Freelancing In Spain As A Foreigner [2023 How-To Guide]

Freelancing has been a quickly growing trend globally since the COVID-19 pandemic. More and more people have started realizing the benefits of working from home on their own terms. Spain too, is undergoing the same trend. It currently has more than 3 million self-employed people, which make up almost 17 percent of its workforce.

If you have recently moved to Spain, or are thinking about it, this article will walk you through the process of working as a freelancer in the country.

Freelance Vs Self-Employed In Spain

If you wish to be self-employed in Spain, there are several avenues available to you. 

Freelancer

A freelancer is someone who undertakes work for another individual or company in exchange for remuneration. They are not under a contract with an employer, but will take on projects with various clients depending on their ease. Since they do not have an employment contract and hence a regular salary, their income will also vary.

Self-Employed

A person is self-employed if they can carry out an economic activity for their own profit without having any contract with an employer or another person who they will work for. Their salary is not fixed, and any business expenses that arise will need to be paid by that person out of their own pocket. This means that they will also bear all the risks themselves. On the other hand, they also have the freedom to work from wherever they want, on their own terms.

Therefore, setting up your own company has more rigid requirements in terms of taxes, social security documentation and capital investment.

Is Freelancing Allowed In Spain?

You can easily work as a freelancer in Spain as long as you have the necessary work permit and other official documentation. These include finances, and adequate educational and professional experience.

How To Obtain A Freelance Visa In Spain

This depends mostly on which country you are coming from. People who belong to the EU and EFTA regions can simply enter Spain and start working, without having to apply for any work permit. They will need to register as self-employed after they enter Spain. The only requirement is that they be of legal age i.e. 18 at the time of registration.

The requirements are more demanding for people coming from non-EU/EFTA regions. They will first need to apply for a visa to be able to come to Spain, then a residence permit which will allow them to stay in the country for the long-term, and finally a self-employed work permit which will allow them to be self-employed or work as a freelancer.

Once you have a self-employed work visa, you will be able to live and work in Spain for one year. Once this time period ends, you can renew the visa for two years. You can continue this cycle till you complete five years in Spain, after which you will be able to apply for permanent residency.

Requirements For A Freelance Visa In Spain

To be able to apply for a freelancer visa in Spain as a non-EU/EFTA citizen, you must fulfill the following requirements:

• Be over the age of 18 years, which is the legal age in Spain
• Not reside in Spain with an irregular immigration status (the process must have been initiated in the country that you are originally coming from)
• Not have a criminal record (this must be proved by certificates issued in the countries you have lived in during the last five years)
• Have the necessary qualifications and experience necessary to conduct the business activity you want
• Show evidence of having the necessary financial resources to conduct the said activity

Moreover, you will need to submit certain documents during the application process. You can schedule an appointment at the Spanish embassy or consulate in the country that you live in. you will need several documents including:

• A copy of your passport
• A signed copy of the application form EX-07
• Certificates for all the relevant academic and professional qualifications
• Initial investment and proof of this income
• A certificate from a medical professional to certify that you do not have any serious medical condition which can be a threat to people around you
• Proof of medical insurance
• An approved business plan (the approving organization must be one that is deemed suitable by the Spanish government). This plan will defend the viability of your project and also give details about the planned investment which will guarantee its success

 Once you submit all the required documents, you will need to wait 3 months to hear a decision about the approval of your visa.

How To Register As A Freelancer In Spain

Registering as self-employed is not incredibly difficult in Spain. In fact, the process is fairly simple. You just need to do the following:

• You will first need to register with the Social Security. This is to facilitate making the necessary monthly contributions. To do this you will need to submit the TA 0521 form to sign up for the RETA (Special Scheme for Self-Employed Workers). Since this scheme has different versions, you will need to check for yourself which one corresponds to you
• Register with the census, after which you will also need to choose your tax scheme through the Tax Agency
• Within 60 days of having registered with the Social Security, you will also need to register with the Tax Agency. You will need to fill out a copy of Form 30 and submit it at the local tax office. In addition, you will also need your NIE, passport and an updated copy of the census record
• To do this, you just need to fill out Form 036 or 037 (whichever is appropriate for you) and TA521/1 and carry your DNI (Documento Nacional de Identidad) with you 
• Finally, you will register with the Spanish Tax Agency for the economic activities tax (IAE). This will register you in the group that corresponds with your profession, so the tax authorities can make a record of the type of economic activity you will be carrying out

Nowadays, you can complete a large part of this process online, to save yourself from the hassle of going to government offices and dealing with the bureaucracy personally.

VAT Tax – Yes Or No?

VAT in Spain is called the Impuesto sobre el Valor Anadido (IVA). Like all other types of businesses, freelancers also have to pay a 21% tax, regardless of their annual earnings. Only certain activities like educational services, some artistic endeavors and writing are exempt from the VAT. The tax will need to be paid in January each year, in addition to quarterly and annual declarations.

If your clients include business customers within the EU (but outside Spain), you may be exempt from paying the VAT since the businesses will be paying it within their country at the relevant rate. You will, however, need to register for this beforehand and obtain a special tax number for your intra-community business. This is specifically for those who work with clients based outside of Spain.

How Much Tax Do Freelancers Pay in Spain?

Spain is segregated into 17 autonomous communities. Each of these has the authority to formulate its own taxation schedule and social security regime. What this means for you as a freelancer, is that you might need to conform to slightly different rules depending on where you are residing in Spain. It’s always a good idea to check with the relevant authorities to confirm which rules apply to you.

Once you register with the Spanish Tax Authority, you will then need to register for paying Tax on Economic Activities as well. This will involve declaring the kind of business you are doing, that is, if you are a freelancer or a self-employed professional. Freelancers in Spain usually pay two types of taxes: the income tax (IRPF – Impuesto sobre la Renta de Personas Fisicas) and the VAT (IVA).

If you are a freelancer or self-employed, you will pay the personal income tax at the same rate as everyone else. As long as you spend more than 183 days in Spain, you become a tax resident and are liable to pay taxes to the government. Freelancers are charged a progressive income tax rate which varies between 19 and 47%. Each region will levy its taxes differently.

You can also claim deductions in your tax return for several categories as long as you carry the invoices and receipts with you. These include social security contributions, accounting and tax related expenses, maintenance and office expenses for your business related activities, subscriptions and vehicles used for work. Even as a freelancer who works from home, you can claim partial deductions. These have been specified by the tax authorities and include a 30% deduction for utilities like water, electricity, gas etc. (this is only possible as long as you have registered your home address as the center of your economic activity when registering as a freelancer).

Accounting For Freelancers In Spain

Bookkeeping And Invoices

If you are working as a freelancer, you must declare your income every quarter. For instance, in January you will need to declare your income for the October to December period and then pay your tax. The income tax for freelancers is paid in advance at 20%. For this, you will need to submit Form 130, unless 70% of your clients are businesses that pay retained tax on your behalf.

If you are registered under the modular system (that is, your income levels are based on estimates rather than your actual income), you will use form 131 instead. In addition to this quarterly payment, you will also need to submit the form 100 in April each year declaring your tax return for the past year.

You will need to have a record of all the expenses and incomes that relate to your business. Moreover, your invoices must have the following information:

• Date of the transaction
• Order number
• VAT ID/number
• The rate of VAT applied to the services
• The total amount of the invoice and the discounts that were applied, if any
• Details of the goods or services that were provided. This must also include the unit prices and quantity
• Your and the customer’s name, address and tax ID number (NIF)

Banking 

While it is not mandatory, having a Spanish bank account is definitely an advantage. It is much easier to receive payments, and the mandatory social security contributions will also be automatically deducted each month. Opening a bank account will require a few essential documents like your NIE, identity documents, proof of your current address and documentation regarding your employment status.

Having a business bank account will let you keep better track of your business expenses and income and give you a better overview. Some banks will even offer additional benefits to those with a small business, so it is always worth checking out your options.

Insurances For Freelancers In Spain

Health Insurance For Freelancers In Spain

You might want to consider getting private health insurance. Although the Social Security entitles you to health care cover by the government, in case you need an emergency treatment you cannot run the risk of waiting months or even a year for it. You don’t necessarily have to get a very expensive plan. If you don’t get sick very often and do not end up going to the doctor frequently, just go for a plan which offers co-payment at very low monthly prices for your ease of mind.

These insurances will offer some deductibles in your annual income tax return. In addition to this, these policies are usually tailored to the needs of freelancers and offer a greater variety of specialized policies.

Liability Insurance For Freelancers In Spain

There are two types of consequences of an accident: civil and criminal. Criminal consequences occur when someone’s actions cause a damage that is considered an offence under the criminal code. Whereas civil consequences are those which are not considered a criminal offence. For civil damages, the individual responsible will need to pay compensation for the damage caused, in which case liability insurance becomes useful.

Oftentimes, it is a good idea to get liability insurance either as a professional or the main beneficiary. This is to prevent anyone else from claiming your private possessions. Some professions like electricians might even be required to take out civil liability insurance to make sure you lawfully do your job. Insurance will provide cover for any damages you might incur to other people’s person, property or belongings. This can be incredibly useful in case of any work related accidents like fires, people slipping on wet floors etc. Other professions like software engineers or marketing specialists will find little use for liability insurance.

Social Security Contributions For Freelancers In Spain

As a freelancer you pay a certain amount of social security contributions every month. If you are registering in Spain as self-employed for the first time, you can also be eligible for certain ‘discounts’ under new laws. You can get an initial flat rate of 60 euros per month for the first year. And for the subsequent year, you can also claim bonuses. This contribution is also called the freelancer quota or la cuota de autonomo. It is called a quota since the amount you pay each month is fixed. As long as you are under 47 years of age, you can decide if you would like to pay the minimum or maximum quota. The minimum is 293 euros while the maximum goes up to 1221 euros per month.

Although the contributions are the highest within the EU, by virtue of this you are also entitled to several benefits. These include health care for yourself and your dependents, maternity and paternity leave and pension. Moreover, you can get coverage for any accidents, illnesses and unemployment.

Ficticious Self-Employment In Spain (False Autonomo)

Fake freelancing is an illegal cost-cutting strategy used by some businesses. It occurs when a business shows someone as a freelancer on their tax records, but the said person is in fact carrying out all the duties of a full time employee. That is, even though the person is technically self-employed, for all intents and purposes they are behaving like a regular employee of their client. If such a situation is discovered, the status of the employee will be changed and the company will be forced to pay all the social security contributions that were owed since the individual started working there. The company can also be fined up to 3500 euros.

To solve this problem to some extent, the Spanish government decided to create a new category called ‘economically dependent self-employed workers’. This includes all those freelancers who receive 75% or more of their income from a single client. However, to be considered a legitimate rather than illegal autonomo, the person should use their own resources to carry out any activity, organize their work according to their own criteria and preferences and is paid according to the results of their activity.

Is Freelancing Possible While Being Employed In Spain

It is definitely possible to be freelancing while also employed elsewhere. This situation is known as pluriactividad. This work contract can be either part-time or full-time. This can also have benefits for you in paying your social security contributions. According to Spanish law, if someone is contributing twice to the system and the total contributions exceed 13,822 euros, they can automatically get a 50% return of the excess amount.

Conclusion

This guide is a detailed overview of all that is required to begin working as a freelancer in Spain. It covers everything from registration to insurance and scams that you would want to avoid. However, if you have specific questions about the nuances of the process or the exact requirements for a profession, you might want to get in touch with legal professionals or the relevant government departments.