SPECIAL SCHEME FOR SELF-EMPLOYED WORKERS.
The special scheme for self-employed workers is made up of natural persons who habitually, personally, directly, on their own account and outside the sphere of management and organisation of another person, carry out an economic or professional activity for profit, whether or not they employ employees. This self-employed activity may be carried out on a full-time or part-time basis.
The law does not demand any special requirements to register as a self-employed worker in Spain, it is sufficient to be legally resident in the country and to be able to undertake a self-employed activity.
In order to register under the special regime for self-employed workers, two procedures must be carried out:
– Registration with the Inland Revenue, using forms 036 and 037.
– Registration with the National Insurance, using form TA.0521.
Being part of the RETA requires the monthly payment of the contribution fee. This depends on the contribution base chosen.
1.1. Registration with the Inland Revenue
Registering as a self-employed person with the Tax Authorities is the procedure by which an entrepreneur informs the Tax Authorities that he/she is going to start his/her activity as a self-employed person. Depending on the boxes you tick on the form, you will have different tax obligations.
A. File forms 036 and 037.
Both include your personal details, details of the activity you are going to carry out, your tax address and your tax obligations, and the taxes you will have to pay.
There are two options for registering with the Tax Authorities: filing form 036 or 037. You need to understand the differences and choose one of the two. You should bear in mind that form 037, which is the simplified version of 036, is only available to self-employed individuals. In addition, the 036 is also compulsory if you intend to sell products outside the European Union. Once the form has been chosen, experts recommend studying the different fields of the form to be filed.
If you opt for the online method for filing either of the two forms, you can also do so via the Tax Agency’s electronic headquarters, although you will need a pin code or digital certificate to do so.
It should be noted that care must be taken with this procedure, as the census registration is the most sensitive part of the process, in which personal details, the activity the entrepreneur is going to carry out, the location of the business and the taxes that will have to be paid will be notified.
B. Choosing the correct IAE heading.
The first important step to start filling in these forms is to be clear about the IAE epigraph under which the activity is going to be located. This is one of the main difficulties that arise when registering with the tax authorities. Depending on the heading chosen, both the way of invoicing will change, with or without VAT, with or without personal income tax, and the quarterly returns to be filed.
C. Make an appointment at the Tax Agency.
Once you have chosen the heading that best fits your activity, the first thing to do is to make an appointment on the Tax Agency website. To do so, you must:
– Go to Appointment and then to Procedures, where you will be asked to enter your DNI, surname and name.
– Among the possible procedures, you must choose the option that says Census Management, Cl@ve PIN and digital certificate accreditation.
– You will see four boxes that you can tick. Choose the one that says 036/037. IAE. NIF. Labels and change of address and fill in the rest of your details (mobile phone and email) to request the appointment.
1.2. Registering with social security.
To register with the Social Security, form TA0521 must be filed at one of the Social Security administrations or online within a maximum of 60 days before starting the economic activity. This form must be accompanied by the following documentation:
– DNI or passport
– Social Security card
– Copy or original of your registration with the tax authorities
If you are a foreigner, you must also provide the following document the work permit for foreign workers.
A. Contribution base.
When registering with the Social Security it is important to take into account, on the one hand, the contribution base and the calculation of the self-employed contribution that will have to be paid monthly and, on the other hand, the flat rate and other aids that can reduce the payment of contributions.
The self-employed contribution is calculated on the basis of the contribution base. Specifically, the contribution is 30.6% of the contribution base, distributed as follows:
– 28.3% for common contingencies.
– 1.3% for professional contingencies.
– 0.9% for cessation of activity.
– 0.1% for training and prevention.
B. Flat rate and other benefits.
The flat rate for self-employed workers consists of starting with a monthly payment of 60 euros to the Social Security instead of the 286.15 euros that constitute the minimum monthly contribution in 2021.
If you are going to register as self-employed soon and you meet the requirements for accessing the flat rate, you can do so without any problem by applying for it at the Social Security when you register as self-employed.
Currently, the requirements for applying for the flat rate for self-employed workers are as follows:
– Register as self-employed for the first time.
– You must not have been registered as self-employed in the last two years (three years if you have previously benefited from the subsidy).
– If you have already been registered as self-employed and benefited from the flat rate, at least three years must have passed since you left the scheme. In other words, you can repeat as long as 3 years have passed in between.
– You are not a collaborating self-employed worker (special regime for family members of self-employed workers).
It should also be noted that members of associated work cooperatives and worker-owned companies are eligible for the flat rate.
In the case of pluriactivity, i.e. working both as a self-employed person and as an employee, the Entrepreneurs Act introduced new rebates of 50% of the self-employed contribution for these cases, with the self-employed person being able to choose between the flat rate and the reductions in the contribution base for pluriactivity.
The amount of the flat rate varies over the first few months of activity, with three reduction brackets being established on the minimum contribution base and the minimum contribution rate, including temporary capacity. Excess contributions above the minimum base are not subsidised and are paid at the general rate of 30%.
Amount of the flat rate for new self-employed in 2021:
– Section 1: first 12 months: contribution of 60 euros (80% reduction on the base of 283.30 euros).
– Section 2: months 13 to 18: contribution of 143.10 euros (50% reduction on the base contribution).
– Section 3: months 19 to 24: 200.30 euros (30% reduction).
– Tranche 4: months 25 to 36: 200.30 euros (30% reduction).
C. Other benefits.
– Workers under 30 years of age, or women under 35 years of age, who are initially registered or who have not been registered in the RETA in the 2 immediately preceding years.
– Workers with a degree of disability equal to or greater than 33%, (initial or supervening disability) or victims of gender violence and victims of terrorism, who are initially registered or who have not been registered in the 2 immediately preceding years in the RETA.
COMMUNITY OF MADRID.
The Community of Madrid has implemented aid for workers who set up as self-employed. These subsidies are intended to cover part of the expenses necessary for the start-up of their business activity. In general, the maximum amount of the subsidy is up to 4,000 euros, and for specific groups up to 4,580 euros. For more information, please consult the website of the Community of Madrid.
Only includes the flat rate as aid for the newly self-employed.
Granting of subsidies to promote entrepreneurship through the programme for the promotion of self-employment, whereby a subsidy is granted as a subsistence income to unemployed persons who access their employment through the creation of independent business activity, through their establishment as self-employed or own-account personnel in innovative projects.
The amount of the subsidy will be determined according to whether the applicant belongs to one of the following groups at the time of registration as self-employed staff:
a) Unemployed persons in general: 2,500 euros.
b) Unemployed persons under 30 years of age or over 45 years of age: 3,000 euros.
c) Unemployed persons with functional diversity: 3,500 euros.
d) Unemployed women victims of violence against women: 4.500 euros.
The amounts established in letters a), b) and c) will be increased by 500 euros in the case of women.
Only includes the flat rate as aid for the newly self-employed.
D. Certificate of registration as self-employed with the Social Security.
The Social Security self-employed registration certificate can be acquired in two ways:
– By appointment at the provincial office nearest to your home address.
– Through the Social Security Electronic Headquarters, in the space for reports and certificates.
E. Registering as a self-employed person with the Social Security: Electronic Office
Registration with the Social Security can also be done telematically, by entering the Social Security E-Office.
The procedures are the same, except that they are completed virtually. To access you need one of the following documents:
– An electronic certificate.
– Through the Cl@ve option.
– Electronic NIF.
1.3 Direct estimation and objective estimation.
A. Direct assessment.
In this type of taxation, taxes are paid according to what we have invoiced, in other words, in proportion to our profits and the volume of our activity. To do this, the total profits are calculated, from which the expenses that can be deducted from the activity are subtracted. The remaining amount is then taxed accordingly. Therefore, it will always vary, but it will be based on actual income and expenditure data.
There are two types of direct estimation: normal direct and simplified direct. Both have the same objectives, but they differ, basically, in the net amount of turnover. In the simplified direct estimation, the net turnover may not exceed 600,000 € (which is the most common system) and in the normal direct estimation, this figure must be exceeded.
B. Objective assessment.
The objective assessment system, better known as modules, is a simplified taxation system. In this way, small entrepreneurs and the self-employed have a simpler way of managing the administration of their work activity. Before starting the activity, the professional will already know what he/she has to pay because the amount is fixed on the basis of scales according to his/her characteristics and the sector to which he/she belongs.
To be eligible for this regime, a series of requirements must be met:
– The activity(ies) must be included in the Order of the Minister of Economy and Finance that develops the objective estimation regime. We leave you with article 2 of the BOE (Official State Gazette) where you will find information on the activities included in the objective estimation regime.
– That a series of values are not exceeded:
– That the volume of total income for the previous year does not exceed €450,000 (economic activities) or €300,000 (agricultural and livestock activities). That the volume of purchases of goods and services in the previous year (minus investments) does not exceed €300,000.
– That they make withholdings of 1% on their invoices.
– That they have not renounced or are not excluded from the simplified VAT system.
2. CITIZENS OF THE EUROPEAN UNION.
The NIE or Foreigner’s Identity Number is the official document that identifies with a personal, unique and exclusive number those foreigners who, due to their economic, professional or social interests, are related to Spain.
The following documents must be provided for the assignment of the aforementioned number:
• Standard application form (EX-15), duly completed and signed by the foreigner.
• Original and copy of the complete passport, or identity card, or travel document or valid registration certificate.
• Communication of the economic, professional or social reasons that justify the application.
• When the application is made through a representative, he/she must prove that he/she has sufficient power of attorney expressly stating that he/she is authorised to submit the application.
2.2 BECOMING SELF-EMPLOYED IN SPAIN
A. NIE number.
As we have seen above, the NIE is the identification document for foreigners, therefore, it is essential to have it, as it will not only be used to register as self-employed, but you will also need it for all legal and bureaucratic procedures in Spain. You need NIE if you are EU citizen.
B. Registration with the IAE and Social Security.
Subsequently, as we have seen in the previous chapter, you must register for the Economic Activities Tax at the Tax Agency Office. With this step, you inform the tax authorities that you are going to start an economic activity as a professional. This tax is usually paid when you get very high incomes (over one million euros)
You must also register with the social security, following the steps described above.
C. Tax declaration.
Once you have started your economic activity, you must take into account all the tax obligations required of you as a self-employed person in Spain. You must file the tax returns required by law, such as the VAT return and the personal income tax return.
3. SELF-EMPLOYED PERSONS FROM THIRD COUNTRIES.
If you carry out an entrepreneurial and business activity, of an innovative nature, and you believe that it is of special economic interest for Spain, you can benefit from the residence regime for entrepreneurs. There are two ways:
• A visa, if you are abroad and need to come to Spain to carry out the necessary procedures to start up your entrepreneurial activity.
• An authorisation, if you are in Spain and can start up your project.
• Those who meet the following requirements can obtain a visa for residence and self-employment in Spain:
• Not be a citizen of a State that is part of the Schengen Area.
• Not be in Spain illegally.
• Not have a criminal record in Spain or in the previous countries of residence for offences under Spanish law.
• Not be banned from entering Spain or be within the period of commitment not to return to Spain.
• The activity to be carried out must be legal in Spain.
• Possess the required professional qualifications or accredited experience in the activity to be carried out. In some cases, membership of a professional association will be required.
• Proof that the planned investment is sufficient and that employment will be created.
• Proof of the economic resources necessary for maintenance and stay in Spain, after deducting those required for the maintenance of the activity.
3.1 VISAS ENTREPRENEURSHIP LAW.
This law envisages a speeding up of procedures for investors, entrepreneurs, highly qualified professionals, researchers and workers who carry out inter-company movements, as well as for spouses and children under 18 years of age, establishing a general 10-day resolution period for all visas included in the law instead of the normal one-month period.
The law also grants a series of advantages over residence. Firstly, the visa is sufficient to reside in Spain for one year without the need to apply for a foreigner’s identity card. On the other hand, in order to renew the residency, it can be done even if there are absences of more than six months per year in the case of residency visas and authorisations for investors or foreign workers of companies that carry out activities abroad and have their base of operations in Spain.
The requirements to be able to apply for a visa under the Entrepreneurs Act are as follows:
• Not to be irregularly present on Spanish soil.
• Be over 18 years of age.
• Not have a criminal record in Spain or in the countries where they have resided in the last 5 years, for offences under Spanish law.
• Not to be refused entry in the territorial space of countries with which Spain has signed an agreement to this effect.
• Have public insurance or private health insurance arranged with an insurance company authorised to operate in Spain.
• Have sufficient financial resources for themselves and their family members during their period of residence in Spain (€2,130 per month for the interested party and €532 for each dependent family member).
• Pay the visa processing fee.
Where to apply varies depending on whether you are already in Spain or not. If you are outside Spain, as we have seen above, you will have to go to the Spanish consulate in your country. If you are already legally in Spain or have an entrepreneur visa: you will apply for the entrepreneur residence permit at the Large Companies and Strategic Collectives Unit (UGE-CE).
3.2 BUSINESS PLAN.
A business plan must be submitted in order to apply for a visa. This business plan must contain detailed information on the activity to be carried out. There are no minimum investment or job creation requirements for the type of investment; on the contrary, an individual analysis of each project is always carried out. Therefore, you must provide a business plan for your project that will allow you to assess its economic interest for Spain.
The experts of the Directorate General for International Trade and Investment will assess:
1. Your professional profile: training and professional experience, as well as your involvement in the project.
2. Your business plan, which must contain at least the following:
– Description of the project: business activity to be developed, start date, location, planned legal form of the company, potential economic impact of the investment, description of the estimated number of jobs to be created and their functions and qualifications, planned promotional activities and sales strategy.
– Description of the product or service: the description shall be detailed and include innovative aspects.
– Market analysis: market assessment and expected evolution, description of possible competitors, assessment of potential consumers and analysis of supply and demand.
– Financing: required investment, sources of financing and financial plan.
3. The added value for the Spanish economy.
3.3. VISA PROCESSING.
In order to apply for a visa for citizens of other States not included in the European Economic Agreement, we must first be aware of the requirements for applying for a visa:
• Not to be a citizen of a State of the European Union, of the European Economic Area or of Switzerland, or a family member of citizens of these countries to whom the European Union citizen regime is applicable.
• Not be illegally present in Spanish territory.
• Not have a criminal record in Spain or in their previous countries of residence for offences under Spanish law.
• Not have been banned from entering Spain and not be refused entry in the territorial space of countries with which Spain has signed an agreement to this effect.
• Not be, where applicable, within the period of commitment not to return to Spain that the foreigner has assumed when returning voluntarily to his/her country of origin.
• Comply with the requirements that current legislation demands for the opening and operation of the planned activity.
• Possess the required professional qualifications or sufficient accredited experience in the exercise of the professional activity, as well as, where applicable, membership of a professional association when required.
• Be able to accredit that the planned investment is sufficient and the impact, where applicable, on job creation.
• To be able to accredit that they have sufficient economic resources for their maintenance and accommodation, after deducting those necessary for the maintenance of the activity.
Subsequently, once we know that we meet the requirements, we must know the documentation that will be required once we want to apply for the visa:
• Official application form (EX-07).
• A complete copy of your passport or valid travel document.
• In retail commercial activities and provision of services listed in the Annex to Law 12/2012, which are carried out in permanent establishments, whose useful surface area is equal to or less than 300 square metres, a declaration of responsibility or prior notification (under the terms of Article 71.bis of Law 30/1992) and, where applicable, proof of payment of the corresponding tax.
In the case of other activities and the provision of professional services, a list of the authorisations or licences required for the installation, opening or operation of the planned activity or for professional practice, indicating the status of the procedures for obtaining them, including, where applicable, the certificates of application to the corresponding bodies.
• Copy of the documentation that accredits possession of the training.
• Accreditation of sufficient economic investment, or commitment of support from financial institutions or others.
• Project for the establishment or activity to be carried out, with an indication of the planned investment, its expected profitability and, if applicable, the jobs expected to be created.
In addition, all foreign public documents must first be legalised by the Spanish Consular Office with jurisdiction in the country in which the document was issued or, where applicable, by the Ministry of Foreign Affairs and Cooperation, unless the document has been apostilled by the competent authority of the issuing country in accordance with the Hague Convention of 5 October 1961 and unless the document is exempt from legalisation by virtue of an international convention.
Finally, it should be noted that the procedure will be carried out at the Spanish diplomatic mission or consular office corresponding to your place of residence, and that you will have to pay a residence and work fee which will accrue when the application is admitted for processing and must be paid within ten working days.
4. ADDITIONAL INFORMATION.
Dimitra Internatioanl offers advice in Spanish, English and Italian.