Self-employment has become the most common way out in Spain in recent years. However, despite this, the Spanish self-employed must face higher taxes. The quota of self-employed has become the highest compared to other European countries and in return, a lower number of social rights are obtained.

Personal Income Tax In The Self-Employed: What Is It And How Does It Affect Them?

The IRPF,as its name suggests, is the tax levied on the income of individuals. It is progressive,depending on the taxpayer’s earnings.

The Spanish self-employed are obliged to make the

income statement

at the end of the fiscal year.

This is obtained by calculating the benefits and subtracting the expenses that the worker has had.

While the results may vary, the quote result oscillates around 20% of the profits.

What taxes does a freelancer pay in 2017?

To the aforementioned Personal Income Tax of the self-employed must be added VAT,which is the tax levied on professional activity and consumption.

The self-employed choose a VAT regime between the general and the special, which includes the equivalence and the simplified. Each self-employed person transfers their VAT to the next step, until they reach the final consumer.

In addition to facing both taxes, to all this we must add the fact that the self-employed quota is 267.03 euros per month regardless of the taxpayer’s income.

However, it is also true that there is currently the flat rate for freelancers, which is 50 euros.

Bonuses for Freelancers

The flat rate of self-employed of 50 euros is extended in 2017 to one year,compared to the current six months with the new Self-Employed Law.

The main requirement is that the worker had not been registered during the previous five years,that is, it will be applied to the new Spanish self-employed.

Other bonuses for the self-employed are, firstly, those incorporated into the RETA for young people,which consists of a reduction in the quota of common contingencies for women under 35 and men under 30. It occurs during the 15 months following the previous reduction and lasts, in total, 15 months.

Also, the amount will amount to 100% of the minimum self-employed quota in case of maternity,paternity, adoption, foster care or risk during pregnancy or breastfeeding.

It is what is called cessation of activity or rest of the self-employed.

The self-employed workers from Ceuta and Melilla can also access other types of bonuses for the self-employed, as can the multi-employed,those engaged in street or home sales, the over 65 years of age and collaborators or relatives,who will enjoy one of the 50% during the first 18 months after discharge and 25% in the following 6 months.

Finally, there are bonuses for self-employed with disabilities equal to or greater than 33%,which is 80% reduction the first twelve months and 50% from month 30 to 60.

It should be noted that, although the regulatory evolution in terms of bonuses in Spain is increasing, it is true that the Spanish self-employed continue to pay an excessive fee compared to the average of European countries.

How much is paid as a freelancer in Spain compared to the rest of Europe?

If we compare the payments that the Spanish self-employed must face compared to the Europeans and because of the income of the average self-employed worker, the quota is quite high.

In the UK,English freelancers should only pay the fee if their annual income is over £7,775. In addition, only from 79,000 pounds a year, they have the obligation to pay the VAT, which is the corresponding to the Spanish VAT and the profits that are between 7,775 and 41,450 pounds, pay 9% of their annual income, a big difference with respect to the average of 20% of Spain.

The Social Security contribution of Germans,on the other hand, is around 300 euros per month,but they only have the obligation to pay it if they invoice more than 1,700 euros per month.

That of italians and French varies according to their salary and, that of the Dutch, 100 euros per month for their private insurance,but the IRPF is only paid five years after discharge.

And finally, it is also worth noting the situation with respect to the Portuguese self-employed,since in Spain there is three times the tax burden than in Portugal.

In conclusion, the self-employed are an important group of taxpayers, currently being a third of the new employment. The tax burdens, however, are the inconvenience that the self-employed must face, being well above the European average.