Maybe it seems like become a self-employed worker in Spain is something complicated. But it’s not. And in this article we are going to demonstrate to you why. We will go over the main steps to become an autonomo as an expat in the Spanish territory. Furthermore, we will provide some useful tips and talk about the main taxes you will need to pay.
What is an “autónomo”?
Autonomo is the Spanish word for freelance or self-employed individual.
Let’s use a clear example so you can easily understand.
Suppose you would like to move to Spain and become an English teacher. In fact, this is something really usual. You will have two options: you can find a job as an English teacher and get your work permit (which is fairly complicated, to be honest).
But, on the other side, you could also become a self-employed individual and work on your own. Without having any kind of contract. And this will be the scope of this article.
Once registered, you just need to send an invoice to the company or individual you are providing a service to, and that’s it! That will be the way in which you make money.
In which cases should you register as an autonomo?
Maybe you are thinking that some specific ways of earning money, like selling stuff on eBay or Amazon, don’t require to register as a self-employed. But you would be wrong.
Aren’t there any exemptions then?
No matter what you do, if you do provide any kind of service (like IT work, English classes or speaking at conferences), you need to register as an autonomo.
Yes, you will start paying self-employed taxes, but that is how it works.
Can I really become an autonomo?
Let’s stop for a second and reconsider things.
Are you really eligible to become a self-employed individual? As always, the answer depends on your country of origin.
- If you are an EU/EEA/Switerzland citizen, no problem. You can enter the country and set up your company or become a self-employed worker easily. The process will be straightforward and you won’t find any additional difficulty.
- But things get a bit complicated if you are from a non-European country. Because, first of all, you will need a visa to enter the Spanish territory. And, then, a residence permit to stay permanently in Spain plus a work permit as a self-employed. Furthermore, you will be required to possess an NIE number and a Spanish bank account.
Self-employed vs Company
There are two legal ways under which you can perform your activity as an independent professional. You can set up a company or you can become an autonomo.
Which one is best? Should you really become a self-employed worker?
Well, it depends.
If you want to get a detailed answer, you can access here our article in which we talk about the main differences in between an S.L. and becoming an autonomo.
But just to give you a quick overview, you will find it much easier to become a freelancer.
The legal process is faster and does not involve the same level of bureaucracy. Furthermore, there is no minimum capital investment to start working, and your tax duties are simpler.
So perhaps, if you don’t want to incur extra steps, the autonomo way is for you.
Nevertheless, if you predict you will have a high level of income (over 60.000€ per month), maybe setting up a company will yield better results: you will end up paying fewer taxes.
Which are the liabilities you will have as an autonomo in Spain?
Before starting with the steps you should follow in order to register as an autonomo, we thought introducing this section first would make things clear for you later on. Because if you understand which will be your two liabilities as a freelance in the country, knowing why you need to register where is easily understood.
Basically, as an autonomo you will have two basic obligations:
You must register and pay a monthly contribution to social security in order to have assistance in the Spanish public health system and to receive a pension in the future.
Hence, a certain flat fee will be charged directly to your bank account on the last working day of the month.
How much money are we talking about?
Right now, the fee is equal to 289€ per month. But don’t get scared: there are some deductions. During the first year as an autonomo you will only pay 60€ per month. And that amount will gradually rise until a total of € 289.
Nevertheless, you can also choose to pay using the maximum salary base, with up to € 1233,20 per month.
There are extra allowances for woman younger than 32 or individuals over 65 years old.
Taxes as a self-employed worker
For sure you couldn’t escape this: taxes.
But you will just need to pay two different ones as a freelancer: VAT (“IVA” in Spanish), and Income Tax or IRPF.
You should bear in mind that the Spanish tax year exactly corresponds to the calendar year: from January to December. In that sense, you will need to file quarterly tax returns (every three months): on January, April, July and October.
- You quarterly pay your income tax, after declaring the business income and deducting its expenditures. You will pay 20% of the resulting amount. Then, between May and June, you need to file your income tax return (on a yearly basis). There is where the real tax rate will be adjusted. What do we mean by that? If what you really had to pay according to your level of income was higher than 20%, you will need to reimburse the difference. But, on the other hand, if the applicable rate had to be lower, you will get a refund.
- VAT. The VAT is the tax that you will need to include in all the invoices you send to your clients, being 21% on the selling price. It is declared quarterly. How? You deduct the VAT paid on your expenses (internet connection, for example) to the VAT charged to your clients. And the resulting amount must be paid to the Spanish Hacienda.
With these two liabilities in mind, we can go now to the actual registration steps. It’s pretty simple: in order to become an autonomo in Spain you need to register for both things: social security and tax agency.
Bear in mind that if you don’t want to navigate this tedious process on your own, our business lawyers are ready to help you out and guide you step by step. Just send us an email and we will manage everything for you.
The 5 steps to become autonomo in Spain
Let’s review each of the 5 steps you will have to go through as an expat in order to register yourself as a self-employed individual:
1. Get your work permit
As we have previously mentioned, if you are not from the European Union or EEA, you will need a work permit in order to become a freelance in Spain. That is why this is the first step on the list.
Because you will need to apply from your country of origin. And this is crucial. Traveling to Spain and starting your work permit application procedure from here will only yield a denied request. Then, how should this work?
You’ll need to submit the required documentation at the Spanish consulate and get your visa.
Then you will be allowed to travel and enter Spain, where you will get your residence permit and continue with the process.
2. Obtain your NIE number
You can request it once you enter Spain with your visa, as you will need it to both get your residence permit and to register yourself as an autonomo. This number is essential, as will be used for nearly every legal or bureaucratic procedure in the country.
Along with your passport, you just need to submit the EX-15 form at your local Immigration Office, and you will get it straight away.
But remember to first book an appointment before going there.
3. Tax registration: the IAE
The next step is to register yourself with the tax authorities.
That is something called IAE (“Impuesto sobre las Actividades Economicas”), which you need to register at your local Tax Agency office. Just to let you know, the tax agency in Spain is called “Hacienda”.
This process simply implies registering yourself with the tax agency so they know that you will start conducting an economic activity as an independent professional. Therefore, you are notifying them that you will start sending invoices, and therefore you should be income-taxed.
How does this process go? It’s really simple and won’t take more than 15 minutes:
First of all, you need to book an appointment at any office that the “Agencia Tributaria” has. You can do it here.
When you go there, you will be asked the group number that corresponds to your specific economic activity. You can find that number here. If you are not sure or haven’t checked it out, don’t worry. The civil servant will help you out and find it for you.
Then, you will fill out model 036 or model 037. You will be told which one should you use, but many times it will be the 037 (a simplified one); as the 036 is commonly used for setting up a company (even though it has additional purposes).
Don’t forget to bring the following documents to your appointment:
- Your NIE number
- Passport and a copy of it
- Bank account number
And that’s it! You will have signed up for the IAE; hence you can now start sending invoices and providing your services to your clients.
Now that you can legally start working as a freelance in Spain, there is one step left. You need to register on social security. Why? Because it will be the process that enables you to enjoy the Spanish health care system benefits and receive a pension in the future. You will be entitled to those benefits after paying a monthly fee, as we have discussed in a previous section.
Let’s explain how this step works.
You will need to visit any of Social Security’s offices within the first 30 days after you registered at the tax agency.
There, you will register for a special regime created for autonomos called RETA (“régimen especial para trabajadores autónomos”).
The documents you must bring with you are:
- Your NIE number
- Passport and a copy
- Model 036 o 037 (depending on your case)
- IRPF form, the one you got on the tax agency office
- Address registration document (padrón)
5. Daily operations and tax returns
And, that’s it! Time for the real adventure.
You will be now fully prepared to start your journey as an expat autonomo in Spain.
All the boring legal paperwork is done, so it’s time to do your job (to do it successfully it will help to understand the management culture in the country, which you can do here).
But, as we went through on the liabilities section, the party does not end there. You will need to file your tax returns: both for the VAT and for the income tax.
And here are two different paths you can follow.
The first one is the one we do not recommend. You can devote a huge amount of time understanding and learning how to file your tax declarations, and do that by yourself (it can be complicated, especially as a foreigner).
The problem is that it will take much time for you. And that time is not worth it. Why? Because you, as a self-employed individual, should be focusing and spending your hours there where you are most productive: doing exactly your professional activity. Not worrying about taxes.
That is why, the second path (the one we recommend), is to have an accountant who will do the job for you. You will just need to send her all your invoices (received and sent), and she will manage everything on your behalf.
Your life will be much easier.
At Balcells Group we offer monthly accounting services both for companies and self-employed individuals. That is why we will be happy to help you out manage your taxes in Spain!