Understanding self-employment in Spain: All you need to know

Self-employment in Spain is a popular option for many professionals and entrepreneurs, especially those in the online and small business sectors. If you're thinking of going self-employed in Spain, there are a few things you need to know.

First, you may need a visa to be self-employed in Spain. You can apply for a visa through the Spanish consulate in your home country. This will apply if you are from outside the EU in most cases, unless you already have long-term or permanent residency in Spain.

Second, you'll need to pay your taxes quarterly, as well as your seguridad social (social security). You can do this through a gestor, who will help you set up your self-employed status in Spain.

Third, some businesses work better than others for self-employment in Spain. For example, online businesses and small businesses tend to do well.

Fourth, when it comes to healthcare and pensions, self-employed workers in Spain are entitled to the same benefits as any other worker in Spain.

Finally, the future of freelancing in Spain looks bright. With more and more businesses going online, there's a growing demand for self-employed workers in Spain.

So if you're thinking of going self-employed in Spain, keep these things in mind. It's a great way to earn a living, but there are a few things you need to know before you get started.

History and context of self-employment in Spain

Self-employment in Spain has a long and rich history, dating back to the country's early days as a world power. For centuries, Spain was one of the most powerful empires in the world, and its economy depended heavily on self-employed workers. These workers were often highly skilled artisans who worked in cities like Seville and Madrid.

In more recent times, self-employment in Spain has become increasingly popular among online workers and small businesses. Finding jobs can be hard, so many people create their own! In Spain, you can pay your taxes quarterly, as well as your seguridad social (Social Security contributions). This makes it an attractive option for those who want to work independently, even though the seguridad social contributions are typically fixed and high. These are all about to change in 2023 though, to create a more fair schedule of payments, though those on middle to high incomes may well end up paying more.

If you're used to be employed and not having to worry about all this stuff, it can be challenging to deal with the admin and responsibilities of self-employment, but there are people who can help you. Once everything is set up, self-employment can be a great way to live and work in Spain.

Getting set up for self employment in Spain

If you're planning to work as a self-employed individual in Spain, there are a few things you need to know in order to get set up.

Once you have your visa sorted, you'll need to register as an autonomo with the Spanish government. This can be done with the help of a gestor, who will take care of all the paperwork for you. Can you do it yourself instead? Yes, in theory you can. But contracting with a gestor is not just for foreigners, lots of Spanish people outsource their day-to-day admin to professionals as well, simply because their time is better spent elsewhere (such as actually working in their business!)

Once you're registered as an autonomo, you'll need to start paying your taxes quarterly. You'll also be required to pay into the seguridad social system, which provides health insurance and other benefits for workers in Spain.

With all of these things taken care of, you'll be able to start working as a self-employed individual in Spain. Just make sure to keep on top of your paperwork and tax obligations, and you'll be all set!

This includes raising invoices for your work (your gestor may provide a template), and ensuring you collect proper individualised facturas (receipts) for the direct costs of doing business.

What kind of businesses work well for self-employment in Spain?

There are a few different types of businesses that work well for self-employment in Spain. One option is to start an online business. This can be something as simple as a blog or an e-commerce store. With an online business, you can reach customers from all over the world and don't have to worry about renting office space or hiring employees.

Teaching online or in a language academy is very popular with remote workers and immigrants, with or without formal qualifications. If you are a native English speaker, you can usually find work, even without a TEFL qualification. And if you are qualified, especially if experienced in a particular niche, you can command much higher rates - such as medical or legal English, (or as this podcast guest explained, aviation English.)

Another option is to start a small brick-and-mortar business. This could be a retail store, a restaurant, or even a service-based business like a hair salon. The key to success with a small business is to choose a niche market and to offer products or services that are unique to your area.

Self-employment is definitely a better option for most people in Spain than operating a private limited company, which is expensive to set up and administer. However, if your income is in excess of around €60,000 annually, you should discuss this option with your gestor, in case it proves more optimal to pay yourself via dividends instead, even with the higher monthly accounting fees.

Self employment also offers no limitation on personal liabilitiy either, as you are not creating a distinct legal entity. So you may wish to take specialist advice and/or consider professional indemnity insurance, depending on the risks associated with your activities.

What is "falso autonomo" and what are the risks?

Employing people in Spain is complicated and expensive, so lots of hirers prefer to contract with people who are self employed instead.

That's fine if the work is genuinely freelance - a professional service which is provided for lots of different clients for example. But if it's something which looks a lot more like a job, and it's the only work you do, then they really should be offering you the security and benefits of a proper employment contract.

The tax office are cracking down on this kind of 'false autonomo', so be wary of any offer of work under these terms, from a business in Spain. (Working for an overseas business on a full-time basis while autonomo in Spain may be okay... But if in doubt, take specialist local advice.)

What about healthcare and pensions when you are self employed in Spain?

When you're self-employed in Spain, your seguridad social payments give you access to local state healthcare, for primary and secondary treatment, as well as discounted prescriptions and other support services.

Healthcare is important because it ensures that you can get the treatment you need if you become ill or injured. Also, your autonomo payment covers the health needs of ALL the financial dependents in your household, so long as they are correctly registered as such (including non-working partners and children.)

Healthcare on the state is managed at the autonomous comunidad level, and is generally excellent in Spain, but some people choose to join a private healthcare scheme as well. This can be expensive, but it will give you access to a wide range of services, which may be provided in your own language, and without delays even for non-urgent treatment.

When it comes to pensions, your payments also contribute to the state pension, which is generous compared to many other countries but will not set you up for a life of luxury. The additional amounts you can contribute before tax are very low, but your gestor can advise on the most effective way to supplement your retirement planning.

The future of freelancing in Spain

As the world increasingly moves online, the popularity of freelancing and self-employment will only continue to grow. Spain is well-positioned to take advantage of this trend, thanks to its large pool of talented workers and its favourable tax laws.

For the digital sector in particular, the future is bright, with increased broadband technology even in rural areas, and increasingly affordable data and devices In the future, we can expect to see more and more people working as self-employed individuals in Spain.