In this article, we will talk about all the details on how to become a real estate agent in Spain.
Although it might seem that this profession is subject to strict administrative controls for its practice—since the primary object of real estate brokerage is housing, a basic necessity constitutionally assigned an essential social function—nothing could be further from the truth.
To practice as a real estate agent, it is not necessary to be a member of an official association, nor to hold a license, a degree, to have passed any exam, or to possess a real estate certification. In other words, anyone can be a real estate agent, but not everyone will achieve good results in their practice.
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What will set you apart from the competition?
Basically, being properly trained to handle the complex world of real estate and being a member of a professional association. Neither of these two things is mandatory, but we consider training to be essential. Furthermore, having a registered professional guarantees that the client receives service that aligns with criteria of independence and transparency, while also benefiting from the legal and technical support of the Association.
You can find plenty of information online regarding the skills required of a registered real estate agent API (“Agente de Propiedades Inmobiliarias” or Real Estate Agent) needs. There are advantages and disadvantages to being a freelance real estate agent.
However, in this article, we will focus on guiding you through the legal procedures you must complete to practice the activity and the taxes you will need to settle.
Procedures to register as a real estate agent in Spain
Register with the Tax Agency
Registering with the Tax Agency using Form 036. You can do this in person by booking an appointment with the Tax Agency, or online through the following link on the Treasury’s website if you have a digital certificate.
Register with the Social Security
Once again, you can do this in person by visiting a Social Security office, where you must present your ID and your tax registration document. Alternatively, if you have a digital certificate, you can register online through the Social Security’s Importass portal.
IAE tax heading for your registration with the Tax Agency
To register in the Treasury, you will need to frame your activity in a specific IAE heading. The one that you must mark is: Group 721. Collegiate Agents of Industrial Property and Real Estate Property.
This activity is professional. For that reason, include it in the second section of Royal Legislative Decree 1175/1990 of the tax on economic activities.
Designated space for your activity
Remember to specify the square metres of the room where you carry out your activity. One advantage of exercising your activity as a freelance real estate agent is that you will not need a place open to the public. Still, you will need a space to manage your business.
Usually, professionals dedicate part of their home to their business activity. Since 01/01/2018 Law 6/2017 of Urgent Reforms of Self-Employed Work allows to deduct expenses of housing supplies. These are water, gas, electricity, telephone and the Internet.
The applicable rate is 30 percent of the proportion between the square meters of the home dedicated to the activity and its total surface area. In this article, we explain in more detail how these expenses are calculated.
How does the fact that it is a professional activity affect your invoicing?
When carrying out a professional activity, whenever you issue an invoice for your services to a Spanish company or self-employed individual, you must include a personal income tax (IRPF) withholding. This means your client will withhold part of your fees to pay them to the Tax Agency on your behalf.
In these cases, regulations turn your client into a tax collector, paying an amount to the Treasury that will be considered an advance payment of your income tax.
The withholding rate can be either 7% or 15%. The general rate is 15% and by default.
You can only apply 7% if you are starting your activity. Also, you couldn’t been working as autonomo in the last 12 months before registration. You can apply the 7% rate during the financial year of the beginning of the activity and the following two exercises.
Here is an example of the calculations for an invoice with a 15% withholding:
Real estate agent fees ……………………….…… €1,000.00
VAT 21% ……………………………………….….. €210.00
Withholding -15% ………………………………… €-150.00
Total invoice ………………………….……..…… €1,060.00
In case that you invoice individuals, you shouldn’t consider any withholding.
VAT when you become a real estate agent in Spain
The real estate agent’s activity is subject to VAT. That means you must include 21% VAT on your invoices, as we have showed before.
Besides, you must submit quarterly VAT form 303 (submission dates: 1Q-20/April, 2Q-20/July, 3Q-20/October, 4Q-30/January) and form 390 of annual VAT summary (submission date: 30/January).
If the result for form 303 is positive, you pay that amount in the corresponding quarter. If it is negative, you can compensate it in the next quarter. Then, in form 303 of the 4th quarter, you can request a refund.
The personal income tax (IRPF)
Usually, the real estate agents invoice individuals, so their income will not be subject to withholding. In that case, the regulations stipulate they must submit a quarterly form 130 as payment on account of their annual personal income tax.
How much is the amount of that form?
Well, you will pay 20% of your net income quarterly. That is, to the result of income less expenses we apply 20%, and we get the amount to pay.
You should know that the sum of the amounts paid in the four forms 130 of the financial year is not the payment of personal income tax. It is simply an advance payment. When filing your annual tax return (renta statement), this will be taken into account to reduce the amount you owe or even result in a refund.
Be careful with cash payments
Law 11/2021 on measures for the prevention and fight against tax fraud establishes that transactions in which any of the intervening parties acts as a business owner or professional cannot be paid in cash if the amount is equal to or greater than 1,000 euros or its equivalent in foreign currency.
It is also not legal to split a single payment into several smaller invoices or receipts (for example, making three payments of 400 euros for a service of 1,200 euros) to bypass the rule. The Tax Agency calculates the limit based on the total amount of the transaction.
If this type of transaction is detected, it would constitute a serious administrative offense punishable by a 25% penalty applied to the amount paid in cash.
The limit is raised to 10,000 euros if the payer is an individual who proves that they do not have their tax domicile in Spain and are not acting as a business owner or professional.
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