Self-employed people hiring other self-employed people

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

Posted in Tax

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