Once a self-employed person has registered as a sole trade (autónomo) with the Spanish Treasury and Social Security, they can start working immediately.
Finding clients, marketing your own products or services and starting invoicing will be essential to get the business going.
But it will also be very important to pay the corresponding taxes, and for this it is good to know in advance the tax obligations and the deadlines to comply with them.
This may save you from having to face eventual unwanted sanctions, penalties or surcharges.
As a self-employed person, you are obliged to pay taxes from the very first day of activity.
There are several types of taxes that sole traders must report to the Treasury, each of them subject to a specific regulation. The main ones are the VAT (or IVA, in its Spanish acronym) and the personal Income Tax (or IRPF).
Quarterly VAT returns
Self-employed persons must file four quarterly returns of Value Added Tax (VAT) each year.
To this end, entrepreneur have to fill in and submit form 303 for VAT self-assessment to the Spanish Tax Authority (Agencia Tributaria).
The first three VAT returns must be submitted between the 1st and 20th of the months of April, July and October.
The fourth and last declaration of VAT must be presented in January of the following year.
This is what happens in the general VAT scheme.
In the case of VAT, the entrepreneur acts as a collector for the Treasury: if the difference between the output VAT (the one you charge on your invoices) and the input VAT (the one you have to pay for purchases related to your activity) is positive, you will have to pay it to the Tax Authority.
But if the difference is negative, you can request a VAT refund or you also have the possibility of offsetting it in subsequent tax settlements.
SIMPLIFIED SCHEME (MÓDULOS)
Simplified VAT only applies to the self-employed who pay taxes based on estimated earnings (módulos or estimación objetiva).
It is important to note that not all the self-employed can benefit from this scheme, whose use is limited to certain activities.
For the self-employed who use the simplified regime, the VAT accrued quota will be calculated by applying established indices (módulos) for each type of activity.
The calculation of the annual amount to be paid is carried out at the beginning of the year and each quarter the entrepreneur pays a percentage of it in advance.
In this way, the self-employed person pays the same amount of VAT every quarter regardless of invoicing. But to avoid mismatches between what is paid to the Tax Authority and what should be paid, an adjustment is made at the end of the year according to the actual billing.
At the end of the fiscal year, the total amount of the annual VAT accrued by the modules is deducted from the VAT paid on the expenses throughout the year. From the resulting figure, the payments advanced in the quarters are subtracted. This is how you get the final fee.
Annual VAT summary
It is an informative statement that the self-employed must send to the tax administration in January of the year following each fiscal year.
This declaration is made using form 390 and includes all operations subject to VAT carried out over a year.
Personal Income TAX (IRPF)
The self-employed in Spain also have to submit quarterly Income Tax returns.
These are what are known as payments on account of the income statement, and should be made in April, July, October and in January of the following year.
The personal Income Tax rate for the self-employed is 15%. In other words, That is, the self-employed person will pay the Tax Agency the amount proportional to 15% of what they have billed in a quarter.
For the new self-employed, the government allows a reduced rate of 7% of personal income tax during the first two years of activity. Later, the general rate of 15% must be paid.
The self-employed are more likely than other workers to deduct expenses, and therefore to pay less personal Income Tax.
In general, freelancers can deduct the expenses they need to carry out their activity (Social Security fee, rent, salaries, electricity, telephone, Internet, financial expenses, repairs, etc.).
These expenses must be proved with an invoice.
In addition, those self-employed who work from home can also deduct from personal Income Tax part of the costs of electricity, water, gas, electricity, telephone and Internet.
In some cases, food and accommodation expenses can be deducted up to a limit (€ 26.67 and € 53.34 per day, respectively, within Spain) and provided they have been paid electronically.
Also, bear in mind that there may be other requirements depending on your field of activity:
Having a restaurant is not the same as being a photographer or importing goods from outside the European Union.