Guide to Tax Obligations for SMEs and the Self-Employed in Spain

If you work for yourself or have a business in Spain, you must declare and pay certain taxes. In this article, we list the tax obligations for small and medium enterprises and the self-employed in Spain. They include income and business taxes, VAT and payments on behalf of other professionals.

Like the experts to look after your tax obligations? Contract our tax representation in Spain services and save time, problems and stress!

Income Tax in Spain for SMEs and Self-employed

All small and medium enterprises (SMEs) and self-employed individuals in Spain must declare and pay income tax on their earnings. If you are self-employed in Spain, you declare and pay directly and personally. If you have a company, income tax is paid through it.

Types of tax declaration for self-employed and businesses in Spain

There are two types of quarterly tax declarations:

You choose one or the other for your activity or business, when you register as self-employed or your company.

Find out how to set up a company in Spain.

Economic Activity Tax in Spain

Spain also applies the Economic Activity Tax (impuesto de actividades económicas/ IAE) and at national, provincial and local level. However, in practice most people and small businesses are exempt from this business tax.

You are not obliged to pay this tax if you are self-employed or your business has a net revenue of below €1 million in the previous tax year.

VAT (IVA)

Value added tax (impuesto sobre el valor añadido/ IVA) applies to the consumption of all goods and services in Spain. As a result, the vast majority of self-employed and businesses charge and pay IVA.

It is applied at one of three rates:

  • 21% – general rate
  • 10% – reduced rate
  • 4% – super-reduced rate

Tax retention and payment

As self-employed or a business in Spain, you will very likely use the services of other professionals. When you do, you’re obliged to retain and pay tax on their behalf. This is done through the invoice in which the professional subtracts the retention (usually 15%) from the amount you are due to pay.

You must pay this retention to the Spanish tax authorities on behalf of the professional. You should do this every quarter and file a report at the end of the tax year.

Get in touch for expert advice

At Costaluz Lawyers we offer help and advice for SMEs and self-employed individuals in Spain. We assist in the setting up of your business and provide tax representation services saving you time, problems and stress.

Get in touch for a free consultation to find out how we can help you do better business in Spain.

Maria Luisa Castro

Director and Founder
María founded CostaLuz Lawyers in 2006 and is the Firm’s Director. María is registered Lawyer number 2745 of the Cadiz Bar Association and is licensed to practice in all areas of law throughout Spain. Working closely with her team, María has developed the firm into one of the most highly regarded and trusted Spanish Law Firms acting for English-speaking clients with legal problems in Spain. We’re here to help. Contact us today for a free no-obligation consultation.
 

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