The figure of the Autónomo (self-employed) is deeply rooted in Spain, so much so that the number of self-employed members in 2018 has reached approximately 3,275,000.
How many of these are Individual Autónomos and how many Corporate Autónomos?
This figure covers both, the Individual Autónomo – 61.3%, about 2,007,575 – and the Corporate Autónomo – 38.7%, about 1,267,425.
More than the 10% these autónomos aren´t Spanish, this means that there are more and more immigrants choosing to become autónomo.
Why there are a lot of Autónomos now?
There are many companies that outsource qualified professionals to perform specific tasks, either as false self-employed or dependent self-employed, and in the majority of cases, they perform translation, consulting or financial analysis tasks, among many others.
The fact that the self-employed person is in charge of making the Social Security, Income Tax and VAT payments means that in many cases he does not know how much money he really has so, how much does a freelancer have to earn to be a Mileurista?
Mileurista: someone who earns €1,000/month
We are going to study the most important matters to know how much an Autónomo should quote to earns 12,000€ net/year.
SOCIAL SECURITY (SEGURIDAD SOCIAL)
This is the first mandatory payment, usually charged on the last day of the current month and must be done by direct debit into a Spanish bank account.
If we are not covered by the Autónomo Flat Rate (50€ during the first 12 months, 139.43€ for the following 6 months and 195.24€ for the last 6 months) the Social Security fee – for the minimum contribution base, where most of the self-employed are, it is 278.87€.
- Social Security of 12 months without applying the Flat Rate = 3,346.44€ (fully deductible)
INCOME TAX (IRPF)
This is the second point that must be studied by an Autónomo person, the payment of Income Tax.
Everyone who receives income has to pay personal income tax, and as a progressive tax, it varies depending on the volume of the income.
In addition, this tax takes into account the family situation of the taxpayer, a married man with 3 children would not pay the same IRPF as a single man without children when they both receive the same income.
When the self-employed issues an invoice to pay their fees -unless it is to a private individual- the invoice must carry IRPF withholding (payment in advance of taxes), which will be the norm of 15%, or 7% for new autónomo.
For a self-employed person whos income is € 15,880 annually –1,323.33€/month– is withhold:
- 1,323.33€ * 0.15 = 198.50€
- 1,323.33€ * 0.07 = 92.63€
Therefore in his income tax return next year they will be returned by Hacienda:
- 2,382€ withheld – 525.63 IRPF = 1,856.37€
- 1,111.60€ withheld – 525.63€ IRPF = 585.97€
Why will Hacienda refund this amount to the autónomo next year?
The 12-month IRPF at a rate of 1,323.33€ gross per month -15,880€/year- is 525,63€. An IRPF rate of 3.31%. You can calculate it yourself on the Hacienda website.
VAT (IVA)
Practically all the work carried out by an autónomo person is subject to IVA and this tax is currently at 21% for the majority of work, so the income calculated above must add 21% IVA which is compensated and arranged with the Hacienda quarterly.
Continuing with the previous assumption, it would work out:
We will need to include the IVA in our invoice which will be paid by our client:
15,880€ / 12months = 1,323.33€ * 0.21 = 227.89€ of IVA
So, how do I structure my invoice to earn 1,000€?
- Gross Salary 1,323.33€
- – 15% Withholding = 198.50€
- + 21% VAT = 277.89€
- = Total = 1,402.72€
This is the total amount that an Autónomo receives in their bank account per month, which must deduct Social Security (€ 278.87) and VAT (€ 277.89). Therefore, the final amount the Autónomo has is 845.96€ / month.
845.96€ x 12 = 10,151.52€
To which must be added return from Hacienda, which is approximately 1,856.37€.
12,000€ Net per year.
Of course, if you have any fixed outgoings must be include it in your invoices to get the same result.
If you intend to set up as an Autónomo, I suggest you contact a qualified Tax Advisor / Accountant before you start your business to see the different scenarios.
Taxes in Spain Online 