Becoming an Autonomo in Spain: the complete guide for expats

What is an Autonomo?

In Spain, an Autonomo is a self-employed entrepreneur without legal personality, comparable to a sole trader or freelancer in English-speaking countries. You work on your own account, bear personal responsibility for your income and expenses, and are personally liable for any debts of your business.

The key difference from being an employee is that you are responsible for your own social security, pension contributions and tax returns. In return, you are completely free in how, when and for whom you work.

When are you required to register as an Autonomo?

This is a question that concerns many expats. In Spain the rule is: as soon as you regularly carry out economic activities with the intention of making a profit, you are legally required to register as an Autonomo. There is no legal minimum income threshold. Even if you earn only a few hundred euros per month, you are in principle already obliged to register.

In practice, the Seguridad Social applies a threshold: if your annual income from self-employed activities is below the minimum wage (the Salario Minimo Interprofesional, around 15,876 euros gross per year in 2024), you may in certain cases apply for an exemption from the social contribution. However, this exemption does not apply to the tax authorities (Hacienda). You remain obliged to register as soon as you carry out business activities.

Step by step: how to register as an Autonomo

Step 1: Get your NIE or NIF

Before you can fill in any form, you need a valid identification number. As an EU citizen, that is your NIE (Numero de Identidad de Extranjero) combined with your registration as an EU citizen (Certificado de Registro de Ciudadano de la Union). If you come from outside the EU, you will need additional residence documents.

Your NIE is your tax identification number in Spain and appears on all official documents, from your tax return to your bank account. Do not have one yet? Then that is the very first step. The NIE module at EasyToSpain walks you through exactly what steps to take, what documents you need and how long the process takes.

Step 2: Apply for a digital certificate

Before you can register as an Autonomo, you need a digital certificate (Certificado Digital). This is your digital signature that allows you to submit all official forms online to Hacienda and the Seguridad Social. Without this certificate you cannot sign digitally and must visit a government office in person for everything.

You apply for the digital certificate through the FNMT (the Spanish Royal Mint). You will need your NIE for this. The Digital Certificate module at EasyToSpain walks you through exactly how to apply as an expat.

Step 3: Choose your economic activity (CNAE/IAE)

Every Autonomo must declare what kind of work they do, via a so-called IAE code (Impuesto sobre Actividades Economicas). This is a classification code that determines which economic activity your work falls under, from graphic designer to plumber, from online coach to construction worker.

Choosing the right code is important because it determines which VAT rate applies and which specific rules apply to you.

Step 4: Register with Hacienda (Agencia Tributaria)

The first official step is submitting form Modelo 036 to the Spanish tax authorities. With this form you declare that you are starting as a business owner, what activity you carry out and whether you are liable for VAT.

The Autonomo module at EasyToSpain includes a clear wizard that guides you step by step through the Modelo 036. This way you can be sure you do not miss anything and submit the form correctly.

Step 5: Register with the Seguridad Social (RETA)

The second mandatory registration is with the Seguridad Social, specifically in the Regimen Especial de Trabajadores Autonomos (RETA). This is the special system for self-employed workers and covers your social security: illness, disability, maternity leave and in the long term also pension.

You have 30 days to do this after registering with Hacienda. Late registration leads to fines. Registration can be done online via the Seguridad Social website or through the module.

Step 6: Open a business bank account (recommended)

It is not legally required, but strongly recommended: a separate bank account for your business income and expenses. This makes your bookkeeping clearer and gives you immediate insight into your financial flow during a potential tax audit.

Step 7: Arrange administrative support

There are specialised platforms and advisors who support Autonomos in Spain with their administration and tax returns. Look for parties that have experience with expats and know the Spanish system well. Whatever you choose: make sure your returns are submitted on time and correctly. The cost of good support almost always pays for itself.

The costs of an Autonomo: what do you pay monthly?

This is the part that surprises many people, and it is also the part that has changed considerably in recent years.

The Cuota de Autonomo: the new income-based system

From 2023, Spain switched to a new system for social contributions of Autonomos. Instead of a fixed monthly contribution, you now pay based on your expected net income. The system has 15 income brackets, with contributions ranging from around 200 euros per month (for the lowest incomes) to 590 euros per month (for the highest incomes).

The new system works as follows:

1. You estimate your expected income for the year

2. You choose the corresponding bracket and pay monthly

3. At the end of the year there is a settlement: if you earned more than estimated, you pay the difference; if you earned less, you get money back

This requires discipline and a realistic assessment of your income. An estimate that is too low can lead to an additional assessment; one that is too high means you have overpaid.

Tarifa Plana: the starter discount

If you register as an Autonomo for the first time (or if you have not been registered in the past two years), you are entitled to the Tarifa Plana. In 2024 this benefit amounts to:

• First 12 months: only 80 euros per month in social contributions, regardless of your income

• Months 13 to 24: reduced rate depending on your income (for low incomes it remains at 80 euros)

This is an enormous advantage for new entrepreneurs. It gives you time to build up your client base without immediately bearing the full social burden.

Important: you must actively request the Tarifa Plana when registering. It is not granted automatically.

Taxes as an Autonomo: IRPF and IVA

IRPF: income tax

As an Autonomo you pay Impuesto sobre la Renta de las Personas Fisicas (IRPF), the Spanish income tax. This works via an advance payment system: every quarter you file a return and pay 20% of your net profit as an advance. This is called the Modelo 130.

At the end of the year you file your final tax return (Declaracion de la Renta, also known as Modelo 100). This calculates your total annual income and sets the final tax. Have you overpaid through the quarterly advance payments? Then you get money back. Have you underpaid? Then you pay the difference.

The IRPF rates are progressive:

In addition to the national rate there is also a regional rate. The final tax is a combination of both.

Alternative: invoice withholding tax (retencion)

If you invoice Spanish businesses or individuals, you can also work with a retencion of 15% (or 7% in your first three years as an Autonomo). In this case, your client withholds the tax at payment and transfers it directly to Hacienda. You then do not need to submit a quarterly Modelo 130. Many Autonomos choose this system because it is administratively simpler.

IVA: VAT

As an Autonomo you are in principle liable for IVA (Impuesto sobre el Valor Anadido), Spanish VAT. The standard rate is 21%, but there are reduced rates:

• 10%: for example hospitality, transport, some construction services

• 4%: basic food, books, medicines

Every quarter you submit a Modelo 303: the difference between the IVA you have invoiced (received from clients) and the IVA you have paid (on business costs). You pay the balance to Hacienda or receive it back.

Exceptions to IVA liability: Some professions are exempt from IVA, such as doctors, psychologists, certain teachers and some social workers. Check whether your activity has an exemption.

Deductible costs as an Autonomo

One of the benefits of self-employment is that you can deduct business costs from your taxable income. This reduces your net profit as the basis for IRPF. Note: the Spanish tax authorities are strict about documentation.

Common deductible costs

• Office space or home office: if you work from home, you can deduct part of the rent or mortgage interest and energy costs. The deduction is limited and requires careful documentation.

• Phone and internet: the business portion of your phone and internet costs is deductible.

• Travel costs: business travel costs (flights, trains, taxis) are deductible, provided you can demonstrate the business reason.

• Materials and equipment: laptop, camera, tools, everything you need for your work.

• Marketing and advertising: website costs, advertisements, business cards, and so on.

• Training and courses: education directly related to your activity.

• Cuota de Autonomo: your monthly social contribution is fully deductible.

• Administrative support: the costs of your accountant or platform are deductible.

How do you keep your receipts?

Keep all receipts and invoices digitally or physically for at least 4 years (the limitation period for tax audits in Spain). Make sure every invoice clearly states your name, NIF/NIE, the amount and the IVA.

Working as an Autonomo with clients outside Spain

Many expats work for clients in their home country, the UK, the US or other countries outside Spain. This has tax implications you must not ignore.

Clients within the EU

If you invoice a company in another EU country, the rules for intra-community services apply. In most cases you do not charge Spanish IVA, but the reverse charge mechanism applies: the client processes the VAT themselves in their own country.

For this you need a VIES number (this is automatically assigned via your NIF/NIE, but you must register for intra-community transactions via the Modelo 036) and you must report intra-community supplies via the Modelo 349.

Clients outside the EU

For clients outside the EU (for example the UK after Brexit, or the US) you do not charge Spanish IVA. However: depending on the country, local tax obligations may arise. Always inform yourself thoroughly about this.

Double taxation treaties

Spain has concluded double taxation treaties (Convenio para evitar la Doble Imposicion) with many countries. These treaties prevent you from paying tax on the same income in two countries. Are you a fiscal resident in Spain? Then you pay tax in Spain on your worldwide income as a matter of principle.

Common mistakes of new Autonomos

Learn from the mistakes others have made before you. These are the most common pitfalls:

1. Registering too late

Many people start working straight away and think they will sort out the paperwork later. This leads to fines from the Seguridad Social and the tax authorities.

2. Not issuing invoices

Every payment you receive must be documented via a correct invoice. Bank transfers without an invoice are not valid evidence during an audit.

3. Treating IVA as personal income

The IVA you invoice does not belong to you. It is an amount you manage on behalf of the client and transfer to Hacienda every quarter. Always set it aside separately.

4. Not planning for quarterly payments

Many new Autonomos are surprised by the quarterly IRPF and IVA payments. Always reserve a portion of your income. Count on at least 30 to 35% for taxes and social contributions.

5. Estimating income too high or too low

In the new system, your Cuota is based on your expected income. Estimate too low and you will face an additional assessment. Estimate too high and you will overpay monthly. Correct your estimate when your income changes. This can be done multiple times a year.

6. Not taking advantage of the Tarifa Plana

Do not forget to explicitly request the Tarifa Plana when registering. If you do not, you immediately pay the full rate.

Autonomo vs. SL: when do you choose a limited company?

As your turnover grows, it may become attractive to switch to a Sociedad Limitada (SL), the Spanish equivalent of a private limited company. When is that switch worthwhile?

Advantages of an SL compared to an Autonomo

• Limited liability: as an SL you are not personally liable for debts of the company (unless there is fraud or mismanagement)

• Lower tax rate: SLs pay corporate tax (Impuesto sobre Sociedades) of 25%, which can be more favorable at higher incomes than the progressive IRPF

• More professional image: for some sectors or larger clients, an SL can appear more professional

Disadvantages of an SL

• Higher set-up costs: notary, company registration, minimum capital of 3,000 euros paid up

• More administration: annual accounts, auditor statements, meetings, and so on

• Still an Autonomo: as managing director and shareholder of your own SL you are in many cases still required to register as an Autonomo
  

As a rule of thumb: seriously consider an SL at a net income above 50,000 to 60,000 euros per year. Below that level, the extra costs and administrative burden often do not outweigh the benefits.

Practical tools and resources for Autonomos in Spain

To keep your administration running smoothly, there are various tools used by Spanish-speaking and international Autonomos:

• Holded: popular Spanish accounting software with invoicing, cost management and reports

• Quipu: user-friendly app specifically for Autonomos, including quarterly returns

• Billin: simple invoicing program for new self-employed people

• Sede Electronica AEAT: the official portal of the Spanish tax authorities for submitting all Modelos

• Importass (Seguridad Social): the online portal for Autonomos to manage their RETA data

Do you not yet have a digital certificate (Certificado Digital) or Cl@ve PIN? That is an important next step. With these digital identification tools you arrange everything online with the Spanish government. The Digital Certificate module at EasyToSpain walks you through exactly how to apply as an expat.

Conclusion

Starting as an Autonomo in Spain requires preparation, but it is certainly not an impossible task. With the right information and a good understanding of the Spanish tax and social security system, you can lay a solid foundation for your business venture as a self-employed person in Spain.

The key takeaways at a glance:

• Register with Hacienda and the Seguridad Social before you start

• Take advantage of the Tarifa Plana as a new Autonomo

• File quarterly returns via Modelo 130 (IRPF) and Modelo 303 (IVA)

• Reserve at least 30 to 35% of your income for taxes and contributions

• Arrange good administrative support to avoid mistakes and fines

• Only consider an SL at higher income levels

Spain offers real opportunities for entrepreneurs. The system makes sense once you understand the logic, and with the right steps you will get further than you think.