International contractors that want to work in Spain will find that several registration steps are depending on their business structure. One of the most popular methods is to work as a self-employed autonomo professional. This is because of its low administrative costs and credibility with clients. Autónomo is a tax and social security regime for self-employed workers working in Spain.
This article will outline the steps to qualify and register as an autonomo and successfully enter the Spanish freelance market.
Who qualifies as autonomo?
If you work as a self-employed freelancer in Spain, you will need to register as an autonomo professional. This also applies to anyone running a small business or who has any type of side gig that invoices clients. The purpose of registration is to make sure that you are paying all Spanish taxes due, including VAT, as well as social contributions.
Contractors who set up their own limited company or do not qualify as autonomo. These people, unlike autonomo, will be subject to other business reporting rules. On the other hand, the autonomo tag does not apply to people who have an employment contract.
How to register as autonomo
If you are a non-EU citizen, the first step is to apply for a ‘self-employed work visa’ in Spain. The visa is valid for one year. Afterwards, it can be renewed for additional two-year periods. EU citizens do not need a work visa but will have to apply for a residence permit.
Once you have a work visa, you can begin the autonomo registration process. You begin by obtaining an NIE (foreigners identity number) to use with all of your financial transactions, taxes and social security. Then you register with the Spanish tax authorities to confirm your intention to work as an autonomo professional.
At that point, you can open a bank account and register with social security as a self-employed. Your social contributions will be deducted automatically from the bank account.
Legal and financial administration for autonomos
It should be apparent that the autonomo registration and administration are designed by authorities to oversee your contracting. You will be required to do the following:
- Submit regular invoices to your clients
- Report all payments
- Make quarterly tax payments
- File taxes annually.
The tax rate for autonomos is 19-45% unless you stay less than six months and then it is a flat 24%.
Social security, health insurance and pension for autonomo
Social security contributions for self-employed in Spain are quite high, but for new freelancers, the full rate does not kick in for two years. For the first 12 months you only pay a flat EUR 60 per month, then 30-50% reductions for the next 12 months. The full contribution rate after that is almost 32% of a fixed salary base. EU citizens may be able to opt out of contributions if they are covered by their home social security program.
Your social contributions do fund the public healthcare system, so you can register and obtain a health card for services. Non-EU citizens may also need private insurance to get a visa. There is a pension program as well where self-employed can contribute if they choose.
Case Study: How to obtain a mortgage when working as an autonomo
A contractor in Spain reached out to Contractor Taxation and wanted to know if there was a way to use an umbrella company services as an autonomo. Specifically, they were concerned with the difficulty of obtaining a mortgage when working as an autonomo. Autonomos are required to submit three years of invoice payments to qualify, whereas it is easier for full-time employees with a salary.
When a contractor works with an umbrella company, there are several ways that it does resemble employment. For example, the umbrella company would withhold taxes and contributions, as well as issue a payslip with net earnings from the client. But the autonomo still has a direct contract and invoices with the client and is in effect still working as a self-employed.
The umbrella company simply facilitates those client payments and is not a true employer.
If the autonomo wanted to have employee status for a mortgage application, they might consider asking their client to employ them directly.
How can Contractor Taxation help with autonomos?
Contractor Taxation has umbrella companies in Spain that can act as an intermediary with your clients to ensure prompt payment with no conflicts. Although many of the self-employment contributions are automated, you still have to navigate the tax system. The umbrella company can guide you through the applicable tax and VAT rules, and make sure that your withholding is sufficient.
If you want to work in Spain as a self-employed, please contact us so we can explain the value of having a third-party partner to assist with registration and compliance.
