Self Employed in Spain

Congratulations! You’ve made it as a blogger, YouTuber, Instagrammer or other internet sensation. You might be earning from AdSense, the Amazon Associates Program or private clients, or you might be hoping to soon. But there’s one question you might not have thought about if you’re freelancing in Spain: what taxes do you need to pay?

An initial thought you might have, especially if you’re not earning much, is “can I pay tax without being self-employed in Spain?“. You can find some thoughts on exemptions here.

In general, however, there’s 3 sorts of tax that everyone who is self employed in Spain needs to pay: Social Security, Income Tax (IRPF) and VAT (IVA).

• Getting started: when you sign up as a freelancer (which, in my opinion, is your easiest option), you’ll need to use the IAE epigraph 844 (advertising services). YouTubers will also need 961.1 (video production).

Social Security

• The same for bloggers, YouTubers, etc. as for any other type of freelancer in Spain
• Starts at €50/month for new autónomos (self-employed people in Spain) and goes up to just under €300/month

Income Tax (IRPF)

• As the type of business activity you are carrying out does not count as “Professional Services”, you will need to fill in Modelo 130 every quarter and advance 20% of your earnings.
• At the end of the year, you will need to fill out the Declaración de la Renta summary form. Depending on how much you’ve earned and your personal situation, you might either be returned some of the 20% you’ve advanced or be asked to pay more.

VAT (IVA)

If you are receiving money from within Spain…

• This sort of business activity pays full-rate VAT (21%).
• This needs to be paid in quarterly with Modelo 303.
• You will also need to fill in the annual Modelo 390.
• Don’t forget to charge VAT on your invoices (you don’t need to charge Income Tax as you advance a standard fee of 20% every quarter). Spanish invoice template here.

If you are freelancing in Spain and receiving money from within Europe… (Google AdSense normally falls into this category, due to their offices in Ireland)

• You do not need to pay VAT or include it in invoices.
• Both you and the entity you’re receiving money from need to have signed up in the Registro de Operadores Intracomunitarios and have a VAT number.
  • You do this using Modelo 036 when you originally sign up as self employed (check box 582 and write the date of your first expected European transaction in box 584).
  • You can check whether the other party has a VT number here.
• You will need to fill in Modelo 349 every quarter (if you’re earning more than €50,000 from other European countries) or yearly (if you’re earning more than €35,000, or €15,000 to any single country).
  • You do not need to pay anything; this Modelo is purely informative.

If you are receiving money from outside of Europe… (I believe the Amazon Associates Program falls into this category)

• You do not need to pay VAT.

Also, don’t forget…

• If you earn more than €3,000 from any single client, you will need to fill in informative-only Modelo 347.

Sources: ASEPYME

Spain continues to struggle to combine digital portals like AirBnB and Homeaway with sustainable living and citizens’ rights. Given the current climate, if you’re renting out an apartment on AirBnB you will want to make sure you comply with the law to avoid fines and upset neighbours. This can be tricky: as well as national taxes, each region of Spain has its own regulation and laws you’ll need to comply to in order to make sure your AirBnB is legal in Spain.

I’ve gone through national requirements and taken the example of Catalonia for the local ones. If you don’t live in Catalonia, I’d encourage you to book some time with your local town council to confirm requirements in your local area (there is a list of local town councils here). Share what you learn in the comments box below!

(Note that renting out an entire apartment has a different legal status from renting out rooms in your apartment (while you still live there). You can find out more about the latter here.)

Renting a flat with AirBnB: national laws

Regardless of where in Spain you set up business, you will need to pay IVA (VAT) and IRPF (Income Tax).

For a very simple business model (just 1 property that’s not your main dwelling on AirBnB), renting a flat is exempt from VAT (article 20.1 VAT law 37/1992, section 23). However, this changes if you offer “hospitality services” to your clients (such as breakfast or laundry services). Then, you are considered to be running a different kind of business and so in a different tax category. Legally, you are not even allowed to change towels or sheets without charging VAT on your final bill (even if you do not charge extra for these services). Of course, this only applies while your apartment is full – after the guests leave you can clear up 🙂

How much you pay depends on your total earnings/profits and personal situation (whether you have children, disabilities, etc.). It generally varies between 20-40%.

If you are earning more than 1000€/year, IRPF needs to be declared in the yearly Declaración de la Renta (which all Spanish citizens need to fill in), in the section “Rendamientos del capital inmobilario”. There are instructions on how to do this here, you can also pay a gestor around €50-€100 to do on a one-off basis.  As the guide explains, you can claim back expenses, including the ones below. If you only rent our your apartment for a portion of the year, you should claim expenses pro rata.

• Property tax
• Interest on your mortgage
• Rubbish collection tax
• Community tax
• Costs of agencies who sub-let your apartment
• Gas/electricity/water bills
• Insurance
• Amortization

Is AirBnB legal? Local laws

Obtaining a licence

In Catalonia, in order to legally rent out a flat using platforms like AirBnB, you first need to register it as a HUT (Habitatge d’ús Tourístic). In order to register, you’ll need to book an appointment with your district council using this form. Note that a “tourist” flat in Catalonia is rented for up to or including 31 days at a time.

You’ll need to fulfill the criteria listed here (namely, having a permanent contact number and having a flat that is correctly furnished) to run a legal AirBnb in Spain.

Make sure you bring your resident’s card/passport and the cedula de habitabilidad (Habitacion Certificate) of the apartment you’re planning to rent.

Local district authorities only grant a certain amount of licenses per year. Fulfilling the criteria is not necessarily enough to guarantee you a licence. If your application is successful, you should display your licence number in your AirBnB listings.

Catalonia’s Tourist Tax

You’ll also need to pay the Tourist Tax (Tasa Turística, applicable in Catalonia and the Balearics). You do this once a quarter using the Modelo 950 form. You can access this by downloading the special programme available here (make sure you have a digital certificate). Select “HT” as your business type.

When calculating the number of units to tax (“nombre d’unitats d’estada”), calculate how many people stayed in your apartment. Then, multiply by the amount of nights they stayed, up to a maximum of 7 nights. So 2 people x 9 nights would mean 2×7 = 14 units.

You currently pay 0.65€ per unit of stay in Barcelona and 0.45€ outside of Barcelona.

These are just my notes and it’s important to note that I might be wrong. Even if I’m not, laws can change. My recommendation would be to hire a gestor (accountant) to do your first round of taxes to check you haven’t missed any nuances and to confirm your AirBnb in Spain is legal. Then, depending on how confident you feel, you can take it from there.

The Declaración de la Renta is Spain’s yearly tax form. Unlike in other countries, everyone has to do it. There are a few pointers following for the Declaración de la Renta due in 2018 (which reports on fiscal year 2017). These are designed for people working in companies – so if you’re freelancing in Spain or a small business owner you should check this article instead.

Disclaimer: I’m not a legal/financial consultant, so do bear in mind that these are just observations based on my own experience of doing the Declaración de la Renta.

1. Do you need to do the Declaración de la Renta? When?
2. The basics of doing your Declaración de la Renta
3. Changing and adding information

The Declaración de la Renta is obligatory for all Spanish citizens earning over €22,000. If you’re not working, you have an obligation to do the Declaración de la Renta if you earn over €1,000 from odd freelance jobs or other economic activity.

For 2018, the deadline has already passed to do the Declaración de la Renta

You can now do the Declaración de la Renta online using this link.

Click on “Obtención del número de referencia” to confirm your identify and get a reference number. There are 3 ways you can do this:

1. Inputting the total amount you paid (or received) in last year’s Declaración de la Renta
2. With a Certificado Digital (if you have one)
3. Requesting to have a PIN code sent by post

Choose one and follow through until you receive a reference number. Then, go back to the initial screen and click on “Servicio tramitación borrador/declaración (Renta WEB)”. Choose “Borrador/Declaración (Renta WEB) to get started. You’ll see that you are asked to confirm details about yourself and family.

(If you’ve done any work outside of your main job, this will appear on a pop-up now. We’ll cover declaring work outside your main job later, so for now let’s assume you haven’t seen it.)

Make any changes. Approve the information, and you will land on the “Resumen de declaraciones” summary screen.

Resumen de declaraciones – reading the summary screen

• “Resultado de la declaración” (the amount you have to pay or, if negative, will receive) is at the top.
• Middle section (“Rendimientos”): reflects your earnings from companies and any financial products; as well as how much income tax and social security they’ve already paid on your behalf
  • This information is provided to the government by companies and banks and pulled into your declaración de la renta automatically.
  • Companies you work for are legally obliged to send you a “Certificado de retenciones” containing this information.
• Underneath: information about any deductions you receive.

If it seems like everything is correct and you don’t have anything to add or change (see below to check what these things might be!), click directly on “Presentar Declaración” in the top right. You might see a message that tells you that there are errors in your Declaración de la Renta. Don’t panic! These “errors” are normally just reminders to check your work. So if you haven’t changed anything, everything should be correct.

Then, depending on how much you need to pay, you may see the option to “fraccionar pago” (pay in instalments). Decide what you prefer and choose your payment method – “Domiciliación del pago” (payment by direct debit) is often most comfortable.

Finally, check your bank account details, sign and send.

Tip! Make sure you save a copy of your Declaración de la Renta for your records.

It’s rare that one size fits all – especially in tax statements. Even if nothing about your financial situation is different, it’s not a bad idea to go into the document to check your records are correct. Some changes might even entitle you to a tax rebate!

Navigating between sections

First, to access your full tax records, click on “Datos Personales” (Personal Info). It seems that from the Datos Personales screen, the navigation bar changes slightly, so you can now see “Apartados” (Sections) from the top, where you can make changes and toggle between the different pages.

Change your declaración de la renta if…

• You’ve changed address in the last year

In Page 1 of “Apartados”, make any changes at the top and then select a code under “Titularidad”. If you’re renting, for example (and have a contract), use code 3. For “Situación”, in most cases you’ll need code 1. In addition, you can use this link to check what the “Referencia catastral” (property reference number) is for your accommodation if you don’t already know.

• You’d prefer not to dedicate a proportion of your earnings to the Catholic church

Sneakily, it seems the default option has you dedicate a portion of your tax payment to the Catholic church. So I normally uncheck this on Page 3, and tick box 106 which dedicates a portion of my tax payment to social ends.

• You’ve paid for trade union subscriptions, obligatory professional collegiates or legal defence against an employer

Page 5 in “Apartados”.

• You’ve earned money from financial products or property

Fill this in on Page 6. Interest on bank accounts is pulled in automatically.

• You’ve done extra work outside your normal job

Remember that pop-up you saw in the initial stages? The distinction here is that “Trabajo” refers to anything that is your main economic activity (whenever you work for a company and are not freelancing), and “Actitividad Económica” refers to freelance work or odd jobs. Select the appropriate option.

While “Rendimientos de Trabajo” are automatically included and calculated in your Declaración, “Actividad Económica” needs to be manually inputted on Page 9.

Some niche kinds of earning (forestry, fishing, assets and goods, etc.) feature in the following pages. Unless you are running a business, it’s unlikely you will need to worry about these.

• You won a monetary prize in 2017

Lucky you! Declare this on Page 15.

• You’ve earned interest on the stock exchange

Page 16.

• You contribute to pensions, life insurance plans, etc

Pages 25-27. If your employer runs these, they will probably be filled in automatically.

• You or a dependant are disabled

Pages 2 and 29-30. Disability also appears in other sections so it may be worth checking through everything and seeking professional help with your Declaración de la Renta to make sure you get the benefits you’re entitled to.

• You bought a house before Jan 2013

In 2013, the law changed and people were no longer entitled to a tax rebate on their mortgage. However, if you’ve been in the same property since before 2013 the old law still applies to you. If you were lucky, fill in the top box on Page 37 (note that you can only claim up to a maximum of €9,040).

• You’ve invested in starting up new businesses

Business Angels can include information about their activity on Page 38 to receive a rebate.

• You’ve lived in the same rented property since Jan 1^st 2015

Similar to property purchase, renters do not get a rebate if they signed their contract after Jan 2015.

If you signed before that and are earning less than €24,107.20 per year, you can claim back on rent on Page 39 by inputting the property owner’s NIF (normally the same as the DNI/NIE; should appear in your contract) in box 643 and the amount you paid over the whole year in box F. Obviously, this only applies if you have a proper, legal contract.

• You’ve donated money to charitable organisations or political parties

You can claim this as an expense on Page 40.

• You’ve invested in anything of cultural or social significance (UNESCO World Heritage in Spain, the Canary Islands, R&D/selected events in technology/the arts, etc.)

Claim this on Page 41 – 45.

Regional financial help

Furthermore, depending on the autonomous region of Spain you live in, you might be eligible for extra financial help. Check Page 47 to see if you can claim any of the items on the list. These change from year to year, so if you’re unsure what any of them mean in 2018, try Googling “declaración de la renta” + “deducción” + list item + the autonomous region you live in for more information.

Next, to check the changes you’ve made, next click “Validar” in the top navigation bar. Normally, the only “errors” that come up should be reminders to check your working and are nothing to be concerned about.

When you’ve finished, press “Guardar” (save) go back to the “Resumen de declaraciones” summary for a final check.

Finally, I like to click on “Vista previa” to read through everything I’m submitting. When you’re ready, click “Presentar declaración” and follow the steps as before to finish and send your Declaración de la Renta.

Done! So… was this article helpful? Do you have extra information? Leave a comment and let me know!

From the comments I’ve received on this blog, it looks like English teaching is a popular profession! Tax declaration for freelance teachers of any kind in Spain is relatively simple compared to other businesses. Here’s how to do it.

Private language classes in Spain – taxes you need to pay

• Private classes or in-company teaching?

This is an important distinction in Spanish tax law.

1. If you are teaching classes in companies (who require an invoice), they will collect income tax from you and pay it in on your behalf.
2. Will you be giving private English classes (or any other language)? If so, you need to pay income tax directly to the government.

Not sure? Ask the people you’re working for if they will “practicar retenciones” (collect tax) from you.

• If more than 70% of your classes are in-company…

1. You need to sign up as self-employed. The IAE epigraph code for language classes is 933.9 – you will need to include this in the forms you fill in.
2. Language classes in Spain are exempt from VAT.
3. The companies you work for should deduct 15% (7% in your first years) from your invoices. They will pay this in for you.
4. Social security payments (ranging from €50/month in the first months to just under 300€/month after a year or two) will be taken out of your account automatically.
5. Once a year, you should complete the Declaración de la Renta to settle up with the government.
   • The government looks at how much you’re earning and what your costs are and decide how much you should pay (or receive). The online form automaticall deducts tax companies pay in for you during the year.
   • You can do this electronically – see the article above for details.

• If you give private language classes…

1. As above, sign up as self-employed, using epigraph code 933.9.
2. Again, you do not need to pay VAT for private language classes in Spain.
3. Every quarter, you need to complete Modelo 130 and advance 20% of your earnings to the government.
4. The government will remove social security payments from your bank account.
5. As before, you need to fill in the Declaración de la Renta once a year.

 

Happy new year, autónomos!

Not much changed in January for Spain’s freelance workers, unfortunately. A few cosmetic changes came about as a result of the Ley de reforma urgente del trabajo autónomo. However, these seemed to be extra exceptions to existing rules rather than real changes to the system.

The main changes are for new autónomos, however there are some for existing ones, too.

Changes for new autónomos in 2018

• New freelancers in Spain now pay €50 social security for the whole first year of business. Before, this was just 6 months.
• For women under 35 and men under 30, social security reductions will continue for 3 years rather than 2.
• Freelancers who also work a full-time paid job will be entitled to 50% reductions in social security for 18 months, and then a 25% reduction.

Changes for all freelancers in Spain in 2018

• You will be able to claim up to €26 per day (€48 abroad) in food as expenses if you have to eat away from home for business. You must pay via mobile or card (and keep your receipt).
• Freelancers who work from their own homes will be able to claim up to 30% of water, gas, internet and electricity bills of the parts of their houses affected by activity.
  • You must have registered your home as you centre of economic activity when you signed up as self-employed for this to apply

Furthermore, Social Security payments for self-employed workers in Spain seem likely to rise by 3-4% in mid-2018.

Autónomos who have parted to create a Sociedad Mercantil, or who employ more than 10 people, will pay 4% more social security starting from January. There will be a possible increase further in the year.

Are you self-employed? What do you think of the tax changes?

Sources: Infoautónomos (El Economista), Cinco Días (El País), Intereconomía, Autónomos en Ruta, EuropaPress.

If you are not a freelancer, see the basic version of how to do the Declaración de la renta linked here.

The dreaded Declaración de la Renta is the annual document all Spanish people must fill in to declare their earnings. For self-employed “autónomos”, it’s particularly important It’s basically your yearly summary of the IRPF income tax you’ve paid, which, as a freelancer, you may or may not also be required to document each quarter with Modelo 130.

This is my experience of the Declaración de la renta. Check and compare with other sources as it may not be appropriate to your business model. If you have any doubts, you should hire a gestor (bookkeeper), especially if this is the first time you’ve done the Declaración de la renta. Most will charge around €40. Even if you do seek help, however, I still recommend getting some understanding of the Declaración de la renta.

How to do the declaración de la renta

The basics

First, read the version for non-freelancers on doing the Declaración de la renta. Most of the steps are very similar. If you’re self employed in Spain, there will be a few extra things to fill in.

In particular, section E1 (“Rendimientos de actividades en estimación directa” – Page 9) is relevant as this covers activity under the “direct estimation” system most freelancers use.

(Some freelancers in Spain pay under the modules system (or other “special regimen”) instead, but this is rare and being phased out. Unless you’re already aware that you’re paying under one of these systems, chances are you’re not.)

Differences for freelancers, step by step

Below is a description of the things I did differently as a freelancer when filling in the Declaración de la renta.

Rendimientos de actividades en estimación directa (Page 9)

• I affirmed my type of business in “Actividades realizadas”. Note: if you’re not sure what your IAE epigraph is, there is a list here. This should also be documented in the Modelo 036 you received when you originally signed up.
• In “ingresos íntegros” (specifically, “ingresos de explotación), I typed in my total earnings as a self-employed person,
• In “Gastos fiscalmente deducibles”, I included all my business costs. (note: the computer I bought went in “Otros servicios exteriors”).
• If you’ve been in business for under a year, check the box which mentions “derecho a la reducción por inicio de una actividad” to claim a tax reduction.

Cálculo de impuestos (Page 33)

In “pagos fraccionados ingresados”, I filled in the amount I had already paid in using Modelo 130 at the end of each trimestre.
And that’s it! Best of luck filling in your Declaración de la renta, and do write in to share any of your tips for doing so with the community.

Next: monthly VAT declarations – Modelo 303.

Are you a freelancer in Spain with a business plan (or at least a couple of ideas on the back of an envelope and a few interested clients)? It might be time to officially sign up to pay self-employment tax in Spain.

There are two ways to do this:

• The easy way is hiring an accountant (“gestor”) to do it for you.
• The hard way is doing it yourself.

“Can it really be so difficult to do your own tax?” The short (and long) answer is: yes, it really can. If you’ve done self-employed work elsewhere, you might think that becoming self-employed in Spain would follow a vaguely similar process. However, the Spanish legal system is full of plenty of red tape to trip up unsuspecting “autónomos” (“freelancers” in Spain). In fact, all the self-employed Spaniards I know hire an accountant to navigate the world of paying tax in Spain for them. It’s only the foreign friends I have who do things for themselves.

Despite this, I managed to work out how to sign up as self-employed in Spain for myself. Here’s what I found.

Going self-employed in Spain

You will need to sign up to pay tax in two places:

1. With the Hacienda (Inland Revenue)
2. With the Seguridad Social (National Insurance)

To properly sign up to freelance in Spain, you will need a valid NIE (Número de Identidad de Extranjero – resident’s number), as well as your passport, access to a photocopier and 1.50€.

You might also like to check the cost of freelancing in Spain quickly to see if it’s for you.

Ready? Let’s go.