Starting A Business In Spain (Comunidad de Bienes)

Setting up a Business in Spain as a Foreigner.

Foreigners who want to set up their own business in Spain must apply for a residence and self-employment permit. If they have permanent residence, they will not need to do so, they will only have to comply with the same requirements that are asked of Spaniards.

Business in Spain – What steps are necessary?

The first thing you must do is to plan your business well. You must make a business plan that includes the amount you are going to invest, the possibilities of creating jobs, the activity you are going to engage in, the benefits you plan to get and the documents and authorisations you need. Once you have the project ready, you must go to the Government Delegation to apply for a self-employment permit. The Delegation will stamp your application and you will have three months to return to your country of origin and apply for a work visa at the Spanish consulate. If you are approved, the Delegation will send it to the consulate and it must be included in your passport. From that moment on, you will enter Spain and start the activity from the moment you arrive.

How Long Does Business Authorization Last In Spain?

The initial authorisation will be granted for one year. Remember it is limited to the activity you applied for, which must also be carried out in the place that appeared in your initial business project. If the company does not work or you decide not to continue with it, apply for a different authorisation, as this is not valid for working for others.

However, if after the first year you decide to continue with the company, you can renew the job application for two years and then for another two years. After these four years, it will be permanent and you will no longer have to renew it. From the first renewal, you will also be able to work in any province, not only in the one where you initially set up your company.

You should remember if you have a permanent residence you do not need to carry out all these procedures. You will simply have to carry out the same procedures as any Spanish citizen.

Comunidad de Bienes (Community of Goods) – What Is It And How Does It Work?

At the time of starting a business, there are several options. The most used are two: to become autonomous or to make up a Limited Society. In fact, the most common is that the entrepreneur starts by becoming autonomous and leaves for later the creation of the company.

The problem is that we cannot always do this. Not even good accounting management software will make this impossible possible. So, when we do not undertake alone, a good option may be to launch a Community of Goods.

The Community of Goods is the simplest form of association between several self-employed to implement a common project. We can define the Community of Goods as the association between two or more self-employed (called common partners) who have a thing or right in common and by which they get a benefit or expect to get it through a business activity. It is the most advisable option when there are several people who are going to start a small business that does not require a high investment.

How to create a Community of Goods (Comunidad de Bienes) In Spain

Private contract

It is necessary to sign a private contract of community of goods between the communal partners. This agreement must be detailed:

  • Name, surnames and DNI of all the partners.
  • Name that will be given to the new Community of Goods.
  • Address of the community.
  • The activity that is going to be developed.
  • What each one of the partners contributes.
  • The percentage of participation in the community.
  • The system of administration of the community.

All the clauses that are agreed upon: duration, cause of dissolution, the possibility of transmission, etc. What is not agreed will be governed by the Civil Code.

After the signature of the contract, it will be necessary to register it in the organism of the autonomous administration that corresponds. If real estate is contributed, a public deed will be required.

Minimum Number of Partners

In order to create a Property Partnership, a minimum of two partners are required. There is no maximum.

Minimum share capital

There is no minimum contribution. They can contribute goods or money and work. These last two cannot be contributed separately, they must be combined.

There must always be a minimum starting capital that can be the contribution of the common thing.

Responsibilies With The Comunidad de Bienes

The Community of Goods does not have its own legal personality and therefore, as independent entrepreneurs that they are, the liability of the common partners for debts to third parties is unlimited and joint and several. The partners are liable for their present and future assets and support each other.

If the community accumulates outstanding payments they could claim the car, the house and any property of the partners. Thus it is deduced from the article 395 of the Civil Code referred to the Community of Goods. This is the major disadvantage that a Community of Goods presents regarding the Limited Company. However, we can limit our responsibility if we use the figure of Limited Liability Entrepreneur when starting the project.

Thanks to this, our property will be exempt from liability as long as its value does not exceed 300,000 euros and as long as we have acted in good faith.

Taxation of the Community of Goods (Comunidad de Bienes) In Spain

Tax obligations of the Community of Goods

As it does not have its own legal personality, it will not have to pay corporate tax. The entity as such will not have to pay taxes on the profits got, since they are distributed entirely among the members. This does not mean that the company itself does not have obligations regarding income tax in relation to its own activity. They are the following:

Withholdings on account of the income tax that you practice to your suppliers that you will settle through the Model 111 quarterly and 115 annual average.

Information return for entities under the income attribution regime. It identifies the members of the community and the income distributed to each of them. This will be done through Model 184, which is presented in February.

Declaration of withholdings on account of income tax and corporation tax. It is liquidated through Form 123 and will only be necessary if there are capitalist partners (they contribute investment but not work).

Informative declaration of withholdings and payments on account. Withholdings on account of income tax to capital partners that will be made through the annual informative declarations according to Model 180 and Model 190.

Regarding the VAT, the periodic liquidations must be presented. Specifically, you must file Form 303 on a quarterly basis and Form 390 annually, and the rest of the informative returns depending on the activity you carry out.

Tax obligations of the partners

The community members pay taxes through the Personal Income Tax (IRPF).

As a member of the community, it is also necessary to give an account of the expenses and income of the community on a quarterly basis by means of the Model 130 or Model 131. Obviously, each member will only report on his part of the company’s accounts, and not on the whole.

How to dissolve a community of goods if a member does not want

We will not enter here into the reasons that can lead a dirty person to want to stop being part of a Community of Goods. But we are going to point out that, once this decision has been taken, there are three basic options.

To transfer the society to a new buyer.

To liquidate the society, which implies that it is necessary to pay to creditors and to make a definitive closing.

Declare an insolvency proceeding. It must be considered that this only makes sense if the debts that the dissolution of the community will generate cannot be met.

Comunidad de Bienes Overview

We have just seen how a Property Company works, the easiest way to start a business among several people. Compared to a Limited Company, the advantages are mainly two:

  • The incorporation procedures are much simpler.
  • No minimum capital is required for its constitution.
  • But there are also some disadvantages:

The responsibility of the co-owners is unlimited and joint and several. We have already seen that this responsibility may not be total if we declare ourselves a Limited Liability Entrepreneur. In spite of this, the responsibility will always be greater than in a Limited Company.

The other great disadvantage is that the Community of Goods is usually excluded from aid and subsidies.However, we assume that before you start your business in Spain you need to know the legal requirements:

Preparations For The Comunidad de Bienes

You have done enough market research to confirm the economic viability of your proposed business (if you do not know how to do this, I recommend that you buy a book on the subject or hire a consultant);

Ideally, you have previous experience in the industry you aspire to.

You are fluent in Spanish, or have a business partner who is fluent in Spanish.

Steps To Undertake a Successful Business in Spain

Please note that the information presented here is only a guide and should not replace the professional advice of a lawyer, manager, business consultant, accountant and/or financial advisor. I encourage you to make friends with these professionals early in the start-up process.

  • To start a business in Spain follow the six essential steps
  • Choose a name for your business (and register it)
  • Choose a legal business structure.
  • Create a business plan.
  • Find financing.
  • Find a suitable location for your premises.
  • Get secure licenses and permits.
  • Choosing a name for your business

A good business name is your company’s first asset in Spain. You can choose to register your company name, which in theory gives the owner of the name the exclusive right to use that name for commercial purposes. Registration of the trade name is optional and is managed by the Spanish Patent and Trademark Office.

In Spain, company companies can have a trademark or trade name different from their official trade name. See Companies in Spain: Types of Business Entities for Companies in Spain.

Selecting a Legal Business Structure In Spain

Spain offers various legal business structures, also known as business entities, to meet a variety of needs, each with a distinct set of legal and tax responsibilities. Choosing the right one is important to accommodate the present and future goals of your future business. The legal business structures in Spain are as follows (links take you to the corresponding bit of our page Companies in Spain: Types of Business Entities for Companies in Spain):

  • Sole Trader or Sole Proprietor (Individual Entrepreneur or Self-employed)Joint Venture (Community of Goods or C.B.)
  • Civil society
  • Public limited company or S. A. (Public Limited Company)
  • Sociedad de Responsabilidad Limitada, S. R. L. (Limited Liability Company, S. R. L.)
  • New Enterprise Limited Company
  • Empresa Laboral (Labour Company)
  • Collective society
  • Limited Partnership
  • Cooperative (Cooperative Society)
  • Creating a Business Plan

Whether it is to attract investors or to create a roadmap for growth, every business needs a business plan. Any good book on business creation should contain a chapter outlining the essential elements of a good business plan, but here is one such outline of the elements of a business plan, however, there are two additional things you should consider in Spain:

Language. If you plan to seek financing or investors from Spain, your business plan needs to be in Spanish. If you plan to look for a combination of Spanish and international investors, you should have a Spanish and English version of your business plan available to everyone involved.

Getting help. The local Chambers of Commerce in Spain offer free advice and support to entrepreneurs. Find a Chamber of Commerce in your area.

Looking for funding

Adequate commercial financing is key to any business, so don’t rule out any options just yet, including the following:

Personal Finance

Especially for small businesses that do not require an extensive amount of capital, dipping into your savings (or asking for gifts or loans from friends or family) could be the shortest and best route to start your business.


Available to residents and non-residents alike, loan terms vary depending on the size of the loan needed (or whether it is considered a microloan), the amount of collateral, the financial institution and other factors. You may be required to repay the loan in as little as three years or sometimes up to fifteen years. Repayments may be monthly, quarterly or semi-annually. Check with the ICO (Instituto de Crédito Oficial, in English and Spanish) or any bank or savings bank. Make sure you go shopping.

Subsidies (Grants or Aid)

Grants are available to new and existing companies at municipal, provincial, regional, national and European Union level. The conditions for subsidies differ, but subsidies are usually available to companies in certain industries or sectors, creating employment in certain areas or employing certain disadvantaged populations.

Check with your municipal, provincial and regional government, or your local Chamber of Commerce, for available subsidies. Consult the Spanish subsidies at the DGPYME (Directorate-General for Small and Medium Enterprises Policy).

Business Angels

Business Angels are private investors who invest in new or existing businesses for a variety of personal or financial reasons. But angel or not, Business Angels expect a good return on their investment like any financial institution. The advantage of an angel investor is that the investment conditions and the amount of risk he or she is willing to take differ. Sometimes, when a bank rejects a loan, an angel investor may come to your rescue. Consult the Spanish Network of Business Angels.

Lines of Credit (Credit account or credit policy)

A line of credit during the start-up phase can be considered a peace of mind loan for those unforeseen extra costs (which there will be and you should plan for). You pay interest on the borrowed money when you need it, and a fee for the privilege of having a line of credit when you don’t. Interest rates can be fixed or variable and terms are usually one year.

Finding a suitable location for your business

Once you have considered who your customers are, where they will come from, what facilities you will need to accommodate your business (for example, will you need dressing room space? Will you need a warehouse? Will your delivery drivers need parking? and if you need to be close to certain other types of businesses, then you can start looking for a location for your business.

Walk around your area and look for signs such as “transfer”, “for rent”, “space available”, etc. Write down the phone number and call them. Or use an experienced local real estate agent. Or try a website such as Fotocasa. es, which offers a list of offices and commercial premises throughout Spain for rent, hire or purchase.

Licenses, permits and insurance

You will need licenses and permits from your respective municipal and regional governments. Check with your local council and regional government for the latest requirements.

To get an idea of what may be required, in the city of Madrid for example, you must get a licence (licencia urbanística) if you intend to build, renovate or demolish anything (interior or exterior) where your business will be developed. (You will not need a licence if you only want to paint the interior or change something small inside your unit. Licence fees vary depending on exactly what you are doing and how many square metres you are doing it on.

At a regional level in the Community of Madrid, certain business activities are required to get specific activity licences, such as travel agencies, tattoo shops, body repair shops, etc. Some licenses for which you will have to pay a fee. Depending on what your proposed business is, other types of licenses may be required as well.

It is not a licence per se, but you must also be prepared to charge Value Added Tax (VAT), which ranges from 4 to 21%. The tax rules are governed by different schemes (regimes) depending on your business. Consult your national tax office and your tax or financial advisor about your tax and reporting obligations.

“Libro de Visitantes” (Visitor’s Book)

Your business will also need a “Libro de Visitantes” (Visitor’s Book). You must acquire it from the Provincial Directorate of the Ministry of Labour and Social Affairs in your province and have it available at all times to the labour and social security inspectors.


Once you have successfully chosen a name and legal structure for your business, created a business plan, found funding and a location, and get licenses and permits, then you can start hiring employees, create a website, advertise and perform all the other tasks that will contribute to the success of your own Spanish business.

Autónomo – Freelance Work In Spain in 2021

How To Become Self-Employed in Spain in 2021

While Spain has the highest minimum quota of self-employed workers in Europe, it also has some of the best health coverage on the continent.

What is Autonomo?

To be registered as Autonomo in Spain is to legally acknowledge that you are a freelancer, that you are self-employed or that you run an unincorporated small business. The Spanish authorities require such business entrepreneurs to register and pay taxes and charge IVA (VAT) to their customers. Most businesses regardless of their level of income must charge IVA in Spain, although there are some exceptions. If you have an employment contract with someone else, then the autonomo rules do not affect you.

Who Should Be Registered as Self-Employed?

The rules in Spain regarding autonomo status are strict. Regardless of whether your earnings are casual and small scale – you do have to register.

Bar-owners, people working as IT or Engineering consultants, English teachers or anyone running their own small business that invoices clients or customers are all responsible for registering themselves as autonomo.

Where your earnings are more sporadic and you are not actually earning a proper living then there are some exemptions.

For a partnership of more than one individual, the alternative is a “CB” or “Comunidad de Bienes” which is similar legally to autonomo. The CB is not a legal entity separate from the participants so both or all of the owners will be fully liable for any debts.

Your Classification as an Autonomo

For those who are running commercial and trading businesses, they are known as Autonomo Empresarial. Professionals or freelancers are known as Autonomo Profesional. There are then sub-classifications within these two broad categories depending on the line of business you are in, or your professional activity.

How to Register as Autonomo in Spain

There are two parts of the process to register as an autonomo in Spain. First, you register with the tax office (Agencia Tributaria or Hacienda) and secondly; you join the autonomo social security system (Regimen Especial de Trabajadores Autonomos or RETA).

For the autonomo registration, you need a national insurance number for Spain (An NIE) and a Spanish bank account. If you’re from outside the EU you will also need a work permit.

Social Security Contributions In Spain

Once you are registered for tax and VAT, you need to register for social security. The Spanish Social Security system is very much like the National Insurance system in the UK.

Unless you make the necessary payments you will not be entitled to access public health facilities, receive a pension or sick-pay or paid maternity-leave and you will also be breaking the law.

You will need to fill in another form acknowledging your autonomo classification. This is because different categories of employment trigger different social security payments, so if your work is deemed to be dangerous, then you will pay more in contributions.

The usual payment is around €286.15 per month, with some exceptions, and is paid every month unless your income is less than the minimum wage, which is currently €1,108 per month. Recently, however, the Spanish government has reduced this amount to €50 per month for the first 12 months of self-employment. The payments then rise to €137 per month for months 13-18, and €192 per month from months 18-24.

Note that any social security payments are tax deductible.

Business Licenses in Spain

Other steps you may need to take will entirely depend on the type of business you run, so for example, if you operate premises that are open to the public you will need an opening licence called a “licensia de apertura” which can be obtained from the local town hall. You will need to be inspected before the license is granted and you will pay fees and be asked to provide evidence of any documents or certificates that the town hall demand.

Home-based licences are usually not a problem if it is a simple internet-based business, however, if you run a business from home that employs people or impacts on other people, such as a crèche, then you will require additional certification.

Any business with employees is usually not permitted to operate from a residential apartment block, although some office-based employers such as lawyers and accountants may have offices on the first floor of a residential building, but no higher. Always take advice if you are uncertain.

Other Obligations for Autonomo’s In Spain

You will be legally obliged as an autonomo to:

  • Provide quarterly tax and VAT (IVA) returns
  • Keep up with your monthly social security payments
  • Issue properly drawn-up invoices, as appropriate
  • Keep accounting records according to the legal standards of Spain

Retain 19% of any invoice (Retenciones) if you offer ‘professional’ services and are invoicing another autonomo worker or business. This is then paid to the Agencia Tributaria as advanced income tax and then credited when quarterly income tax returns are made. For self-employed workers with less than 2 years trading the rate is reduced to 7%. For women under 35 and men under 30, the reduced rate continues for 3 years. Note you will not need to keep any taxes if you are Empresario Individual or are invoicing an individual or business outside of Spain.

Important Recent Self-Employment Changes In Spain

In November 2016, an important government proposal was put forward to change the tax laws for self-employed workers and generally encourage more people to become autonomo. The law is titled Ley de Reformas Urgentes del Trabajo Autónomo and has recently been approved.

The new tax laws include:

A standard flat rate social security payment of €50 per month for the first 12 months. The payments then rise to €137 per month for months 13-18, and €192 per month from months 18-24. After 24 months there are no further discounts and you will pay the standard rate of around €286.15per month.

  • Up to 50%  of petrol expenses can be claimed back.
  • Up to 20% of electricity, gas and water costs can be claimed back if working from home.

There will be smaller sanctions for freelancers who are late paying their social security payments.

Autonomo’s can claim up to €26.67 per day (€48.08 per day) for food as an expense if you have to eat away from home while on business.

Many people decide to employ an accountant to do their accounts for them. As a guide, an accountant in Spain will usually charge around 60 Euros per month to do this on a retainer basis. Their service will usually involve submitting quarterly and yearly tax and IVA returns on your behalf.

De-registering or Winding up Your Business in Spain

The good news is that if you end up having to wind up your business, your autonomo classification is simple to de-register. You just need to complete the forms you used initially to register – Modelo 36 or 37 in the case of the Agencia Tributaria and the TA 521 for social security.

One of the obligations involved in registering with the Special Regime for Self-Employed Workers (RETA) is the monthly payment of the so-called “freelance quota”, which varies every year. In 2020, the minimum quota in Spain is 286.15 euros per month. However, new self-employed workers can take advantage of the flat rate and pay only 60 euros per month for the first year. To get this, you cannot have been registered as a self-employed person in the last two years, nor can you be a director of a company or a collaborating self-employed person.

However, although the self-employed quota in Spain is the most expensive in Europe, it also has one of the best health coverage in the entire continent. The contribution of the self-employed to Social Security allows the 3.3 million members of RETA access to benefits for retirement, maternity or paternity leave, occupational illness and industrial accident, common illness leave and continuous training in an amount proportional to the contribution they are paying. Likewise, 100% of the contribution can be reduced from the second month of sick leave or temporary disability until the moment of registration, Spain being the only country in the European Union where the contribution covers this contingency.

According to a recent study most self-employed workers seem to be unaware of its advantages. Barely 8.6% knew that the quota allowed them to receive the benefit for cessation of activity, and only 20.8% knew that they could take leave for an accident at work. It was also striking that only 47.1% knew that they were eligible for a retirement pension and that just over 30% knew that they were entitled to maternity or parental leave.

Comparison of Self-Employment In Spain With Other European Countries

Luxembourg has the closest system to Spain in terms of coverage. The self-employed, who must be registered with the joint Social Security Centre, do not pay contributions, but are taxed according to their income and the activity they carry out. This covers contingencies arising from illness, disability, death, retirement, occupational accidents and maternity.

In Italy there is also no self-employed contribution. Here, however, the tax is paid to the Treasury based on earnings, not income. The self-employed must register with the Social Security and will receive benefits for retirement, illness, disability, unemployment and health care.

In France, self-employed persons do not pay any contribution during the first year of activity. From that date, they face a progressive system that works according to the type of activity. They have to pay the State 12% of income for business, 18.3% for the liberal professions and 21.3% for services. In return, they are entitled to pensions for retirement, for invalidity and widowhood, for temporary incapacity and for health care. However, they have neither a cessation of activity nor maternity or paternity leave and are not covered in the event of an accident at work.

The cost of the contribution is set by the United Kingdom based on the income received. Thus, a self-employed person must pay a minimum fee of 14 euros per month if the monthly income does not exceed 600 euros, and a maximum fee of 58 euros if the income will be over 6,000 euros. This way, starting a business in the UK is much cheaper, but the system only includes the basic pension, death benefit and maternity leave.

In Germany, the monthly contribution is 140 euros if you earn over 1,700 euros. If this figure is not exceeded, no contribution is required. However, the system requires that you take out public or private health insurance from the time you start working, which ranges from 150 to 600 euros. This contribution provides access to the basic retirement pension as long as you have contributed for a minimum of five years in any EU country, of which 12 months must have been in Germany.

In neighbouring Portugal, self-employed persons are not required to pay social security or VAT contributions. Instead, they must pay around 24.5% of their annual income, thus establishing a system where those who earn the most pay more. In return, they may receive benefits for retirement, illness, maternity or paternity.

In the Netherlands, the self-employed pay only 50 euros a year, but have to pay for their compulsory monthly health insurance. This does not include pension insurance, death benefit, disability benefit or sick leave.

A step-by-step guide to becoming self-employed in Spain

Do you want to know how to be self-employed in Spain? Are you offering services online or working remotely and want to register as a self-employed but do not know how to do it? Excellent! You have just landed in the right place. We have prepared especially for you this complete guide from scratch with every step and detail you need to know about how to be self-employed in Spain in 2020. This is not a country that makes it very easy, so we want to help you in this way.

What does it mean to be self-employed?

First, you must remember that being self-employed means being a person who regularly carries out an economic activity for profit, with no obligation to be subject to a contract or to separate your personal assets from your professional services. You will have control over every aspect.

The Treasury and Social Security: what you need to know

First of all, we are opening this space for you to get to know these two institutions well, which, being self-employed, will be behind you even more punctually than you would like: to be self-employed in Spain you must register with the Tax Agency (better known as Hacienda) and then you could register with the Social Security Institute (INSS).

You often get the impression that these two institutions are the same or are connected, when in fact each body is different, although they can collaborate with each other, they have different functions, and therefore, registering to be self-employed with each one entails a series of requirements that are also different.

To be self-employed in Spain, you must become the most alert person in front of these two institutions and know the conditions of each one like the back of your hand. On the one hand, the Inland Revenue (Hacienda) manages the entire Spanish tax system and this body will keep a record of every income and expense that is produced on your behalf and based on this it will calculate how much tax you have to pay as a self-employed person, whether it be VAT, personal income tax, etc.

In contrast, the Social Security is the institution responsible for managing health coverage, but its General Treasury handles pension and retirement issues through the contributions of each worker, whether self-employed or employed.

In order to be self-employed, it is not compulsory to register for Social Security contributions, as long as your monthly income as a self-employed worker does not exceed the minimum interprofessional wage in Spain, which to date in 2020 stands at 950 euros per month. However, it is always recommended that you register with the Social Security in order to get the health and other benefits of the system at a national level.

What are the requirements for “registering” as a self-employed person in Spain?

Here are the requirements you need to present to each institution if you are interested in knowing how to be self-employed in Spain today in 2020.

General requirements and applications to be self-employed before the tax system.

  • Request an appointment at the Tax Office closest to your location.
  • Fill in and present form 036 or 037 (depending on your case) for registration, which are basically documents in which we inform the tax office of important census data in relation to our professional activity (obligatory).
  • Be aware of which Economic Activities Tax (IAE) epigraphs correspond to you, depending on your professional services as a self-employed person. You can consult the list here (obligatory). This is basically a code that identifies your professional activity, you will need it to fill in the form.
  • Be aware of whether you will have to register with the Intracommunity Operator Regime (ROI), that is, if you are self-employed, you will carry out operations aimed at another European Union country (compulsory if you are).
  • Knowing which tax regime you will be included in according to your professional activity (obligatory).
  • To know what taxes you will have to pay (compulsory).
  • Knowing the self-assessment forms that you will have to present every quarter and the annual informative declarations at the end of the fiscal year (compulsory).
  • Register voluntarily with the electronic tax notification service.
  • To fulfill requirements requested to be self-employed before the Social Security system.
  • To present the model TA.0521 for registration in the Special Regime for the Self-Employed.
  • Present your National Classification of Economic Activities (CNAE), the code with which your economic activity or activities are represented.
  • Know and select your quotation base.
  • Consider how much you will pay for the types of contribution and social coverage to be obtained.
  • Carry out the process of your registration at the Social Security Electronic Headquarters to carry out all your procedures related to the institution and keep you up to date with its alerts and notifications.
  • Select an account number with which you can pay your contributions by direct debit. We recommend one more account for professional use.
  • Find out if you have the requirements to become self-employed with a Social Security discount and which is the most appropriate in your case according to your personal situation.
  • Find out application for grants for the self-employed in your region of residence. Many times you will find them very useful.
  • Find out how much you will pay as a self-employed person, especially considering the monthly fee and when the Social Security will collect this fee. Remember, they may apply charges if you do not comply with your payments on time.
  • Know how to bill as a self-employed worker.

Invoice Types and Data For Business In Spain

As you know, your obligation after being self-employed is to invoice and correctly select which model of invoice you plan to issue according to the case, it can be said that there are several, today we are going to talk to you about the most common ones so you can, obviously, invoice and make your tax presentation every quarter or on an annual scale, and correctly manage your accounting.

Simplified type of invoice: this is the type of invoice issued for private clients who do not fall into the category of companies or are not registered in the self-employed system.

Sales-type invoice: this type of invoice follows the classic model of self-employed-company business relations. It is the best known, most complete and most likely to be found as a reference if you do more research on the subject.

Rectification type invoice: this is a type of invoice that is only issued in case you have made an invoice with some mistake, since after you send an invoice you cannot change it, unless you make another of this type on that invoice. It must include the same data as the type of invoice you have previously made with the corrections required in the case.

To keep your invoices up to date, and with a lot of organization, you can access a good program or management system of invoicing in “the cloud” that works as professional applications to issue and register all your invoices, keep the accounting and have control over all your customers and expenses. Also, remember to save all the invoices that are issued to you.

Basic obligations that you must fulfill when you are self-employed in Spain

What do you have to pay to the Inland Revenue (Hacienda)?

Personal Income Tax (Impuesto sobre la Renta de las Personas Físicas): this is a type of tax that is paid progressively, the more income you generate by being self-employed, the higher the percentage of this tax.

VAT (Value Added Tax): this is a tax on the value produced by companies. As you know, the current rate in Spain is 21%, which you must include in the cost of your services.

Processing form 347 (in the case of operating for third parties within the European Union): if you issue invoices and develop services for third parties in the EU, you must present this form in your declaration so you can process the VAT exemption.

How much do you pay to the Social Security when you are self-employed?

It would seem that you are starting out in this matter of how to be self-employed in Spain. If this is your first time registering, the key thing you should know is that the self-employment fee is 283.30 euros per month, from which a percentage is deducted initially and gradually decreases until the final fee is reached. The result would be something like this:

First year: -80% = 60 euros per month.

6 months later: -50% = 141.65 euros per month.

6 months later: -30% = 198.31 euros per month (*certain conditions apply if you are under 30 or 35 years old, in case you are a woman)

From the second year: 283.30 euros per month (final quota for self-employed).

For the moment, this is the essential thing to know about being self-employed in Spain. At the beginning it can be a tedious process, but with some time and a lot of responsibility, you will adapt to the rhythm and obligations of being self-employed in Spain.

Being self-employed is an individual who habitually, personally and directly, carries out an economic activity for profit, without being subject to an employment contract, and even if they eventually use the paid services of other people.

The condition of being self-employed is assumed if one owns an establishment open to the public as owner, usufructuary, tenant, or other similar concepts.

The condition of self-employed person is also presumed, if the person is a tele-transmitter who has clients and who carries out a paid activity (despite working from home), and if he or she issues formal invoices for his or her activities since he or she is the owner of a one-person company.

They can be individual entrepreneurs:

People of legal age who have the free disposal of their property

Emancipated minors, with the limitations established in article 323 of the civil code

Minors and the disabled, through their legal representatives

The responsibility of the self-employed is unlimited, being responsible for the activities of the business with all its present and future assets, so that there is no separation between personal and company assets

Regardless of whether the worker is registered in the Special Regime for Self-Employed Workers or is legally self-employed, it is presumed, in the absence of proof to the contrary, that the owners of an establishment open to the public are self-employed as owner, lessee, usufructuary or other similar concept.

The self-employed person handles registrations, modifications and cancellations in the Social Security system, and his or her responsibility is unlimited, with all his or her present and future assets, unlike companies that have limited liability.

Obligatory steps for all self-employed workers

Registration for the economic activity tax (I.A.E.) is a tax on the exercise of professional activity. It classifies business and professional activities through a code called the “activity epigraph”. It is carried out at the Tax Office.

Census registration and tax regime option: also processed at the Tax Office. Form 036 must be completed, on which you choose the corresponding tax regime and show the activity to be carried out and the company’s details.

Affiliation to the Special Regime for Self-employed Social Security Workers: this is done at the General Social Security Treasury (TGSS). From the moment you register, you have thirty calendar days to register. You must take the 036 form, the DNI and the TA521/1 form for registration in the Special Regime for Self-Employed Workers. The latter can be filled in at the TGSS office.

Types of self-employed workers In Spain 2021

Self-employed workers

If you are a self-employed person who manages a small business, does your own work regularly and is thinking about self-employment, you are a self-employed person. The vast majority of these professionals pay business tax (IAE) for their professional activities. This also includes artists, athletes and women and people dedicated to bullfighting activities.

Self-employed professionals

Self-employed professional is understood as a self-employed worker whose work activity is included in the list of liberal professionals included in the list of professional activities of the IAE.

A distinction can be made between self-employed professionals who are members of a professional association (such as doctors, pharmacists, veterinarians, lawyers, etc.) and those who are not (computer programmers, translators, publicists, etc.).

Economically dependent freelance

Self-employed workers or TRADE are those professionals who bill a single client for 75% or more of their income. It does not matter if they are workers or self-employed professionals.

This type of self-employed person is treated differently and is more legally protected than other groups of self-employed people.

Collaborating self-employed

The family member or self-employed collaborator is a type of self-employed person with certain characteristics and who must meet very specific requirements. It refers to the spouse or direct relatives of the self-employed person who work with him/her regularly.

Self-employed company directors

All commercial companies require by law a director in charge or a board of directors. This is known as a self-employed company. The administrator of a company or self-employed corporate worker, provided he is a natural person, must pay compulsory social security contributions under the self-employed regime.

What is the meaning of self-employment in Spain?

A self-employed person is one who directly carries out an economic activity without being subject to an employment contract and with their own paid workers. The activity carried out is independent and the same salary is not always received every month. The self-employed worker must be the owner of an establishment as a tenant, owner or any other similar concept. However, a self-employed worker is also considered to be someone who, by signing a contract for the provision of services, works for a company that is not their property.

Types of Self-Employed Workers in Spain

Individual autonomy: their activities are carried out independently. They are thinking of self-employment, and may or may not have hired employees. Individual self-employed workers can be separated into two groups: self-employed workers who pay business tax for their activities, and those who run businesses and are involved in construction and maintenance. The former would be taxi drivers, shopkeepers, etc. The second would be hairdressers, beauty centres, among many others.

Self-employed with workers: these are those who, besides conducting the activities carried out in the company as entrepreneurs, take part directly and actively in the work.

Economically dependent self-employed worker: 75% of their income comes from one of their clients only. Their activities are aimed at a few clients and they do not have workers in their care. They have to sign the contract of the economically dependent self-employed worker with their clients in order to be more protected.

Self-employed and freelance professionals: they are those who are engaged in the liberal professions, i.e. completely independent of a company. They can be separated into two groups: those who are members of a professional association (architects, economists, engineers, lawyers…) who sometimes pay contributions through their own professional associations, and those who are not members of a professional association (programmers, translators, make-up artists…). Finally, freelancers are those who can decide whether or not to have an establishment and workers. This type of self-employed worker is subject to income tax under the Simplified Direct Estimation system.

What do you have to do to become a new self-employed person in 2021?

At the beginning of this year the new Law on Urgent Reforms of Self-Employment came into force. This law is quite important if you want to take steps to become self-employed, or if you want to optimize some aspects of your work if you are already self-employed. Here you have an article based expressly on the explanation of this new law and all its characteristics. Below, we list the essential steps for the new self-employed person.

1. Register with the Social Security

First, it’s really important to remember forgetting to do the paperwork with Social Security is a mistake you shouldn’t make. Omitting this point can be detrimental to your business, as the Administration will claim three things from you:

  • Registration with the RETA (Special Regime for Self-Employed Workers).
  • The payment of any overdue fees.
  • 20% of the surcharge for this.

You must register with the Social Security the same day or the day before, before starting your activity with the Tax Office. This is done in order to make contributions for the days you work and to control the full monthly self-employed contribution. The procedure can be carried out online (with a digital certificate) and is notified in the following ways:

Quotation base. The Social Security asks for a minimum and maximum contribution base every year, and from here a contribution base calculates the self-employed quota. The maximum contribution base for this 2018 is 3,642 euros per month and the minimum is 893.10 euros per month.

CNAE Code (National Classification of Economic Activities). The code depends on the chosen IAE (Tax on Economic Activities). A list granted by the INE (National Institute of Statistics) is chosen.

Bank account number. This is where the monthly fee is redirected.

Work Accident Mutual Insurance Company. It is important to choose a mutual insurance company that can cover the temporary incapacity of the self-employed entrepreneur.

To facilitate the invoicing of the self-employed, we recommend software that allows you to get the electrolyte bill for expenses. DevoluIVA offers a digitalisation service for expenses and automatically provides you with the invoices so you can reduce the VAT that corresponds to you, with guarantees.

2. Register with the Inland Revenue (Hacienda)

It is important to be clear from the outset that the Treasury and Social Security are two bodies that work together and complement each other, but they are not the same. Social security handles social welfare through health coverage, pensions, retirements… In contrast, the Treasury manages the State’s public income and expenditure through tax collection.

To register with the Treasury, you must register with IAE from the first moment you start your business. On your first sale, regardless of whether it is a product or a service. You must also invoice with VAT (Value Added Tax), and this procedure will affect your personal income tax (IRPF).

3. Get your Digital Certificate

A key element for your new status of business autonomy is that of the “digital certificate”. Public bodies are increasingly up to date and make more use of new technologies to store information, so it will be necessary for you in the future. If you get it through the website of the Fábrica Nacional de La Moneda y Timbre as an individual it is free. You will find your digital signature on it and it may be beneficial for you at the time you want to manage your business autonomy.

Once the procedures have been carried out, a resolution will be issued to register with RETA to justify your registration as a self-employed worker. It is important to remember that you must keep it with form 036, 037 and model 303 when registering with the Tax Authorities.

From here on, follow some simple steps to continue being a good self-employed worker.

Don’t forget that every end of the month you will have to make the payment by direct debit. If you let this go, it can be really hard for you, as you will be charged extra fees or lose bonuses.

Pay attention to the BOE (Official State Bulletin), as there may be news that interests you as a self-employed person.

Check the tax calendar to control your income and expenditure.

Apply for the discounts and get your 50 euro flat rate.

Find an advisor to guide you so you have all the papers for your work autonomy in order.

Pros and cons of being self-employed in Spain

The advantages of labour autonomy motivate us to become self-employed and to take the risk of what may happen. This is true, but we also like to be informed about the disadvantages so we can be prepared for anything that might happen.

Advantages of being a new self-employed 2021

You will become your own boss.

You don’t have to follow the work schedule, as you decide when and how to work.

It’s the clearest and quickest way to set up a business.

You’ll have the option to deduct VAT (21%) and you’ll be able to get many discounts on things like petrol or office supplies.

You will not have to provide any initial capital.

You can choose the type of client you want and work with them yourself.

This is the cheapest way to set up a company, as it doesn’t require so much paperwork and therefore you need less advice.

Disadvantages of being a new self-employed 2021

You can choose your own schedule, but you must be well organized. If you don’t do it from the beginning, you may end up working 24/7 and that’s not what we’re looking for over time.

Pay your debts with your personal assets. If you are married and your partner and you have unified assets, he/she may have to contribute his/her own assets to pay the debt.

Not knowing if you will have an assured income.

Pay the monthly social security contribution whether or not you have an income, so you will have a loss.

To hire a close relative you must register as a collaborating self-employed person.

You must have knowledge of all the fields of your company so it can go ahead. We are not talking about you practicing, but about you knowing how to manage it.

The world of the self-employed in Spain is difficult, but it is still one of the best ways if you want to set up your own business, enjoy your work autonomy and work on something that you like and that motivates you.

What is the Self-Employed (autonomo) Quota?

If you are thinking of becoming self-employed or are already doing so, know that one obligation involved in registering with the Special Regime for Self-Employed Workers (RETA) is the monthly payment of the so-called “self-employed quota” and that this varies every year.

In this article we tell you how much it costs to be self-employed in 2020 how much you pay each month to the Social Security.

And if you need help with your registration process as a self-employed person, remember that this service is free if you contract one of our consultancy packages for the self-employed.

Self-employed workers must pay contributions from the first day they start their activity and the settlement of the contribution will be made at the end of each month at the Social Security General Treasury administrations, by direct debiting the payment to your financial institution or through the Social Security website.

It should be noted that, since the entry into force of the Urgent Reforms Law for Self-Employment in 2018, both in the month of registration and in the month of cancellation as a self-employed worker, the payment of the derived contribution will be proportional to the days of registration, without having to pay the entire monthly fee. Besides the Social Security, you also have certain obligations to the Treasury, which are those derived from the taxation of the self-employed (Autonomo).

What does the amount of the self-employed contribution depend on?

The self-employed quota is a percentage that is calculated based on the contribution or “theoretical salary” that, as a worker, you estimate you will have.

The contribution bases have a minimum and a maximum that are established each year by the Government through the General State Budget. In the absence of these, the Government has the possibility of freezing the contribution bases or regulating new increases by a Royal Decree, as established in Royal Decree-Law 28/2018, of 28 December, for the revaluation of public pensions and other urgent measures in social, labour and employment matters.

This Royal Decree established an increase of 1.25% in the minimum contribution base for 2019 and a progressive increase in the general contribution rate for the years 2019, 2020 and 2021, and the compulsory incorporation of the contingencies which give rise to some of the benefits to which the contribution in the RETA gives entitlement and the corresponding monthly payment of the self-employed contribution. Let us look at this in greater detail.

Social benefits to which the payment of the self-employed quota entitles you

The amount of the contribution bases conditions the benefits that a self-employed person can receive in situations of cessation of activity, sick leave, leave because of accident and very especially with retirement, which makes it necessary to plan the contribution from the age of 47 as we explain below.

It should be remembered that Royal Decree 28/2018 of 28 December introduced a progressive increase in the general contribution rate from 2019 to 2021 to ensure some of the contingencies and social cover that until 2019 was voluntary, such as professional contingencies (accidents at work and occupational diseases), cessation of activity and continuous training.

Until that time, only the contribution for common contingencies was obligatory for all self-employed workers, unless they were in a situation of multiactivity and contributed for that benefit in another Regime.

On 1 January 2020, the increase in the general contribution rate from 30% in 2019 to 30.3% introduced by Royal Decree Law 28/2018, of 28 December, became effective. The minimum base in 2020 is 944.35 euros and the self-employed contribution is increased from 283.30 euros in 2019 to 286.15 euros.

Self-employed Workers’ Quota 2021

The minimum quota for self-employed workers in 2021 is 286.15 euros. This 286.15 euros per month as a self-employed quota cover the self-employed in the event of common illness, accident or occupational illness, cessation of activity and training.

Rebates to cushion the cost of the Spanish self-employed quota 2021

There is a very important bonus, the flat rate for new freelancers, which you must consider.

In 2020, the self-employed quota resulting from the flat rate bonus is 60 euros for new self-employed registrations from 1 January, a quota that includes professional and common contingencies, but leaves out the cessation of activity and training.

There are also a series of discounts in the RETA, applicable to different groups, such as collaborating self-employed workers, disabled self-employed workers, young people, workers from Ceuta and Melilla, those over 65 years of age or those who stop working because of maternity or paternity leave.

Self-employed quota in 2021 for those over 47

(Social Security has not yet updated the contribution rates and bases for 2020 so the bases for 2019 are extended)

Most self-employed people increase their contribution base when they reach the age of 47, in order to pay more contributions and thus increase their pension.

However, the freedom to choose the contribution base was restricted from this age onwards and it was only possible to accumulate it under the limits set each year in order to achieve the maximum pension.

Following the Royal Decree on the contribution of the self-employed in 2019, these limits are eliminated so that self-employed workers under the age of 47 can choose their contribution base between the minimum base of 944.35 euros and the maximum base of 4,070 euros, a freedom of choice which is maintained for those self-employed workers aged 47 who, in December 2018, contributed for a base equal to or greater than 2,052 euros per month.

If the contribution base is lower than this figure, the maximum contribution base will be limited to 2,077.80 euros, except that before 30 June 2019 they will increase their base by over 2,052 euros.

Self-employed persons who, on 1 January 2019, were at least 48 years old, may opt for a contribution base of between 1,018.50 and 2,077.80 euros per month, unless the surviving spouse of the economic activity holder 45 years old or over and who, because of the death of the holder, has to take over the business after registering in the Self-Employment Scheme. Here the contribution bases will be between the general minimum, 944.40 euros and 2,077.80 euros maximum.

If the self-employed person, before reaching the age of 50, has contributed for five or more years in any other Social Security system and his last base has been equal to or less than 2,052 euros, he may choose to contribute to the self-employed regime between a base of 944.40 euros and 2,077.80 euros. If the last base has been greater than 2,052 euros, the base for which he can make contributions is between 944.40 euros and the last base increased by 7%, with a ceiling of 4,070 euros per month.

Evolution of the self-employed contribution in the last decade

Any increase in the share of self-employed workers means that the self-employed person is scratching his or her own pocket more. But has the increase in the self-employed quota over the last ten years been so meteoric? Let’s look at the evolution. Of course, the increase in the share of self-employed workers stems from the increase in the minimum contribution base and in the last two years from the rise in the general rate.

Fees for self-employed corporate clients in 2021

The minimum contribution base for the corporate self-employed or self-employed with over 10 employees has also increased in 2020. As of 1 January, the self-employed worker who pays the minimum contribution will have to pay 1,214.08 euros, which means a monthly fee of 367.84 euros, 3.61 euros more than in 2019.

Under the Urgent Reforms to the Self-Employment Act, approved in October 2018, the contribution of the self-employed worker is no longer subject to the General Regime.

New features in the self-employed workers’ quota 2021 due to the COVID-19 crisis

In an extraordinary manner, Royal Decree-Law 11/2020, of 31 March, allows self-employed workers who are not entitled to the extraordinary benefit because of cessation of activity the moratorium on the quotas for May, June and July 2020. This measure allows the payment to be delayed for six months and without interest.