How to get Social Security and be Self Employed in Spain

What is social security?
It’s essentially like National Insurance in the UK. Once you start paying in, you are entitled to a pension, healthcare and sickness benefit.

What documents do I need to get a number?
If you’re an EU citizen you need:

• Your N.I.E. and a copy
• Your passport and a copy
• A completed application form

Is it really as simple as that?
Yes, compared to the other documents you need for your life in Spain, this has been the easiest by a mile. Again, try not to go to the capital of the province if you can help it to avoid queueing, but really, that’s it!

To look for your nearest office click here.

 

Now the big one… Self Employment

What is the definition of self-employed?
In Spain, there are two types: sole traders (empresarios individuales) and independent professionals (profesionales autonomos). Knowing which one you are (or want to be registered as) will determine your advanced income tax (retención). Some professional activities (e.g. education) are VAT (IVA) exempt, so it is important to indicate such when registering.

You also have to give a detailed description of the work you will do. Here’s a list of codes in English.

What do I need to become self-employed (dar de alta)?

• A completed application form
• Your social security number certificate
• Bank account details (or recent statement)
• It also doesn’t hurt to have your passport and N.I.E. and a copy as well, just in case

If you’re from outside the EU you will need a work permit or residence card as well.

How much will it cost?
Spain is famous for its high taxes… If you work with a contract, your employer has to pay 40% of your salary in tax for you, so most small businesses (especially academies) ask you to go as self-employed as you don’t pay as much as they would.

There is an offer at the moment for first time self-employed people. The full price is 261,83€/month but if you are new to it, check out this offer:

First 6 months – 80% reduction and you pay 53,07€/month
Next 6 months – 50% reduction and you pay 130,91€/month
Next 6 months – 30% reduction and you pay 183,28/month (this last reduction is open for 12 months, an extra six months, to people under 30 or women under 35)

What is a “rentención”?
If a profesional autónomo invoices a business for their services then that business must retain 21% of the invoice value to pay to the Agencia Tributaria as advance income tax on behalf of the autónomo. Note that trading autónomos (empresarios individuales) don’t have retentions. Also, if the autónomo is invoicing a private customer (not a company or an autónomo) then no retention is applicable (for example, private classes). The retention rate is reduced to 9% for autónomos in their first three calendar years. You get this back when you fill in your quarterly or yearly tax return.

What about invoicing?
The basic requirements for an invoice are: supplier and client clearly identified, their full name and tax number (NIF/NIE/CIF), date and address. The service or product you are selling, the base amount of the sale, the applicable taxes (IRPF and IVA) and any discounts or other deductions should be included as well. Generally speaking a freelance professional invoicing to a company registered in Spain will be required to include withholding tax (retención) in their invoice which is a tax deduction taken from the base amount of the sale which your client pays to the tax authority on your behalf. This tax is then deducted from your tax bill when filing your quarterly tax form.

Here’s an example of a simple invoice (factura):

What about expenses?
As a rule of thumb, any expenses necessarily incurred whilst carrying out your professional activity can be considered deductible for tax purposes. It’s important to have the necessary justification by holding onto your expense invoices (receipts alone are not enough). There are a couple of specific aspects that you should also bear in mind: 1) in general food, hotel and travel expenses are not deductible unless they are incurred outside of the community you are registered in. Depending on the activity, food expenses incurred can sometimes be included when they have been for the purpose of entertaining clients. 2) Home office: some freelance professionals register a home office which can allow them to deduct a certain percentage of their household bills (normally 30%). This would include rent, electricity, phone, water, gas etc.

How to I de-register (dar de baja)? 
It works in the same way as registering, only in reverse. You fill out the same forms as you have before, but put an end date as to when you want to deregister. Simples! Remember to deregister from your tax payments first, and then social security (RETA). When you have deregistered, your healthcare benefits should still be valid for the subsequent three months.

Is there anything else to take into consideration?
In order to apply for your partner’s residency (the non-EU) you need to be “dado en alta” throughout the process “tramite”. This means that you need to be paying social security from before you apply for their residency up until the point they get the card. You will also need to pay it for the duration of your time in Spain to comply with the centre of life for the UK. It’s worth considering that for the centre of life it’s harder to prove how much you’ve been working if you are self-employed. They like to see 12-15 hours/week so if you can invoice for this, amazing.
The benefits of having a contracted job is that you are entitled to sick pay and holidays, and have a fixed amount of money coming in every month. Being self-employed is more risky, but if you’re looking for a quick fix, then this could be an advantage for you.
Once you have taken advantage of the monthly reductions and then leave Spain or stop paying as you find a job with a contract, you cannot benefit from the same reductions if you need to become self-employed again. That is to say, once you start, you enjoy the reductions but if you stop and start, you go straight back in at 261,83€/month. This is to entice people into paying for longer periods of time so be sure that when you want to stop, it’s for good.
Before registering with Hacienda you should download your digital certificate here which gives you a tax number with which you can do all of your paperwork online. You have to download some free software to read the certificate, but it can be printed normally.