Are you living in Spain and are you considering becoming a freelancer? In this blog we will give you the ins and outs of how to set up as an autónomo. If you are thinking of starting a profitable activity in Spain, when not being employed by a Spanish business, it is obligatory to register yourself as an autónomo. If you are coming from the EU/EEA or Switzerland, there are no restrictions of setting yourself up as a freelancer. If you are coming from outside the EU/EEA or Switzerland, this process is a little more complicated; you will need a visa to come to Spain, a residence permit to stay long-term and a work permit that allows you to work as a freelancer.
To become a freelance worker in Spain might seem complicated and is a rather time-consuming process. The easiest way to go through this process would be to hire a gestor, a type of business manager who acts as an intermediary between you and the Spanish bureaucracy, using the help and advice would make your life a lot easier. With or without the help of a gestor, we will provide you with some guidelines on how to become an autónomo.
What do you need before registering as an autónomo?
Before being able to register as an autónomo you must need the following things:
1) Your Foreigner’s Identity Number (NIE)
2) Your Social Security Number
3) A Spanish Bank Account Number
In order to start working as a freelancer in Spain, you need to register at two different places: with the Spanish tax authority (Agencia Tributaria or better known as Hacienda) and the Spanish social security system (Tesoreria General de la Seguridad Social).
Step 1 – Register your business
As a first step you must make an appointment with a local tax authority office and sign up for the Impuesto sobre Actividades Económicas (tax for economic activities). To find the contact details of the closest tax office in your area click here
Once you are at the Hacienda you will need to let the person know that you would like to register as a freelancer and will be asked to fill out the Modelo 036/037 (known as declaración censal). It is important to state when you wish to start your activity and what service you are going to offer. For tax purposes, in Spain you will be put into a category which describes the type of work you want to carry out.
There are two main categories of autónomo: autónomo empresarial (commercial and trading business) and autónomo profesional (professionals or freelancers). Within these categories there are sub-classifications which depend on the activity you will be undertaking. In relation to your category you will be given a code. Moreover, you will receive a personal tax certificate (Impuesto sobre la Renta de las Personas Físicas, IRPF).
Step 2 – Register as an autónomo in Seguridad Social
Having registered your business with the Spanish tax authority, you will have 30 days to contact the Spanish social security authority. You will inform them you have become self-employed in Spain and will be registered under Régimen Especial de Trabajadores Autónomos or RETA (Special Regime for Autonomous Workers). In this way you will be covered by Social Security and will have access to the public health system.
You will be asked to:
– present a copy of your Passport
– provide you NIE number
– show the IRPF form
– provide a copy of Modelo 036/037 from Hacienda
– fill in the application form and sign
– perhaps present your town hall registration (Certificado de Empadronamiento)
After these 2 steps you are officially registered as a freelancer in Spain.
Once you are registered and want to start with your business activities, there are three factors that should be highly taken into account:
1) Social Security contributions
Being autónomo you have to pay your social security contributions. This is in order to receive health care and, after 15 years of paying, a pension. The social security is a monthly payment and normally depends on what type of activity you are doing. In general, most autónomos pay a flat rate around 270 euro a month.
According to the update of January 2019, the new autónomos have the advantage to only pay 60 euro a month for the first year, then 141.65 euro after 12 months and 198,31 euro after 24 months. For women under 35 and men under 30 there is even a further 12 months of reductions, meaning that full social security is not paid until after 3 years of freelancing.
The Spanish VAT, IVA (Impuesto sobre el Valor Añadido), represents the government indirect tax of 21%, paid by the final consumer. You will collect this 21% on to what you earn and must declare it every January. Apart from declaring it every year, you must report your VAT every quarter. There might be cases in which, when doing business with another country from the EU, to be exempt for paying VAT on goods and services.
3) Income tax (IRPF)
The Spanish income tax, Impuesto sobre la Renta de Personas Físicas, is rather complicated. What is for sure is that you must complete a tax return (declaración de la Renta) , summarising how much tax you have paid during the year, every year. Depending on your nature of work, there are two different ways to calculate the IRPF: retention of income (retenciones) and up-front payments. Regarding retenciones, when you invoice another autonomo or business in Spain, you will retain a 7% of your invoice to pay to the tax office in advance. Referring to the advance tax payment, you will have to pay a 20 percent of your profits to the tax office, every quarter.
Running your own business is always a complex process and you have to be very careful at how you are doing things, and when you should be doing things. Therefore, again, it is recommendable to be hire a gestor so he can manage your administration and you can clarify any doubts.