Your ultimate guide to being self-employed in Spain
Itching to start your own business in Spain? Here, you’ll learn what paperwork you have to complete, where to do so, and what you need to bear in mind on your journey into freelancing.
6 min read
Dreaming of being your own boss but don’t know where to start? Thinking about moving to Spain? Well, you’re in luck: we’re bringing you a complete guide to becoming a freelancer in Spain. Read on to learn how to get your feet wet, as well as the advantages and disadvantages of being self-employed.
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A self-employed worker is anyone who performs their economic activity independently, for their own profit, and without having an employment contract with an employer. In contrast, an employee does have an employment contract with a company with certain working conditions, a schedule, and a fixed salary—all agreed upon prior to signing their contract.
The main differences between a self-employed person and an employee in Spain
A self-employed person has to use their own money to respond to any unforeseen professional expenses, while in the case of an employee, the company pays.
A self-employed worker doesn’t have a fixed salary, unlike an employee who receives a salary every month.
An employee has to respect the rules of the company they’re working for (as well as asking for permission to take holidays), while a freelancer is free to work however and whenever they choose.
Self-employed people work wherever they want and use their own tools or equipment, while an employer provides a workplace and equipment to their employees.
In the event of financial losses, anyone who is self-employed has to assume all the business risks, while in the case of an employee, the company does this.
Self-employed people pay their own social security contributions, while employees’ contributions are deducted automatically from their salary.
Advantages of being self-employed in Spain
In Spain, the advantages of being self-employed are broadly the same as in most other countries:
Ideal business structure for small businesses.
Comparatively few administrative procedures and paperwork.
More economical, because the legal entity is in the entrepreneur’s name.
Disadvantages of being self-employed in Spain
And in Spain as elsewhere, the biggest disadvantages of being self-employed are:
Unlimited legal responsibility (especially if you run into debt or legal problems).
Responsibility for all business expenses, including management, investment, administration, etc.
High earners may have to pay higher rates of income tax than high-earning employees.
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What are the Spanish self-employment quotas and how do they work?
When you become self-employed, you have to start paying the so-called “monthly quota.” This quota is a payment to the social security office, usually made from your bank account by direct debit.The amount of the quota payment is different for each freelancer depending on the calculation base they chose when they registered as self-employed. The minimum calculation base is the one that new freelancers usually choose. With this base, you pay a reduced flat rate for the first two years (starting from €60 per month) until you reach the real monthly quota, which is currently €293.76.From 2023 onwards, there will be 13 monthly quota ranges that will be directly related to the self-employed person’s real earnings. That means that the system will be similar to the one that applies to salaried employees.
How to register as self-employed in Spain
Although it might look complicated, registering as self-employed is easier than you think. You just have to follow these steps:
Register for the economic activities tax (IAE) with the Spanish Tax Agency.
Sign up to the Social Security’s Special Scheme for Self-Employed Workers, which you can do via the Social Security General Fund (TGSS) or online. You’ll need Form 036, your DNI (Documento Nacional de Identidad), and Form TA521/1 to complete the process.
Register with the census and choose your tax scheme via the Tax Agency.
You will also need a bank account from a Social Security Collaborator entity, such as N26.
Requirements for being self-employed as an expat in Spain
To be able to work freelance in Spain as an expat, you’ll need two non-negotiable permits: a residence permit and a work permit. It has to clearly state on your work permit that you’re authorized to be self-employed. If it doesn’t, you won’t be able to register.So, how can you get the permit if you don’t have one? You’ll have to go to the Spanish Consular Office where you live and apply for authorization using Form EX07.In addition to these two conditions, you’ll also have to meet a series of additional requirements to be granted the right to be self-employed:
You aren’t in an irregular situation in Spain.
You don’t have a criminal record.
You haven’t been banned from entering another country that Spain has a treaty with.
You’ve paid the temporary residence permit fee.
You meet the same requirements that Spaniards do in order to be self-employed.
You have a professional certification or equivalent experience.
You have sufficient financial resources to pay for your living costs and accommodation.
You’re up to date with the payment for the authorization to work as self-employed.
You also have to present a series of documents during the application process in order to be granted a permit to work as self-employed in Spain:
A copy of your passport or travel document.
A criminal records check certificate.
A health certificate.
An establishment or activity project.
The required authorizations or licenses.
What information does a Spanish invoice have to contain?
Every self-employed person has to submit invoices for the work they do. But for your invoice to be legal in Spain, what does it have to contain? Here’s a breakdown:
An invoice number.
The issuing date.
Your name, address, and tax ID number (NIF).
The name, address, and NIF of the person or company you’re invoicing.
A description of the services you’re invoicing and their value.
The type of VAT and income tax (IRPF) applied.
The total amount after taxes and payment method.
How to de-register as self-employed
The process for de-registering as self-employed is easier than the registration process. You simply have to go to the Social Security Fund’s Provincial Directorate (Dirección Provincial de Tesorería de la Seguridad Social) and fill in form TA.0521.This process is mandatory if you de-register, and notifying Social Security is also your responsibility. If you don’t, you may be fined by the Social Security General Fund.The de-registration will start to apply the month after you requested it.
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Before you jump into self-employment, you’ll need to inform the Spanish tax authority. In this article, we explain what the Special Regime for Self-Employed Workers (RETA) is and how you can register.
Before you jump into self-employment, you’ll need to inform the Spanish tax authority. In this article, we explain what the Special Regime for Self-Employed Workers (RETA) is and how you can register.
