Category: Tax

A month or so into my journey of self employment in Spain, I came up across the following question:

“Can an autónomo hire another autónomo?“

This actually wasn’t because I needed to hire any self-employed people (hopefully one day!), but because a client/friend wanted to hire me and had no idea how to do it.

So I looked into the issue a bit, and made a few calls to the Hacienda. It turns out that it’s actually not too difficult to hire a self-employed person (probably why many businesses, in this day and age, do so to get round the laws that require that they might actually have to pay for their employees to have holiday time and social security benefits). This is how you do it:

When you write your invoice for the person employing you (don’t forget to include VAT!), you’ll need to include a line for the IRPF tax as described here (IRPF is normally 9% for the first couple of years of business, and 19% afterwards as of January 2014, depending on the sector you work in. I hope to write more about paying IRPF soon). It is the responsibility of the client to hold back (“retener“) this tax for you.

If you’re a self-employed person hiring another self-employed person, you’ll need to fill in an extra form. This is called the “Modelo 111” and should be filled in every trimestre. You can fill it in online. In this form, you declare the IRPF you have held back for your self-employed employees. Hopefully, the government will return a part of the IRPF paid back to you when you fill in the annual “Declaración de la Renta“.

In theory, you also need to provide a contract. For self-employed people, this is a special kind of contract called a “Contrato Mercantil“. I found a sample contract here (quick disclaimer: as I say many times, I’m not paid nearly enough to be a lawyer, and I can’t endorse this contract on any level apart from saying “looks alright to me”).

In all honesty, however, I’ve only ever had one client (my biggest one) who’s actually written a contract for me, and he’s from the States, so I don’t know to what extent this is actually a requirement unless there is some kind of legal dispute. Might be worth writing one for big projects with a large payoff at the end, where you would be at a serious loss if they didn’t come up with the goods.

Photos and text by Penelope

Conditions for self-employed people in Spain seem to be, very slowly, improving, and one of the laws which has recently changed is the 2013 law which allows the self employed to claim unemployment benefits or “el paro“, as it’s known locally.

There’s a long list of requirements you need to be able to fulfil to do this, however, and amongst them includes a requirement to pay an extra 2.2% in social security, meaning that your monthly payments will be a minimum of €281.84 instead of €253.36. This is because you choose to include in your social security payments cover for “cese de actividad” (cession of activity).

Other things you must do to claim unemployment benefit if you’re self employed:

• You must retrace the steps you made when signing up as self employed, and sign off due to cession of activity.
• You must have been paying into the social security systems for at least a full, continuous year.
• You must be up to date with your social security payments.
• You must not be old enough to retire.

The first point in particular seems to cause problems – I’ve read that eight of ten applications to claim unemployment benefits are rejected as it was too difficult to justify the cession of activity. You will need things like a stamped certificate and past records, and will need to prove that your business is making a real loss (ignoring any right you might have to a salary).

Text and photos by Penelope

If you’re self employed in Spain, there’s various bits of paperwork you’ll have to do to declare your earnings (or losses if you’re unlucky!) and pay the correct tax rates. This is where the fun begins.

Paperwork for the self-employed in Spain

First and foremost, when you’re signing up as self-employed you’ll have to do various bits of paperwork, including filling in the Modelo 036/037 in the Hacienda and filling in forms in the TGSS. Get more info on both of these initial steps in our article.

Once you’ve done that, the majority of people working self-employed in Spain will have to fill in the following forms. These are divided into declaraciones informativas (you only need to give info) and forms where you will need to pay.

The basics

• VAT: All companies must declare their VAT every year in the Modelo 390 (information only), and once every trimestre using the Modelo 303.
• IRPF: The Spanish equivalent of the poll tax or income tax needs to be declared every year in the Declaración de la Renta (Modelo 100), which everyone in Spain needs to fill in.
• Operaciones con terceros: Anyone setting up business in Spain withdealings of over €3,005 per year with another client or provider needs to fill in Modelo 347 once a year.

Added quirks:

• If you are in the “Regimen Simplificado del IVA” (mostly for farmers and fishers – if you don’t know about it, you’re probably not), replace VAT Modelo 303 with the Modelos 309, 310 and potentially 371 as well.
• Some people (like me, as I have lots of overseas clients) will need to declare the IRPF they earn once every trimestre using the Modelo 130 as well as the declaración de la renta. If you’re in the “Estimación Objetiva del IRPF” (your tax levels are based on predicted rather than actual income – again, if you don’t know about it, you probably aren’t), you will need to fill in the trimestral Modelo 131 instead.
• Operaciones intracomunitarias: If you work with the EU (either you sell your services to clients here or buy EU products), you will need to fill in Modelo 349 (information only). This is done once a year if your total dealings are less than €35,000.

If you are running a business in Spain and employ people, or rent a building, you’ll also be required to fill in scary-sounding forms like the 111, 115, 180 and 190. Or even the 184. Or the 123 if you deal with loans or dividends. There are also plenty more forms for large businesses or non-standard business models, but, let’s face it – if this is the case, it’s probably worth your while to employ an accountant anyway.

Note that the deadlines for each trimestre are: 20^th April, July and October and 20th/30^th January. Operaciones con terceros has to be handed in in February, and the Declaración de la Renta in May/June.

You can now do your tax in Spain online by downloading an electronic signature.

Step one of signing up as self-employed in Spain: take yourself to one of the Hacienda (aka. “Agencia Tributaria”, equivalent of the UK’s “Inland Revenue”)’s physical offices. You can find a list of addresses here. You need to do this before you open a business or start any kind of “economic activity”, or you’ll be subject to fines starting at €150.

Tell the nice man/lady at the desk that you want to sign on as self-employed, and you will be asked to wait for a while before being directed to a desk. Here, you will be asked to complete either the “Modelo 036” form, or the “Modelo 037”, also known as the “declaración censal”. The Modelo 036 seems to be much longer and more complicated, although it does have a useful box you can tick if you’re planning on operating with other business in Europe. Ask at the Agencia Tributaria if you’re not sure.

You will be directed as to how to fill in the form. Bear the following in mind:

• Epígrafes IAE – This records the type of business you have, so the government knows how much IAE (“Impuesto de Actividades Económicas”) business tax to charge you. Don’t panic – whatever category you put down, you’re exempt from the IAE unless you earn more than €1,000,000. By which point, you’ll probably have enough to pay for your own accountant anyway. This said, getting a proper description of the type of business you have is presumably quite important. I managed to confuse the woman at the desk into giving me a description which was something like “Generic professional”. You’ll find a complete list of the different IAE epigraphs on this government website.

You’ll be asked to sign a few things and fill in a few personal details and then – bang – you’re part of Spain’s self-employed. Time for a cup of cava to celebrate.

At this point, you might also like to consider signing up to get a digital signature to be able to do your tax online in Spain while you’re here. Make sure you have also signed on at the Seguridad Social.

Next: signing on as self-employed if you’re from abroad.