Spanish autonomo registration basics

Considerations when registering as autonomo / self employed in Spain

In this section:

1. When do you have to register as autonomo?

2. What's involved?

3. Choosing the right classification

4. Deregistering / winding up

 

1. When do you have to register as autonomo?

Autonomo status is the Spanish equivalent of self-employed or freelance and in addition covers people operating (unincorporated) small businesses.  Anyone engaged in any of these activities is obliged to legalise them with respect to registration, paying the taxes and charging IVA (VAT).   So to answer the question "should I be registering as autonomo?", the answer is usually "yes" if you are earning money in Spain and are not employed or conducting the business through a company.  If the business is incorporated and is a "one person" company, then the sole director (administrador) will be classified autonomo in any case.  If you are working for a Spanish company owned by someone else, then you should either have an employment contract with it or be invoicing the company for your services, which will require autonomo registration.

The question of whether to register as autonomo is therefore, fairly clear cut in the majority of cases but a question mark often arises about legalising irregular, small scale or casual earnings.  For example, fees for speaking at conferences, selling arts and crafts, selling on ebay, giving music lessons, earnings from tupperware parties and similar.  At what point do such casual earnings trigger the need for autonomo registration?  Unfortunately the rules are quite strict and the answer is that to legalise any earnings whatsoever, autonomo registration is required. However it may be possible to opt out of paying autonomo social security (see What's involved? below) if earnings are sporadic and it is not a proper living.  This exemption is discussed further in the full Advoco autonomo guide.

Naturally enough this strict interpretation leads many people to accept cash in hand payments rather than register.  The question then becomes is it possible to declare the income for tax?  The answer is no - unless you comply with the autonomo registration obligation to begin with, it is not possible to declare the income in your annual tax return.  Nor is it possible to provide an invoice to the customer for your service and then for them to deduct the expense against their taxes.  This is because there is no IVA threshold in Spain - all businesses and self-employed must charge IVA (though some activities and goods are exempt - see IVA rates Spain) and only registered businesses, autonomo or companies, can issue proper IVA invoices.  In summary, there is no grey area, earnings are either fully legal or fully "black" - not invoiced and subject to IVA, unregistered and undeclared.

 

2. What's involved?

Registering autonomo is essentially a two step process: registering as self-employed with the tax office (Agencia Tributaria) and joining the autonomo social security system (Regimen Especial de Trabajadores Autonomos RETA).  Both are reasonably straightforward and the only real requirements are -

 

    • > a NIE (there is a NIE guide on this website NIE number Spain)
    • > a bank account (for the social security charges)
    • > a work permit (if from outside the EU)

 

There are no requirements to show any business plans, capital or prove professional qualifications.  Joining the autonomo social security system RETA does require that you are already in the social security system and this involves another fairly simple registration process.  Similarly the Agencia Tributaria would expect you to be registered as a resident taxpayer which involves completing a another form (Modelo 30).  See also the autonomo social security page.

That is the bare minimum requirement for registering as self-employed but there may be other steps to go through, depending on the type of business.  For example anyone opening premises to the public will require an opening licence called a "licensia de apertura".  This is obtained from the local town hall and will be granted according to local by laws, after passing an inspection by a municipal expert ("tecnico"), payment of fees, presentation of other documentation and certificates and undertaking any other remedial work demanded by the town hall (e.g. sound proofing, emergency exits, hygiene facilities).  In practice hiring a private tecnico to assist with this process is normally required.  It is important to note that the licensia does not belong to the building but to the person who took it out; therefore if you buy a business you will need to reapply for a licensia even if nothing has changed and you are operating from the same premises.

And then there are the ongoing obligations applicable to all autonomos, which are mostly described in other sections of this webiste:

> tax and VAT (IVA) returns on a quarterly basis http://www.advoco.es/home/22-latest/45-spanish-tax-late-reporting-and-fines.html#L3

> keep up social security payments (monthly)

> issue properly drawn-up invoices, including IVA and - where appropriate - income tax retentions. See also Invoicing considerations for Spanish businesses

> keep accounting records according to the legal standard including income accounts, expense accounts, supporting invoices for expenses and accounts of capital items, being goods used in the business with a life more than 1 year and which can be depreciated (expensed) over a period of time.  These accounting records will be absolutely essential if you are selected for inspection by the tax office.

 

3. Choosing the right classification

There are two types of autonomo - commercial and trading businesses (autonomo empresarial) and professionals or freelancers (autonomo profesional).  Within these broad classifications there are individual sub-classifications depending on the type of business or professional activity being undertaken.  The Agencia Tributaria and Social Security offices both have their own classification systems. Many prospective self-employed people could choose which classification they are to be and they can have some important effects on the timing and structure of tax payments.  For more see http://www.advoco.es/advice/26-autonomo-self-employed/74-spain-autonomo-classifications.html

4. Deregistering / winding up

One of the positive things about the autonomo classification is that it is relatively simple to de-register.  Use the same forms for registering (dar la alta in Spanish) to de-register (dar la baja), being the modelo 36 or 37 in the case of the Agencia Tributaria and the TA 521 for social security.  As with registration, do the Agencia before the social security office who will want to see the de-registration for tax purposes before they will take you out of RETA.  Failing to leave RETA properly by filling in the forms will expose you to continuing social security liabilities (just cancelling the standing order is not enough). Also remember that you will still have to do an annual income tax declaration (la Renta) in the year following your last year as an autonomo.

NOTE: once you de-register from RETA your health system card should still be valid for 3 further months.

Other autonomo articles:  Autonomo expenses guide How much does it cost to go autonomo?

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