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Ready to say adios to the 9-to-5 grind — and become el jefe of your own working life?
If so, Spain is an ideal location to go it alone. With a warm Mediterranean climate and a high quality of living, Spain is popular with remote workers, independent contractors, and digital nomads. Whether you want to set up shop in the bustling metropolitan hubs of Madrid and Barcelona, the historic towns and cities of Andalusia, or the chic party hotspots of the Baleaerics, there’s something here for everyone.
Before you get started though, you’ll need to get to grips with the legal requirements of self-employment. Specifically, you’ll want to know how to:
Register your business in Spain
Avoid misclassification as an employee
Create compliant contracts that protect you
Invoice and collect payments from around the world
In this article, we’ll cover all these things. We’ll also help you navigate your tax obligations as a self-employed worker, and discuss some of the other risks and liabilities you should be aware of.
First, it’s important to clarify how Spain defines independent contractors.
Independent contractors are workers who provide paid services (or products) to another party. However, they are classified differently to employees, and are usually not entitled to the same benefits, such as paid leave, sick days, and minimum wage. On the flip side, contractors have more freedom and flexibility in the way they work.
See also: Why businesses hire contractors vs. international employees
In Spain, there is no existing legislation that explicitly determines the difference between employees and contractors. However, in practice, you are generally considered an independent contractor if you:
Determine your own work schedule and location
Work without direction or supervision
Supply and use your own tools, materials, and equipment
Are able to perform work for other companies simultaneously
Set your own pay rate
Are able to delegate or subcontract work
When you work with clients, it’s important to be correctly classified to avoid penalties and fines.
To begin working as an independent contractor in Spain, you’ll first need to choose a formal structure for your business. Some of the most popular models include:
Autonomous Individual Entrepreneur (Empresario Individual (Autónomo)): A simple structure that is ideal for independent, individual contractors. You have full control of the enterprise, although there is no legal separation between you (the owner) and the business; you are personally responsible for all its debts and liabilities. You can also set up as a Limited Liability Entrepreneur (Emprendedor de Responsabilidad Limitada) to mitigate some of this risk.
Simple Limited Partnership (Sociedad Comanditaria Simple): A simple agreement between general and limited partners. For general partners, there is no legal separation between the individual and the business; they are personally responsible for any debts and liabilities. Limited partners are only liable for the capital they invest in the business.
Limited Liability Company (Sociedad de Responsabilidad Limitada): A formal, legal entity that is separate from you, the individual. In most cases, all income and losses are attributed to the company as opposed to you personally (i.e. you are only liable for the capital you invest in the company).
There are pros and cons to each of these structures, but most independent contractors choose the Individual Entrepreneur model, as it is fairly simple to set up and operate.
Alternatively, if you practice a liberal profession — such as law, medicine, or engineering — you can operate as a freelance professional (profesional autónomo).
In either case, you do not need to register your business on a commercial register, as it is not considered a separate legal entity. You must, however, inform the Spanish tax authority (La Agencia Tributaria) that you will now pay tax as a self-employed person. To do this, you need to fill out and submit a Model 037 form (either online or in-person), and select the group number that corresponds to your business activity. If you don’t already have one, you’ll also need to acquire an electronic signature (known as Cl@ve) to access the Spanish government’s online portals.
Once you have completed this step, you then have 30 days to register with RETA, the Spanish government’s social security scheme for self-employed people. To do this, simply fill out form TA 0521. Note that, even if you wish to pay into private health and pension schemes, it is still mandatory to make social contributions through RETA.
As an independent contractor, it’s down to you to handle your invoices and payment collection. Unfortunately, this means billing each client individually and collecting payment through their preferred payment method — which can be inefficient and time-consuming.
Some of the most common ways to collect payments include:
Digital transfer services like PayPal and Wise
These methods all have their own pros and cons. For instance, bank and digital transfers can be pretty quick, but often come with hefty service fees. And if you have clients in other countries besides Spain, the payment collection process can be even more complicated.
Alternatively, you can use a trusted solution like Remote. Our platform is a simple, secure, and reliable way to get paid quickly in euros — and with no hidden fees. Learn more about how our platform can help.
As an independent contractor, you’re also responsible for paying your own taxes and social security contributions. Spain has a progressive income tax rate of between 19% and 47%, which indicates how much you will need to pay. Note that these rates may differ slightly depending on where in Spain you are based.
As an autónomo (i.e. an Individual Entrepreneur or a freelance professional), you pay personal income tax on your business profits. Therefore, you do not need to fill out a separate tax return, or pay any corporate tax.
However, you will need to submit quarterly declarations of your income and expenses using the Model 130 form, plus an annual summary of these declarations every January. You will also need to submit a summary of your commercial relationships each February (the Model 347 form), followed by your annual personal income tax return between April and June. If you hire employees or contract for clients outside Spain, you may need to file additional forms.
You will also need to make social insurance payments, which are set up automatically when you register with RETA. The Spanish government has recently overhauled the social insurance system for self-employed people, moving from flat-rate monthly payments to a sliding scale rate based on how much you earn. These changes are set to be implemented gradually until 2031, so expect the exact figures to change frequently; for 2023, the minimum annual contribution will be €751, with a maximum of €4,495.
On a more positive note, you can claim tax deductions for multiple business expenses, including:
Utility and supply costs
Home office costs (as laid out in the Model 037 form)
Business premise costs (including rent or mortgage payments)
Materials and equipment
Marketing and advertising
Training and education
In Spain, all self-employed people must charge and pay VAT — regardless of how much revenue you generate. Effectively, this means that you charge and collect VAT from your clients, and then pay it to the government. As with income tax, you must submit quarterly VAT returns (using the Model 303 form), as well as an annual declaration (Model 390 form).
The standard VAT rate in Spain is 21%, although some goods and services are charged at the lower rates of 10% and 4%. A select few goods and services are exempt from VAT altogether.
As a sole proprietor, you are personally liable for finance and tax debts, which means your private assets can be forcibly used to settle your business debts. Many independent contractors purchase liability insurance to help mitigate this risk.
It’s also important to cover yourself when drafting and signing agreements with clients. Our legal experts can provide you with fully compliant contract templates, for both Spanish and international clients.
As a sole proprietor, you do not need to publish financial statements each year. However, it’s advisable to keep accurate, organized records of your accounts, including all your client invoices and business purchases. This will help you file your tax returns more efficiently, and give you a better picture of your business’s financial position.
You can either manage these records yourself using a bookkeeping or accounting tool, or hire a bookkeeper or accountant.
You do not need to open a business bank account, although it can be a good idea to create a separate account for your business dealings.
As we’ve mentioned, independent contractors are classified differently to employees. Many of the protections and benefits employees enjoy do not typically apply to contractors.
As a result, companies may deliberately misclassify you to circumvent their legal obligations, while at other times, it may happen accidentally. Whether it’s intentional or not, misclassification can result in penalties and fines for both you and your client, or lead to costly legal disputes.
As an independent contractor, you can work with your clients to ensure this doesn’t happen. Discuss your role and responsibilities with them, and review the working arrangement regularly.
If your working relationship changes over time and you become more integrated into a client’s company, you can ask to be converted into an employee.
Open a dialogue with your client and carefully discuss the risks and benefits of moving to an employer-employee relationship. In particular, be clear about how it can benefit both parties — not just you.
You can even suggest the help of a third-party solution, such as Remote, to ease the transition. Our global employment services help both parties stay compliant by taking care of key HR functions (like payroll management and benefits administration) in line with Spanish law.
As you can see, there’s a lot to take on board when setting up as an independent contractor. Remote can help you with many of these challenges, allowing you to focus on growing your business and delivering to your clients. Here’s how:
Navigating all of your clients’ different invoicing, approvals, and payments systems can be complicated and time-consuming. And manual methods of invoicing and collecting payments can increase the risk of fees, errors, and delays.
Remote gives you access to a highly secure, streamlined dashboard that makes invoice management and international payments cost-effective and efficient. You can use our platform to get paid in euros hassle-free, without any hidden fees.
When you draft agreements and contracts for your clients, you run the risk of non-compliance with local labor laws — especially when working with international clients. Remote offers localized contracts tailored to Spanish laws, ensuring that you stay compliant. Our legal experts can also provide guidance on complex issues, such as local classification and intellectual property protections.
With Remote, you no longer need to rely on spreadsheets and other manual tools to invoice for payments; we remove many of the inaccuracies and delays caused by archaic processes and manual management. Our platform lets you create invoices, submit them for approval, and subsequently get paid in your local currency without needing to switch to any other tool or software.
Tax management is notoriously complex work. Remote helps you quickly and efficiently deal with tax management by compiling data about your income based on your invoices and payments received.
Having the freedom and flexibility to work on your own terms is liberating. But your administrative responsibilities can distract from what you really want to be doing: helping your clients, delivering great work, and collecting invoices.
By using a stable, trusted platform like Remote, you can manage these obligations quickly and efficiently, allowing you to focus on your business goals. Specifically, we can help you:
Avoid intermediary fees and delays with international client payments
Draft compliant contracts for Spanish and foreign clients
Enhance your invoice management and avoid manual processes
Comply with local labor laws regarding work practices
Our platform makes it quick, simple, and seamless to get started as an independent contractor. Learn more about how our expertise can save you time and resources today.
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