How to become ”autónomo” in Spain
In general, any non-EU citizen who wants to register as a self-employed person in Spain needs 2 compulsory permits: the residence permit and the work permit.
It may seem that registering as a self-employed person in Spain is complicated, especially if you are a foreigner, but it is not. We are going to show you the main steps you will have to follow to become self-employed as an expatriate in the Spanish territory, as well as provide you with some useful tips and what taxes you will have to pay.
What is a self-employed worker?
The self-employed worker is the one who carries out his professional activity independently and on his own account. Let’s give you an example to make it clearer:
Let’s suppose you would like to move to Spain and become an English teacher. You will then have 2 options: find a job as an English teacher and get your work permit (something complicated), or you could become self-employed and work on your own, without having any kind of contract or working for any company (or academy in this case).
Once you are registered, it is easy. You will only have to send an invoice to the company or person you are providing a service to, and that’s it. This will be the legal way in which you will earn money on a daily basis.
Documentation required for self-employment as a foreigner
To apply for the self-employment and temporary residence authorization you will need to submit the following documentation.
- Copy of valid passport or travel documents.
- Criminal record certificate
- Health certificate
- Project of the establishment or activity and the required authorizations or licenses.
In which cases must you register as self-employed?
You may think that some specific ways of making money, such as selling products on eBay, don’t require you to register as a freelancer, but that’s not the case. No matter what you do, if you provide any kind of services (such as IT work, English classes or speaking at conferences) and you make money from it, you will need to register as a freelance
Can you really become a freelancer?
Are you really in a position to become self-employed? As always, the answer depends on your country of origin.
- If you are a citizen of the EU or Switzerland, no problem. You can enter the country and set up your company or become self-employed easily. The process will be straightforward and you will not encounter any additional difficulties.
- But things get a bit more complicated if you are from a non-European country. Because, first of all, you will need a visa to enter Spanish territory. And, subsequently, you will need a residence permit to stay in Spain on a long-term basis, as well as a work permit as a self-employed person. In addition, you will be required to have a NIE number and a bank account in Spain. So, first of all, make sure you meet these requirements.
Setting up a company VS becoming self-employed
There are 2 legal forms under which you can carry out your activity as an independent professional in Spain. Either you create a company or you become self-employed.
Which is the better option, and should you really become self-employed? If you want to know a detailed answer, you can access here our article in which we talked about the main differences between an S.L. and becoming a freelancer.
But to give you a general idea, you will find it much easier to become a freelancer:
The legal process is faster and doesn’t involve the same level of bureaucracy. Plus, there’s no minimum capital investment to get started. And your tax obligations are simpler. So, if you don’t want to incur additional steps, the freelance route will be the best option if you want to set up on your own.
However, if you predict that you will have a high level of income (more than €60,000 per year), setting up a company will yield better results, as you will end up paying less tax.
What are the obligations you will have as a self-employed person?
Before you start with the steps you need to follow to register as a freelancer, seeing this section first will make the process much clearer for you. Because if you understand what your 2 main responsibilities will be as a freelancer in the country, you will know exactly why you need to go through all the legal steps you will take.
Basically, as a freelancer you will have two basic obligations:
You must register and pay a monthly contribution to the social security in order to receive assistance in the Spanish public health system, as well as to be able to receive a pension in the future. Therefore, on the last working day of each month you will be charged a fixed fee directly to your bank account.
How much money are we talking about?
Currently, the fee is equal to 289€ per month, but don’t panic: there are some deductions. During the first year as a freelancer you will only pay €60 per month. And that amount will gradually increase to a total of €289.
On the other hand, you can also choose to pay using a higher wage base, paying up to €1,233.20 per month. There are additional bonuses for women under 32 years old or people over 65 years old.
Taxes as a freelancer
You will only have to pay two different taxes as a freelancer: VAT and Income Tax (IRPF).
Please note that the Spanish fiscal year corresponds exactly to the calendar year: from January to December. In that sense, you will have to file quarterly tax returns (every three months): in January, April, July and October.
How to file quarterly tax returns?
- On a quarterly basis you will pay income tax, after declaring the income from your operations and deducting expenses. You will pay 20% of the resulting amount. Subsequently, between May and June, you will have to file the so-called income tax return (once a year). That is where the actual tax rate will be adjusted. What do we mean by that? If what you actually had to pay according to your income level was higher than 20%, you will then have to refund the difference. But, on the other hand, if the applicable rate should have been lower, you will receive a refund.
- VAT is the tax that you must include in all the invoices you send to your customers, representing 21% of the price. It is declared on a quarterly basis. How? By deducting the VAT paid on your expenses as a freelancer (Internet connection, for example) from the VAT charged to your customers. And the resulting amount must be paid to the Treasury.
With these two responsibilities in mind, we can now move on to the legal steps to become self-employed. It is quite simple: to become a foreign freelancer in Spain you must register for both: social security and the tax office.
How do I register as self employee in Spain?
Let’s now take a look at each of the 5 steps you will need to follow as an expatriate to register as a self-employed person:
1. Get the work permit
As we mentioned above, if you are not from the European Union you will need a work permit to become self-employed in Spain. That’s why this is the first step on the list.
Why the first one? Because you will have to apply from your home country. And this is crucial. Traveling to Spain and initiating the work permit application procedure from here will only result in you being denied the permit. So how should you proceed?
Start by presenting all the required documentation at the Spanish consulate and get your visa. Once it is stamped in your passport you will be allowed to travel and enter Spain, where you will be able to obtain your residence permit and continue with the procedure.
2. NIE Number
The NIE is the identification number for foreigners in Spain.
You can apply for it once you enter Spain with your visa, as you will need it both to obtain your residence permit and to register as a self-employed person. This number is essential, as you will also use it for almost all legal or bureaucratic procedures in the country.
Together with your passport, you only have to present the EX-15 form and you will receive it immediately.
3. Registration with the tax office: the IAE (tax office)
The next step is to register with the tax authorities.
This is something called IAE, which you will have to register at the Tax Agency office nearest to your residence.
This process simply involves registering with the tax office so that they know that you will begin to carry out an economic activity as an independent professional. Therefore, you are notifying them that you will start sending invoices and, thus, you must pay taxes.
How does this process work? It is really simple and will not take more than 15 minutes:
- First of all, you must make an appointment at any office that the Tax Agency has.
- When you go there, they will ask you for the group number that corresponds to your economic or professional activity. These are called epigraphs.
- Then you will have to fill in form 036 or form 037. They will tell you which one to fill in, but in most cases it will be the 037 (simplified form); since the 036 is commonly used to establish a company (although it has additional purposes).
Do not forget to bring the following documents to your appointment:
- Your NIE number
- Passport and a copy of it
- Bank account number
And so you will have registered with the IAE; therefore, you can now start sending invoices and providing your services to clients. But there is still a fundamental step missing.
4. Registration with social security
Now that you can legally start working as a freelancer in Spain, there is one more step. You are going to have to register with the social security.
Why? Because it will be the step that will allow you to enjoy the benefits of the Spanish healthcare system and receive a pension in the future. You will be entitled to these benefits by paying a monthly fee, as discussed in a previous section.
You will need to visit any of the Social Security offices within 30 days of registering with the tax agency.
There you will be registered in a special regime created for self-employed workers called RETA.
The documents you must bring are:
- Your NIE number
- Passport and a copy
- Form 036 or 037 (depending on your case)
- IRPF form, the one you obtained from the tax office
5. Daily operations and tax returns
You are now fully prepared to start your journey as a foreign freelancer in Spain. But, as we saw in the section on obligations, the party does not end there. You will have to file your tax returns: both for VAT and income tax.
And here there are two different paths you can take:
- The first is the one we don’t recommend. You can spend a great deal of time understanding and learning how to file your tax returns, and do it on your own. Warning: it can be complicated, especially if you are a foreigner. The problem is that it will take a lot of time. And that time is not worth it. Why? Because you, as a freelancer, should concentrate and spend your hours where you are most productive: doing exactly what you do for a living. And that doesn’t involve worrying about taxes.
- That’s why the second way (the one we recommend) is to have a manager do the work for you. You will only have to send them quarterly all your invoices (received and sent), and they will manage everything you need.
Can I develop an activity without registering as self-employed?
Any person who carries out a commercial or professional activity on a continuous basis and which is his or her source of income must be registered as self-employed. If you carry out these activities without being registered, you may be sanctioned.
It is possible that you think that if you carry out an activity that generates little profit you should not register as self-employed. To develop an activity that generates profits it is necessary to regularize every cent that enters your bank accounts. This means that it does not matter your activity, since it is necessary that you declare it and the benefits to the Treasury.