Procedures and Taxes To Be a Real Estate Agent in Spain
Although it may seem that it is a profession subject to many administrative controls for its exercise – since the main object of real estate mediation is housing, a first necessity that has an essential social function constitutionally attributed – nothing is further from reality.
In order to perform the activity of real estate agent, it is not necessary to be registered or have a license, or a title, or have passed an exam or have a real estate agent certification. That is, anyone can be a real estate agent, but not everyone will get good results in the exercise of their activity.
What will set you apart from the competition?
Basically be properly trained to develop in the complicated world of real estate and be registered. Neither are mandatory, but we consider the training essential and having a professional collegiate offers the client an action that meets the criteria of independence and transparency, and also has the help of the College in legal and technical matters.
You can find a lot of information on the internet about the skills that an API (“Agente de Propiedades Inmobiliarias” or Real Estate Agent) needs, about the advantages and disadvantages of being a freelance real estate agent, etc., although in this article we are going to focus on orienting you about the procedures that you must perform to legally exercise the activity and taxes that you must settle.
Procedures to register
- Register in the Treasury using the form 036 or the simplified version 037. You can do it in person by requesting an appointment at the Tax Agency or if you have a digital certificate through the following link on the Treasury website.
- 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”.
Heading for your registration at the Treasury
To register in the Treasury you will need to frame your activity in a specific IAE heading. The one that you must mark is the following: Group 721. Collegiate Agents of Industrial Property and Real Estate Property. 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.
Room for your activity
Remember to indicate the square metres of the room where you carry out your activity. One of the advantages of exercising your activity as a freelance real estate agent is that you will not need a place open to the public, but you will need a space to manage your affairs. Normally professionals dedicate part of their home to the exercise of their activity, and since 01/01/2018 Law 6/2017 of Urgent Reforms of Self-Employed Work allows considering the expenses of supplies of such housing, such as water, gas, electricity, telephony and Internet, as a deductible expense in the percentage resulting from applying 30 percent to the proportion existing between the square metres of the home designated to the activity with respect to its total area. In this post, we explain in more detail how these expenses are calculated.
How does your professional activity affect your billing?
Performing a professional activity when you issue an invoice for your services to a Spanish company or self-employed worker, you must reflect an income tax withholding, that is, your client will retain part of your fees to enter them in the Treasury in your name. In these cases, the regulations make your client a tax collector, entering into the Treasury an amount that will be considered a payment on account of your personal income tax.
The withholding percentage may be 7% or 15%. 15% is the general rate that is applied by default, and 7% can only be applied to professionals who begin their activity (after having been without economic activity in the last 12 months) during the fiscal year of the beginning of the activity and the following 2 exercises.
We give you an example of the calculations of 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, as usual, you should not reflect any withholding.
The activity of real estate agent is subject to VAT which means that you must reflect 21% VAT on your invoices, as we have indicated before, and also submit quarterly VAT form 303 (submission dates: 1Q-20/04, 2Q-20/07, 3Q-20/10, 4Q-30/01) and form 390 of annual VAT summary (submission date: 30/01).
In form 303 you will have to include all the VAT that you have passed on your income invoices and subtract the VAT that you have borne in the expenses that you have had to assume for the exercise of your activity. If the result is positive you will have to pay that amount in the corresponding quarter, and if it is negative, you can compensate it in the following quarter. Only if the amount is negative in the 303 form of the 4th quarter, you can request the refund.
The personal income tax (IRPF)
Normally the real estate agents invoice individuals, so their income will not be subject to withholding, and in that case, the regulations stipulate that 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 have to enter 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 fiscal year is not the payment of personal income tax, it is simply a payment on account that when making your “Renta” (Annual personal income tax) will be taken into account to reduce the amount that you pay or they can even give you back.
Beware of cash payments
Article 7 of Law 7/2012, of October 29, establishes that cannot be paid operations in which any of the parties involved may act as an entrepreneur or professional, with an amount equal to or greater than 2,500 euros or its countervalue in foreign currency.
In the case of detecting this type of operations, a serious administrative infraction sanctioned with 25% applied on the amount paid in cash would be committed.