Going freelance in Spain? Find out what you can expect to pay as an autónomo with our guide to taxes for freelancers and the self-employed in Spain.
The Iberian sunshine comes with a price, especially if you’re self-employed: freelance tax in Spain is levied at the same rate as anyone else. This is perhaps because there are over 3.2 million people are registered as freelancers or self-employed persons living 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 12 months.
This guide explains exactly what you need to know, with sections on:
- Freelance tax in Spain
- Registering for freelance tax in Spain
- Self-employed tax deductions and credits in Spain
- How to file self-employed tax in Spain
- VAT in Spain for self-employed people
- Social security for self-employed workers in Spain
- Useful resources
Freelance tax in Spain
Freelancers and the self-employed pay Impuesto sobre la Renta de 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’ll be considered 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.
Tax for self-employed sole traders and freelancers in Spain
Tax for freelancers – autónomos – in Spain is charged at a progressive rate. As such it varies between 19%–45%, according to income earned. Bear in mind that Spain’s regions levy taxes differently, so rates vary across the country.
Tax for partnerships in Spain
There are different kinds of business partnerships in Spain, including the Comunidad de Bienes, a partnership based in 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, since the association lacks a legal personality and is not considered 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. As PWC explains, 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 number in the authority’s database.
If you aren’t registered, you’ll need to fill out Form 30 (Modelo 30) and present it to your local tax office along with your NIE, passport and an up-to-date certificado de empadronamiento (census record). You can get this from your local town hall. You can also send in the documents online (in Spanish).
To pay freelance tax in Spain, you need Form 36 (Modelo 36), or a simplified version, Form 37 (Modelo 37). The Agencia Tributaria explains the difference on its website.
Self-employed 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:
- social security contributions;
- 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.
A new regulation allows freelancers who work from home to 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 €53.34 per day within Spain and €91.35 per day spent abroad.
Be aware that you will need to pay by credit card or electronic payments and can produce the receipts – and that the payments are for business or working days.
Deductions when you work from home
For freelancers who work from home, Spain’s tax authority specifies certain partial deductions, such as supply expenses (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.
How to file freelance tax in Spain
As an autónomo, once you’re registered with the tax authority, you will need to 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 1st and 20th day 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.
You can now pay freelance tax in Spain online via the Agencia Tributaria.
VAT in Spain for self-employed people
Freelance tax in Spain extends to the Impuesto sobre el Valor Añadido (IVA), or VAT. 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 VAT every January, but have to report your VAT every quarter (Modelo 303) and also complete an annual IVA (VAT) 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 a VAT return and you cannot reclaim VAT on your own costs.
VAT within the EU
You may be exempt from paying VAT on goods and services if you are dealing with business customers (i.e., VAT registered) outside of Spain but within the EU, as they pay the VAT at their country’s rate at their end.
If you intend on doing this, you need to register this with the Agencia Tributaria to receive a special tax number and will need to make quarterly declarations about your intra-community business. As of January 2018, if you are selling digital services to consumers within the EU, you now 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 will have to pay social security contributions. If you are eligible and don’t pay social security, you won’t get the benefits.
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.
In general, self-employed persons under 47 years of age may choose the level of contributions they wish to pay within their income bracket. Social security benefits depend on the level of social security contributions paid. As of 2020, the general rate for self-employed professionals has increased to 30.3% (in Spanish), which is applied on a monthly social security contribution base of between €944.40 and €4,070.10.
Social security rates for freelancers
Unlike freelance tax in Spain, social security for most autónomos has increased to a flat rate of €286.15 a month. You will need to make these payments even if you don’t earn anything one month, so make arrangements to cover payments if necessary.
But there’s good news for new entrepreneurs. In 2018, changes were made to encourage more people to register as autónomos. This monthly contribution, called the quota de autónoma, is set at €60 for new freelancers as of 2020. From months 13–18, you’re eligible for a 50% discount, and from months 18-24, a 30% reduction. After 24 months it reverts to the standard rate.
For women under 35 or a man under 30, the reductions continue for three years.
It is sometimes possible to pay less. For example, if you have not registered as an autónomo but set up your company within the past two years, you can re-apply for the same discounts a new autónomo would receive.
Women returning after maternity can claim 100% discount for 12 months. If you work in a full-time job and freelance in your spare time, you are entitled to a 50% reduction in social security contributions for the first 18 months, then a 25% reduction.