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What taxes do I have to pay if I am self-employed?

spain freelance tax and self-employed tax

If you want to be self-employed in Spain, you need to know which taxes you have to pay in order to avoid mistakes and possible penalties. We will tell you all you need to know about the spain freelance tax In this post.

Tax residence in Spain

The first thing you should know is that, in order for you to have to pay taxes as a self-employed person in Spain, you must have a tax residence in the country. A person is considered to have their tax residence in Spain when:

  • They stay in Spain for more than 183 days a year. 
  • When their core economic activities are located in Spain. 

If you meet any of these requirements, you will have to pay taxes in Spain as a self-employed person.

Taxes self-employed people must pay in Spain

The taxes that a self-employed person has to pay in Spain are the following: 

  • Personal income tax (IRPF). This tax is levied on the income obtained by a person, which, in the case of a self-employed person, will be the income derived from economic activities. The self-employed person pays IRPF in advance in either one of these two ways:
    • Personal income tax withholdings from the invoices issued. That is to say, every time the self-employed person sells a product or a service, they must issue an invoice from which a withholding percentage will be calculated on the taxable base. The withholding percentage will be as follows:
      • For the self-employed starting their activity and for those who are in the first three years as self-employed people: 7%. 
      • For the rest of the self-employed: 15%. 
  • Form 130. This is a quarterly form indicating the income and expenses obtained during each quarter and in which a tax rate of 20% applies, that is, the amount of money that will have to be paid to Hacienda (Treasury). 
  • Value added tax (VAT). The self-employed acts as an intermediary between the tax office and the final consumer who pays the VAT. With the VAT returns, the self-employed person pays the difference between the VAT charged to customers on invoices and the VAT on the invoices received from suppliers. The general VAT rate applicable on invoices is 21%. 
  • Corporate income tax. When the self-employed person creates a commercial company to carry out his or her activity, he/she is a corporate self-employed person. In this case, he/she will have to pay corporate income tax, which has a general rate of 25%, which may be less depending on the age of the company. The corporate income tax is filed through Form 200. 
  • Other forms. Depending on the activity carried out by the self-employed person or the specific circumstances of his/her situation, he/she will have to file other forms:
    • If the self-employed person receives invoices from other self-employed professionals in which an income tax withholding is included, he/she must pay this withholding to the Tax Authorities by means of Form 111.
    • If the self-employed person has rented a property for his/her activity, it is possible that in the invoice related to the renting of the place a retention in concept of IRPF is practiced. This withholding must be paid by means of Form 115.
    • If the self-employed person has a client or supplier with whom he/she has carried out an economic activity for an amount greater than 3.005 euros per year, he/she must file Form 347. 
    • If intra-Community transactions are carried out, Form 349 must be filed. 
Legal and tax representation

Other obligations for the self-employed in Spain

Along with the taxes we have seen in the previous section, a self-employed person in Spain must register in the special regime for self-employed workers (RETA) of Social Security. This implies the need to pay a monthly amount for the Social Security contribution. This contribution allows the self-employed to have public health care and an unemployment or a retirement pension.

The general contribution to be paid is 294 euros per month when the contribution base is the minimum. However, in order to help the self-employed during the beginning of their activities, there is the so-called flat rate, which means that during the first year of registration as a self-employed, only 60 euros per month are paid and, subsequently, the contribution will progressively increase until reaching 294 euros.

If you wish to develop an activity in Spain as a freelancer, it is necessary that you are informed of all the procedures you must follow and that you have the help of a business consultancy specialized in the creation and in giving advice to commercial companies and freelancers. Thanks to it, you will be able to carry out all the procedures to register as self-employed quickly and to pay your taxes in time and due manner, avoiding inspections and penalties from Hacienda.

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