100% discount for 12 months. If you work in a full-time job and freelance in your spare time, you’ll automatically receive a 50% reduction in social security contributions for the first 18 months. After that, you get a 25% reduction.

Useful resources

• Agencia Tributaria – the Spanish tax authority
• Servicio Público de Empleo Estatal de España – Spain’s social security system