Online Language Teacher: Being Self-employed in Spain
If you are a language teacher and work online from Spain, surely you have had some doubts about how to bill and the tax treatment of your economic activity. In this article, we will try to clarify the most common questions such as: what are the procedures to register as a language teacher, in which heading of the Treasury, how to bill if you use Italki or other online class platforms, etc.
1. Procedures to register in Spain
To bill as an online language teacher and make your invoices legally, you must be registered in the Treasury and pay as a self-employed. To do this, you must carry out the following procedures:
– Register in the Treasury using the 036 form or the simplified version 037. You can do it in person by making an appointment at the Tax Agency or if you have a digital certificate through the following link on the website of the Treasury. In the plans that we offer in SelfEmployed Spain, this procedure is included as well as the registration in Social Security.
– Register in Social Security. Again you can do it in person by going to a Social Security office where you must present your ID and your registration at the Treasury. Also, if you have a digital certificate you can register through the Electronic Social Security Headquarters here, the option “Register for RETA”.
2. Heading for your registration in Hacienda
To register in the Treasury you will need to frame your activity in a specific IAE heading. The most common one used for language teachers is 826: Teaching Personnel of Diverse Teaching, such as Physical Education and Sports, Languages […] and the like. This activity is considered professional, for that reason, it is included in the second section of Royal Legislative Decree 1175/1990 of the tax on economic activities.
The language training is exempt from VAT since these are subjects included in any of the levels or grades of the Spanish education system. That is, you do not have to submit a quarterly VAT 303 form, nor the annual summary 390 form.
The fact that the subject on which you give training is included or not in these educational plans is determined by the Ministry of Education, Culture and Sports.
Because language training is exempt from VAT, you will have to include in your invoice this text: “This training is exempt from VAT under Art. 20, point 9 of Law VAT 37/1992” or in Spanish “Esta formación está exenta en virtud del Art. 20, punto 9 de la Ley IVA 37/1992”.
Although the training is exempt from VAT, there will be cases in which you will have to apply withholding income tax on your invoices. If the recipient of the training invoice is a professional or a Spanish entrepreneur, the corresponding professional withholding must be applied.
In cases when you invoice to individuals, it will not be necessary for your invoices to be subject to withholding.
5. Periodic procedures
As we have already mentioned, the training is exempt from VAT, so you will not have the obligation to make quarterly VAT settlements (303 form) nor should you submit an annual VAT summary (390 form).
If your turnover to Spanish companies and freelancers is greater than 70%, you would not have the obligation to submit form 130 on a quarterly basis (payment on account of the annual personal income tax). Otherwise, you will be required to submit it.
6. Billing with Italki
First of all, you have to make your invoices to Italki. Our advice is that you include several works in the invoice that you issue to Italki (at least once a month), and that it also coincides with the money you download from the platform. That way, you can justify that the amount of the invoice coincides with the download of the money you receive in your bank.
As for the issuance of the invoice, you must complete it with the tax data of Italki, and the amount in euros of the amount you are downloading in your bank. You should know that Italki will pay you 85% of the price of your classes and that you may suffer some detriment in the amount received due to the currency exchange (from dollars to euros) that your bank manages. The invoice goes without VAT and without IRPF since the tax domicile of the client Italki is in Hong Kong.
If you use Paypal or Payoneer as a payment gateway, the commission that charges you upon receiving the payment must be considered as an expense in your accounting.