Entrepreneur Tax

Even though the French government are calling into question the simplified model for the self-employed, Spain, on the other hand, are voting for this model but with the aim of revitalising economic activity, helping to create businesses and to fight about unemployment affecting millions of Spaniards.

What is an autonomo?

Spain offers an advantageous taxation system when one becomes an entrepreneur and starts a business. The Spanish entrepreneur (otherwise known as the autonomo) works on his own. Therefore, he has no employment contract or employees. His business is his profit. An autonomo must be a Spanish tax resident which means he must stay in Spain for more than 183 days a year. Autonomos are also obliged to inform social security as soon as they arrive and of any changes in their employment status.

What are the necessary steps for becoming self-employed?

Before establishing yourself as self-employed in Spain, the first step is to get a N.I.E (ID number for foreigners). This number is mandatory for all those working in Spain.

When you have obtained your N.I.E, you should open a bank account and then go to the town hall to proceed with registration. This registration gives your authorisation to live in Spain.

After that, you will need to declare your tax activity and to do this you must go to the Agencia Tributaria and conduct a statement that includes an application for a NIF tax identification number (or NIE for foreigners). The "censal" statement must be made by every individual engaging in commercial activity on Spanish soil.

Finally, along with the formulas 036 and 037, one must enrol in social security and apply for membership to the Regimen Especial de Trabajadores Autonomos. During registration, you'll have the choice between different contribution rates and one mutual fund. Namely, all public health care such as hospital fees, radios, analyses and consultations are thereafter free.

Which taxes do the self-employed need to pay?

In Spain, an autonomo must pay personal income tax (IRPF). The reasoning behind this is to withhold 7% in the first six months and then they are referred to a tax scale with progressing rates from 24.75% to 52% depending on income.

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