Compliance as a Self-Employed Worker in Spain: Taxes, Social Security, and More
[Article content approved by Entre Trámites. This is general information and does not constitute specific tax advice for any individual]
Working as a self-employed individual, or autónomo, is a very common status, for immigrants and locals alike in this country. Approximately 16% of the workforce in Spain is registered as autónomos according to Instituto Nacional de Estadística (INE), making around 3.2 million people in total. This relatively high compared to other European countries, reflecting Spain’s significant number of small and family-run businesses.
The autónomo population covers a wide range of professions, from freelancers and entrepreneurs to small business owners across various sectors, including large numbers of knowledge-based workers nowadays.
Being autónomo Spain comes with specific legal and tax obligations. Whether you’re a resident of Spain or an international entrepreneur looking to start a business here, it’s crucial to understand the requirements involved in establishing yourself legally. Spain offers many opportunities for remote working freelancers, but it also comes with certain administrative tasks that you must handle to avoid legal complications.
Note: This advice is for those legally residing in Spain - if you need a visa first, then please see this source.
Setting Up as Self-Employed: First Steps
Before working as a self-employed professional in Spain, you need to complete the following essential steps:
Obtain an NIE (Foreigner Identification Number)
An Número de Identificación de Extranjero (NIE) is required to conduct any legal, financial, or tax-related activity in Spain. As a self-employed worker, this identification number is a critical part of your registration process with the Spanish authorities - in fact, you will find it almost impossible to do anything in Spain, without getting this number first.
If you’re a non-EU citizen, you’ll need to apply for this alongside your residency or work permit. EU nationals can simply request an NIE at a police station or through Spain’s immigration office. However in both cases waits can be long in some areas, and you may need help from your accountant or gestor to get an appointment in a reasonable timeframe. They can also apply for you to receive a digital certificate, to operate a number of administrative procedures securely online.
2. Register with Social Security (RETA)
All self-employed workers must enroll in the Special Regime for Self-Employed Workers (Régimen Especial de Trabajadores Autónomos or RETA). This process requires you to visit the Tesorería General de la Seguridad Social (TGSS), the Spanish Social Security office, or apply online via the Social Security portal.
Once registered, you’ll be obligated to make monthly contributions to Spain’s social security system, which covers healthcare, pensions, and other benefits. You will be able to apply for a SIP card to use your local centro salud and public hospitals, and also the Tarjeta Sanitaria Europea, extending your health coverage across the whole EU bloc.
3. Monthly Social Security Contributions
Autónomos in Spain are required to contribute to the social security system. The standard base for monthly contributions starts at around €300. However, Spain offers a tarifa plana (flat rate) for new autónomos, providing a reduced monthly contribution of (around) €80 during the first 12 months of registration.
After this period, the rates gradually increase until you’re paying the full rate. This flat rate is available to both Spanish nationals and foreign residents, and there may be extensions to the early rates depending on your income, and also your exact location. However it’s important to note that this discounted period is only available once every 3 years, and you will not be able to access the flat rate if you are a self-employed collaborator, the special regime for family members hired within the same business.
4. Register with the Tax Authority (Hacienda)
To declare your earnings and fulfil tax obligations, you must register with Hacienda, the Spanish Tax Authority, by submitting forms Modelo 036 or 037. This registration formally declares your intent to operate as self-employed and enables you to submit tax returns, file for VAT, and access tax benefits or deductions available to freelancers.
Tax Obligations for Self-Employed Workers
Spain’s tax system requires self-employed individuals to stay on top of their earnings declarations and pay the necessary taxes. You will need to file taxes in two main areas: Impuesto sobre la Renta de las Personas Físicas (IRPF) and Impuesto sobre el Valor Añadido (IVA).
Personal Income Tax (IRPF)
Personal income tax, known as IRPF, is the tax on your earnings as a self-employed individual. Taxes are usually calculated on a progressive scale, with rates ranging from 19% to 47%, depending on your annual income. If your annual earnings are under a certain threshold, you may qualify for reduced tax rates or deductions, but these must be declared accordingly.
Autónomos must pay income tax on a quarterly basis (Modelo 130). This payment is an advance, calculated as a percentage of your income, usually 20% of net earnings (after deducting eligible expenses). In June you will file your annual return for the previous year (the Spanish tax year matches the calendar year), and at this point any underpayments or overpayments are balanced.
Value-Added Tax (IVA)
Most self-employed workers in Spain must also charge and pay IVA (Value-Added Tax), currently set at 21%. This is a tax on the goods and services you provide to customers in Spain, which must be added to your invoices unless your business activities are exempt from VAT.
You will need to file your VAT return every quarter (Modelo 303). When calculating this, you subtract the IVA you’ve paid on business-related purchases (input VAT) from the IVA you’ve charged clients (output VAT).
If the amount of IVA paid exceeds what you’ve collected - for example if you mostly or wholly invoice clients outside of Spain, while also running up some taxed expenses locally - you may receive a refund, which is usually carried forward for several quarters.
Record Keeping and Invoicing
Proper invoicing and bookkeeping are essential for autónomos in Spain. Self-employed workers are expected to maintain accurate records of their income, expenses, and invoices for at least four years. Each invoice must include specific details such as the client’s information, a breakdown of IVA (if applicable), and a clear description of the service or product provided.
Failure to properly invoice clients or keep records can result in fines from the tax authorities. Professional administrators or accountants are employed by most autonomos, Spanish and foreign, to help manage these administrative tasks and ensure compliance.
Penalties for Non-Compliance
Non-compliance with Spain’s legal requirements for self-employed workers can result in penalties, ranging from fines to legal action. Failing to register with social security, underreporting income, or not declaring VAT can attract significant fines, and in severe cases, result in legal proceedings.
Additionally, backdated payments on social security contributions or taxes owed may accrue considerable interest, and penalties are often served many years after the mistake - which a cynic might say is to demand the highest fine possible.
The Solution for Smart Solopreneurs: Outsource to Experts
From obtaining an NIE and registering with Social Security, to managing your taxes and maintaining proper records, there are multiple administrative tasks that need to be handled efficiently throughout the accounting cycle, to ensure that all legal and financial obligations are met. Many autonómos, both Spanish and foreign, find it beneficial to work with professional advisors to manage these obligations, allowing them to focus on growing their businesses.
To make this process easier and stress-free, we highly recommend consulting Entre Trámites, a team of professional gestores experienced in helping both locals and foreign residents navigate Spain’s complex tax and legal systems. They offer a free initial consultation to help you get started on the right track. Contact Entre Trámites today and ensure you’re fully compliant with all requirements as an autónomo in Spain.