Becoming a freelancer in Spain: tax payment and social security contributions

After having a legal identity that permits you to carry out freelance activities, you need to register yourself as a legal freelancer in· the tax agency and the social security system. This might sound discouraging to you because it means money outflow. But they are obligations every working professional needs to carry out and you will also have access to the public pension plan and public healthcare.

Below, we will explain how to pay taxes and how to make contributions to the social security system. But also remember that you can always consult an experienced lawyer or accountant to help with the calculations.

 

1. What are the taxes you need to pay as a freelancer?

2. How to register yourself in the tax agency office (Hacienda)?

3. Why should you register yourself in the social security system as a freelancer?

4. How to register in the social security system?

5. Advice from the official international office of Adeslas

 

 

1. What are the taxes you need to pay as a freelancer?

 

First, you need to understand that you need to pay VAT(IVA in Spanish) and income tax. The Spanish tax year is the same as a calendar year, from January to December. As a freelancer, you need to file quarterly tax returns, which means you will pay in January, April, July, and October annually:

 

• VAT: The VAT is the tax for every product/service that you sell, usually 21% of the selling price. Since the VAT is charged at the consumer level of the product or service level, the VAT you need to pay to the Tax Agency:
  • The VAT you charged your consumer- the VAT you paid to produce the product or carry out the service. The final amount is exactly the amount you need to pay to the tax agency.
  • This is also declared quarterly.  
• Income tax: You quarterly pay 20%*(business income-expenditures). Then the next year between May and June, you will need to file your tax statement. This will adjust the taxes you need to pay: If what you must pay is higher than 20%, you will need to reimburse the difference; Otherwise, you will get a refund from the government.

 

 

2. How to register yourself in the tax agency office (Hacienda)?

 

The process is easy and fast if you do it correctly. You need to pay IAE taxes, which means impuestos sobre las actividades economicas (taxes about economic activities)

 

• 1st step: Make an appointment at any tax agency office (Agencia tributaria) here. Don´t forget to change the language to English in the top right corner.
• 2nd step: Be prepared about what they are going to ask. They usually ask about the type of activity that you carry out. The public servant will help you find the industry and number accordingly. Prepare the other documents:
  • NIE number or NIE card
  • Passport and a full copy of it
  • Spanish bank account number
• 3rd step: Bring the documents with you to your appointment. Fill in the necessary forms (eg. model 036 or model 037) to complete the process.
• 4th step: Payment starts! Make sure you include all the important invoices and report the tax accordingly.

 

3. Why should you register yourself in the social security system as a freelancer?

 

Making social security is an obligation of any working professional to get benefits such as unemployment benefits, public pension, and public healthcare. The social security contribution is a fee charged directly to your bank account on the last working day of the month. There are distinctive fee-charging rules and allowances or deductions for different groups of people. You can check the updates here.  

 

 

4. How to register in the social security system?

 

After knowing the rules, you might want to know how to register yourself in the social security system. Remember that you need to visit any of Social Security´s offices within the first 30 days after you registered at the tax agency!

 

The presentation process is also very easy:

 

• In-person: You need to make an appointment at any social security office near you. The documents you need to bring are:
  • Your NIE number/NIE card
  • Passport and a full copy
  • Model 036 o 037, the same one you filled in the tax agency
  • IRPF form, a form you get from the tax agency
  • Empadronamiento
• Online: If you have a digital certificate, cl@ve, or username and password, you can present the documents online.

 

5. Advice from the official international office of Adeslas

 

Our expat insurance is not only 100% satisfactory visa insurance, but also the best private insurance in Spain with the broadest hospital network and advanced technology. We want to protect you while you are achieving new goals in your freelance career.

 

Check out this blog if you are curious about income tax:

• Guide to the income tax statement in Spain
• Guide on how to open a business in Spain
• Becoming a freelancer in Spain: visa options
• Can an international student earn extra money while studying in Spain?
• Job opportunities for expats in Spain
• Guide to a job-seeking residence permit (Permiso de residencia para la búsqueda de trabajo)
• Becoming a freelancer in Spain: how to make a legal invoice

 

 

Reference:

 

[1] Seguridad Social: Cotización / Recaudación de Trabajadores. (2021). Retrieved 10 November 2021, from https://www.seg-social.es/wps/portal/wss/internet/Trabajadores/CotizacionRecaudacionTrabajadores/36537

[2] Seguridad Social: Cotización / Recaudación de Trabajadores. (2021). Retrieved 10 November 2021, from https://www.seg-social.es/wps/portal/wss/internet/Trabajadores/CotizacionRecaudacionTrabajadores/10721/10724/1320/1322 

 

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