How Can I Register as Self-employed Worker in Spain?
The first question to solve, and about which each entrepreneur has his own idea, is how to start the activity. The first thing that must be done is to apply for registration or enrolment in the Entrepreneurs, Professionals and Withholders Census. This is done by submitting form 036 or form 037.
Which form should I use?
You can use form 037 if:
– The tax residence is the same as the administrative management one.
– The VAT system to comply with is normal, simplified, agriculture, livestock and fishing or equalisation charge.
– You are not registered in the monthly refund register.
– You don’t do remote intra-community acquisitions of goods or sales.
– You don’t pay taxes by Special Taxes nor by Insurance Premium Tax.
– You don’t have income from movable capital (i.e., shares incomes, etc.).
Once you complete the form you are interested in, you must submit it at the Tax Agency’s office from your tax residence, along with the proof that you are the signatory or that you authorise a representative to deliver the form.
What obligations do I have to comply with?
Once you register in Treasury, you must submit the required quarterly tax forms depending on the activity and configuration of your registration. Many new independent workers make the mistake of not submitting anything at first, because they haven’t had any income or expenses for a few months.
Don’t forget that if you’re registered in the Tax Agency you must submit your tax forms, even if they are considered as “no activity” or zero. Not submitting anything means that you will have to face the respective penalties.
How much will I have to pay?
Apart from the expenses that come from developing your activity, you must consider that at the end of each quarter the taxes you register are settled. Therefore, if you register:
– VAT (form 303): you will have to pay the VAT that comes out of the equation (VAT from your income invoices) – (VAT from your expense invoices). If this equation comes out negative, it means that you get VAT “to compensate”, i.e., the amount will be compensated with the following quarters and you won’t have to pay anything on this.
– IRPF (form 130): you will have to pay 20% of your profits. Many new independent workers recall VAT, but don’t remember IRPF (in case they are in obligation) and by the end of the quarter they realise that this business is not profitable if they have to pay for this form. Keep in mind that 130 really is a payment on account and when you do the annual income there will be amounts already credited in your annual tax payment. If you have gained more than what you have to tax, you will be refunded, otherwise you will have to pay, but deducting what you’ve paid already.
– Form 111: when you have business relationships with other professionals subject to withholding, keep in mind that the obligation to withhold them is yours. Which means that you will pay the amount of withholdings practiced during the period on a quarterly basis.
– Form 115: If you are also developing your business in rented premises which invoice includes withholding per rental, you will also have the quarterly obligation to submit these withholdings.
In addition to being aware of your obligations, you must be aware of your clients and how your business is going. It’s a fact that today there is a lot of information on how to fill out your tax forms, but we recommend you to trust a tax advisor with the submission of your tax obligations.
In Self-employed Spain we find more and more cases of independent workers who have tried to do it all by themselves in order to save money. Eventually they have saved one, two or three months of tax advice, but have been sanctioned for not submitting certain forms on time. Inform yourself, do your calculations and trust your accounting and taxes to a professional advisor.