How To - Register for Autonomo
What is Autonomo?
Autonomo status is the Spanish equivalent of self-employed or freelance and in addition covers people operating (unincorporated) small businesses. Anyone engaged in any of these activities is obliged to legalise them with respect to registration, paying the taxes and charging IVA (VAT).
Autonomo will set you back costs of just under €300 monthly in social security payments, this figure is dependant upon age. This figure stays the same, it does not matter how much or how little you earn each month, (there’s a discount during the first two years), as well as 9-21% of your net profits in income tax. And don’t forget about VAT.
When do you have to register as autonomo?
If you are earning money in Spain and are not employed or conducting the business through a company. If the business is incorporated and is a "one person" company, then the sole director (administrador) will be classified autonomo in any case. If you are working for a Spanish company owned by someone else, then you should either have an employment contract with it or be invoicing the company for your services, which will require autonomo registration.
Unfortunately the rules are quite strict and for any earnings, autonomo registration is required.
Naturally enough this strict interpretation leads many people to accept cash in hand payments rather than register. The question then arrises - is it possible to declare the income for tax? The answer is no - unless you comply with the autonomo registration obligation to begin with, it is not possible to declare the income in your annual tax return. Nor is it possible to provide an invoice to the customer for your service and then for them to deduct the expense against their taxes. This is because there is no IVA threshold in Spain - all businesses and self-employed must charge IVA (though some activities and goods are exempt - and only registered businesses, autonomo or companies, can issue proper IVA invoices. In summary, there is no grey area, earnings are either fully legal or fully "black" - not invoiced and subject to IVA, unregistered and undeclared.
Registering autonomo is essentially a two step process: registering as self-employed with the tax office (Agencia Tributaria) and joining the autonomo social security system (Regimen Especial de Trabajadores Autonomos RETA). Both are reasonably straightforward and the only real requirements are -
There are no requirements to show any business plans, capital or prove professional qualifications. Joining the autonomo social security system RETA does require that you are already in the social security system and this involves another fairly simple registration process. Similarly the Agencia Tributaria would expect you to be registered as a resident taxpayer which involves completing a another form (Modelo 30).
That is the bare minimum requirement for registering as self-employed but there may be other steps to go through, depending on the type of business. For example anyone opening premises to the public will require an opening licence called a "licensia de apertura". This is obtained from the local town hall and will be granted according to local by laws, after passing an inspection by a municipal expert ("tecnico"), payment of fees, presentation of other documentation and certificates and undertaking any other remedial work demanded by the town hall (e.g. sound proofing, emergency exits, hygiene facilities). In practice hiring a private tecnico to assist with this process is normally required. It is important to note that the licensia does not belong to the building but to the person who took it out; therefore if you buy a business you will need to reapply for a licensia even if nothing has changed and you are operating from the same premises.
And then there are the ongoing obligations applicable to all autonomos,
tax and VAT (IVA) returns on a quarterly basis
keep up social security payments (monthly)
issue properly drawn-up invoices, including IVA and - where appropriate - income tax retentions.
keep accounting records according to the legal standard including income accounts, expense accounts, supporting invoices for expenses and accounts of capital items, being goods used in the business with a life more than 1 year and which can be depreciated (expensed) over a period of time. These accounting records will be absolutely essential if you are selected for inspection by the tax.
Choosing the right classification
There are two types of autonomo - commercial and trading businesses (autonomo empresarial) and professionals or freelancers (autonomo profesional). Within these broad classifications there are individual sub-classifications depending on the type of business or professional activity being undertaken. The Agencia Tributaria and Social Security offices both have their own classification systems. Many prospective self-employed people could choose which classification they are to be and they can have some important effects on the timing and structure of tax payments.
Deregistering / winding up
One of the positive things about the autonomo classification is that it is relatively simple to de-register. Use the same forms for registering (dar la alta in Spanish) to de-register (dar la baja), being the modelo 36 or 37 in the case of the Agencia Tributaria and the TA 521 for social security. As with registration, do the Agencia before the social security office who will want to see the de-registration for tax purposes before they will take you out of RETA. Failing to leave RETA properly by filling in the forms will expose you to continuing social security liabilities (just cancelling the standing order is not enough). Also remember that you will still have to do an annual income tax declaration (la Renta) in the year following your last year as an autonomo.
NOTE: once you de-register from RETA your health system card should still be valid for 3 further months.
A BASIC STEP BY STEP GUIDE - if unsure employ a Spanish Accountant/Gestor
1) Getting the appointment: Cita Previa. Here, the system will guide you through the following steps:
(You should click on the link to understand these steps better)
- First they’ll ask you for identification – Identificación
- NIE number – IE: X-1234567-D
- Family Name – Primer Apellido (Spaniards have two)
- Then they’ll ask you to select a procedure – Selección Procedimiento. You’ll have to choose the option of Economic Activity Tax or Impuesto de Actividades Económicas (IAE), first by clicking on: Gestión Censal y acreditación certificado digital; and then: 036/037. IAE. NIF. Etiquetas y cambio de domicilio
- Now you have to choose your area – Selección Zona. You only need to enter your Post Code number (5 digit code. For example, Benidorms code is 53053.
- Finally, confirm your appointment! To set up your appointment with Hacienda, you’ll have to follow three more easy steps:
- Select a date – Selección Fecha
- Select a time – Selección Horario
- Click on: Confirmation – Confirmación
2) Signing up in Hacienda for Impuesto de Actividades Economicas (IAE)
Signing up for IAE used to be a tedious task. Today, but it’s surprisingly fast. You just need to show up with your ID and tell the civil servant that you want to become an autónomo. During this step, you are letting Haciendaknow that you would like to register as a freelancer by filling out Modelo 036 / 037.
The funcionario or civil servant will ask you two questions: when you would like to start your activity and what service you are going to offer. Then, he or she will provide you with an “Activity Code” (each profession has a category or code). If your Spanish is good enough, we suggest asking for specific information regarding your activity—IVA, specific retention, etc.
Here are the documents you must bring:
- NIE Document
- Social Security Number
- Bank Account Number
B) Obtaining your Electronic Certificate (Certificado Electrónico)
This will allow you to interact with Hacienda (pay taxes).
What you need to do:
- Install the FRMT certificates.
- Then apply for your User Certificate. They will send a Code to your email.
- Prove your identity. Once you receive your code in your email, present your ID card at a Seguridad Social office.
- Finally, you will be able to download your User Certificate.
C) Becoming Autónomo in Seguridad Social’s eyes.
Last step — registering at Seguridad Social — isn’t as easy as it is with Hacienda. But not to worry; when it comes to getting paid, Spain is highly efficient.
By becoming autónomo in the Seguridad Social and starting to cotizar (‘to pay for social security’ in English), you will be covered by Social Security and you have access to the public health system.
What you need to do:
- Find your closest offices here.
- Fill out Modelo TA0521. There are workers at the info desk that will give you the form. Just let them know that you’d like to become an autónomo. They will also give you a piece of paper with a number.
- Once you see this number on the screen, you only have to give them the following information:
- Your Social Security Number
- Your ID card
- A copy of Modelo 036 / 037 (from Hacienda)
- FNMT-RCM code to prove your identity (the code that you received in the previous step)