What is it? How do you do it? What are the risks and the benefits? If you’re thinking about becoming autónomo in Spain, these are the key things you need to know.
Becoming autónomo in Spain seems like a daunting task, with lots of technical hoops to jump through before you can become a fully fledged freelancer or run your own business. However, the benefits of going it alone can be great, especially for those people who want complete control of their activity and to set their own schedule, with all the flexibility that offers.
In this “How To” piece, we take you through the entire process of becoming autónomo from start to finish, showing the things you’ll need to set up as autónomo in Spain, and the ways in which you can do it yourself.
We took advice from two Barcelona based organizations who are experts in this field for this. Both offer services to help you every step of the way to becoming autónomo.
- Balcells Group is an international law firm that provides legal advice to a range of clients. It specializes in international law and immigration, and so has a wealth of experience in helping clients to become autónomo.
- BCN Business Services, is an organization that assists in all levels of business management, taking care of all legal, fiscal and social obligations any business might have, so you can concentrate on the other parts of your business.
What Is Autónomo?
In Spain, autónomo refers colloquially to people who are working as freelancers—profesionales autónomos. However, it’s not actually just for the self-employed: anyone who runs a business will also have had to set up their organization as autónomo too.
Setting up your business through the autónomo system can be done either in the same way as those who are self employed, or, for larger organizations, as a “limited company” (sociedad limitada) commonly shortened to SL (as this article will from here on).
Who Is It For?
Many different people choose to become autónomo, usually as independent professionals who want to create a structure so they can issue invoices and make social security payments, but small businesses starting out can do so too. Therefore, becoming autónomo should only concern you if you want to work freelance or set up a small business. If you have a contract with someone else, they take care of all the boring tax and social security obligations that go with it for you.
Most will choose to become autónomo via the profesionales autónomo or freelance route, however, bigger businesses may want to set up as a sociedad limitada, or SL (more on that later).
It’s worth noting that setting up an SL is not the immediate option for many people starting a business: it is often cheaper and easier to set up your business via the freelance route. Many people will then choose to register as an SL once they have a more reliably significant income, so they can get the better rate of corporate tax compared with IRPF.
Pricing and Tax Rates
Once you are set up as an autónomo in Spain, the normal rate of social security payments you have to pay is €275 per month. However, the Spanish government has recently made it more reasonable for young people starting out. If you are under 35, the current social security requirement is now €60 per month for the first 12 months. This will then rise in stages after the first year, depending on your income.
The amount of IRPF tax that businesses you will invoice have to retain is currently 15%, however, this falls to 7% in your first three calendar years as an autónomo. The amount of VAT you will put on your invoices and then pay each quarter also changes depending on the type of work you want to do. For example, for things like teaching, artistic endeavors, and forms of independent writing, you will not have to pay VAT.
Getting Started
While anyone can become autónomo, there are a couple of different things to do with immigration that you might need to sort out before getting started. This mainly depends on whether you are from a country in the EU/EEA, or not.
If you are from a country within the EU or the EEA, the process of becoming autónomo is relatively straightforward: once you have the NIE, you are basically good to go.
If you are from a country outside the EU, you will need to get a specific visa or work permit and the TIE (Tarjeta de Identidad de Extranjero) in order to become autónomo. This can be done by changing your non-lucrative visa or 90 day tourist visa to one that includes a work permit, however, the process can often be quite tricky, so it is worth checking that you can do this before you start the autonomo process.
You can read more about the many different types of Spanish visas and how to get them here.
The Process
While it is possible to set up as autónomo yourself, the process is pretty confusing for first timers, especially those whose Spanish isn’t perfect. Both Balcells and BCN Business Services can do the process for you for a modest fee, which many find the smartest way to get the autónomo process over and done with. There are also other organizations like the Chamber of Commerce who can help you with the process as well.
However, if you want to go it alone, here’s a breakdown of the steps you’ll need to take. Given there are two defined types of autónomo—profesionales autónomos and SL—there are two different processes.
Profesionales Autónomos
Documents you will need for the entire process:
- NIE/Certificado de Registro de Ciudadano de la Union “Green Card” for EU nationals
- TIE for third country nationals
- Passport
- The names of your father and mother
- Personal Spanish bank account IBAN number
- Spanish mobile phone number (you can use a friend’s local number if you don’t have one yourself)
First off, you’ll need to get your NIE. Here’s our article on how to get it.
Once you have this, it is first useful to find out the two codes that correspond to the type of work you intend to carry out: the IAE code, which relates to the tax office, and the CNAE code, which relates to social security. You can look up the code for your specific profession here.
In the past, the next step in the process involved a trip directly to the tax office—the “Hacienda”—followed by an appointment at the social security offices, in order to get registered. However, with the advent of the “digital certificate,” this is now all done online.
The digital certificate is essentially your digital passport—it is used to access your social security profile online to check everything from your empadronamiento to housing and driving issues. You can apply for and download the digital certificate here, or you can visit a catastro gerencia regional to do this as well. For more detailed help on how to obtain the digital certificate, read this how to.
Once you have the digital certificate, you are registered with seguridad social and will have been given your own unique social security number. You can then check on your social security profile online through this website, clicking on “Tu Seguridad Social” to proceed. At this point in the registration process you will also need to choose an insurance provider for sickness and accident cover.
Now you will need to do an inscription (the “alta”) in the tax office (the “Hacienda”), presenting the form model 037 after filling out all required information. You can do this through the Hacienda website, here.
Once this is done you are a fully independent autónomo! You can now start invoicing clients, but make sure to do so only after the starting date of your autónomo activity to avoid any complications.
Setting up an SL
This process is more costly and takes a little more time—while you could be set up as an autónomo in a couple of weeks, setting up an SL usually takes around a month. However, if you are starting a large company with a big turnover, this is probably the one for you.
Again, you will need to have a NIE (EU nationals) or TIE (third country nationals) to get started with this. Read our NIE how to article here.
The process then requires you to come up with five possible names for your company—they will give you one of these names which is not already taken.
Next it’s time to set up a bank account for the company under the name you give to them. You’ll have to deposit at least 3,000 euros into it—the minimum amount of capital that the company has to have to begin. Make sure to retain the certificate the bank gives you confirming this.
To confirm this procedure, you must then go to a notary to sign a deed of incorporation for the company, confirming that: you have 3,000 euros in a company account; you have a unique name for your business; you have expressed the type of work that you will be doing. Following this, you should go to the registro mercantil to deposit the deeds of constitution.
To proceed from here, the administrador (administrator) of your company needs to be registered as autónomo societario (as opposed to autónomo profesional). The company will also need to get an employer social security number if it wants to hire staff. The start of operations and census need to be communicated to the tax authorities. This is the start of the incorporation of the company.
Once You Are Set Up
When you are all set up, you should receive a message to the Spanish phone number you gave and see the first social security payments leave your account.
At this point, many people choose to hire a gestor (accountant) to look after their finances. This is definitely recommended if you are sending out a large number of invoices, or if you want to free yourself from the hassle of accounting, and both Balcells and BCN Business Services offer services that deal with this. Other app based services like “Tu Gestor” and “Abaq” can be useful for people with a smaller number of invoices who want something to help keep a track on it. However, if your number of invoices is smaller, it is possible to do all your accounting by yourself.
Both companies and independent professionals must keep accounts according to the Spanish Code of Commerce and must present the corresponding tax declarations. The key thing to do is to keep copies and a record of all your invoices, which should be kept for five years. While they don’t have to be in Spanish, a sworn translation might be demanded, so many expats choose to create dual-language invoices. You should also keep a record of all your expenses, retaining any receipts so you can claim that back each quarter.
Quarterly & Yearly Reports
Companies must present their company tax declaration in July and freelance independent professionals must present their personal income tax declaration in June. There are various fines if this is done late, depending on the amount of tax you have to pay.
Freelancers also have to fill out quarterly reports declaring paid and received VAT. As noted earlier, some professions, like teaching, artistic endeavors, and forms of independent writing, are exempt from VAT, although you will have to submit the quarterly reports.
Useful Info
How to Stop
This is a very simple procedure—you just have to communicate your intention to stop with Seguridad Social at the soonest opportunity, and the next month you will stop paying social security contributions. You can do this in person or online, if you have the digital certificate, with the TA0521 form. More info on this here.
Bear in mind that if you wish to start as an autónomo again, you can still access the discounted social security payments if you stopped within a year. However, starting again as autónomo, even if you are still under 35, does not restart the one year, €60/month cycle.
Knowing the Risks and Repercussions
Being aware of the risks of going it on your own is key when thinking about becoming autónomo, especially if you are going to try and do the process without help from any other organization. Know that you yourself are liable for any mistakes you make, which might mean that you are not able to access the discounted social security contributions or that you are forced to pay a fine for missed quarterly or yearly reports.
Harry Stott.
Harry Stott is a regular contributor to the Barcelona Metropolitan covering Brexit, local political and social issues as well as the music scene. He recently received a B.A. in music from the University of Leeds, and now writes and produces radio content for a number of organizations in Barcelona and beyond. You can read more of Harry's articles here.