Being self-employed or freelancer in Spain as a foreign citizen is not straightforward. Depending on your nationality, you’ll need a visa like the Golden Visa, Digital Nomad Visa, etc.; or if you are a citizen of a third country or the EU, you’ll need a residence as a European citizen, which is a much easier process than obtaining a visa.
The general steps to register as a freelancer are as follows:
✓ Obtaining a Foreigner’s Identity Number (NIE). If you haven’t done so at the Consulate of your country before your arrival in Spain, you’ll need to go to the National Police Station closest to your address in Spain and apply for it.
Foreign citizens coming from third countries, before they enter Spain, must obtain an initial authorization of residence and a visa authorizing them to work in Spain, which must be obtained at the Spanish diplomatic mission or consular office corresponding to their place of residence or at the Large Companies Unit in Spain.
✓ Registering as self-employed within the Tax Authorities by filing forms 036 or 037.
✓ Opening a Spanish bank account – this should be done before registering with Social Security, as the self-employed fees to be paid will be automatically deducted from your bank account at the end of each month.
✓ Registering with Social Security in the RETA (Special Regime for Self-Employed Workers). This special regime offers several concepts of Social Security coverage, including incapacitation for work either due to common illness, non-occupational accident, or occupational illness or accident.
Table of Contents
New contribution system for the self-employed in Spain for 2023
On January 1, 2023, Royal Decree-Law 13/2022 of July 26, 2022, was approved, which establishes a new contribution system for self-employed workers and improves the protection for these workers in the event of termination of their activity.
Those who register in the special regime for self-employment will have to choose the corresponding contribution base according to their income.
Period of transition for self-employed workers who registered before 01/01/2023
For self-employed workers who started their activity before 1st January 2023, the Royal Decree-Law 13/2022 establishes a transitional application of the new contribution system based on real income in its Second Transitional Provision. This means that self-employed workers must exercise the option to contribute under the new system. If they don’t exercise this option, they will continue to apply the contribution base they had in December 2022 during 2023. It’s up to the self-employed to study whether it is in their best interest to contribute according to their income under the new system as of January 2023 or whether it’d be better to postpone this until 2024.
How did the self-employed quota work in Spain until 2023?
Until now, under the Special Social Security Regime application for self-employed workers, it was up to the self-employed to choose their contribution base. Regardless of whether they had more or less income, most self-employed workers and company administrators chose the minimum contribution base. As the contribution base determines the number of future benefits, we can see that the self-employed are to receive lower benefits than those that employees can receive.
The new self-employed reform in 2023
The recently approved Royal Decree-Law 13/2022 of 26th July 2022, establishes the bases of the new contribution system, by which self-employed workers will abide as from 1st January 2023, the date on which it came into force.
Changes in the new self-employment contribution system
The main change contemplated in Royal Decree-Law 13/2022, of 26th July, establishes a new contribution system for self-employed workers, which also improves protection in the event of termination of activity. This new system is based on actual income brackets, whereby each self-employed worker must estimate their real income and fall into one of the 15 brackets that have been set up. Within these brackets, the self-employed can choose the contribution base between the minimum and maximum contribution base established for each income bracket.
Contributions based on the income received
As previously mentioned, the monthly tax to be paid will be calculated according to the net income obtained by the self-employed worker. Initially, this will be based on the income minus the anticipated expenses (with adjustments made in the following year, when the actual income is communicated).
If you are taxed under the direct estimation regime, which is usually the case for most of the self-employed, the calculation should be as follows:
Add all the income from the economic activity and subtract the expenses directly related to such activity; to this result, add the number of social security contributions. Moreover, the new law allows you to deduct 7% for deductible expenses that are difficult to justify, a percentage reduced to 3% for self-employed workers who are corporate.
Once this result is obtained, the self-employed worker must choose the contribution base within the bracket in which these estimated incomes are found, which are included in the general table of bases approved in the Royal Decree-Law.
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Possibility of changing the contribution base if the income changes
This new system allows those who anticipate a variation in net income during the year to modify the contribution base, and consequently, the adapted quota. A maximum of 6 changes will be permitted during the year.
Regularization of the Social Security contribution
As stated above, in the following year, the self-employed must regularize the contributions paid, calculating the contributions in accordance with the actual income obtained. Since the calculation referred to above is based on estimated income, the self-employed should pay the Social Security the difference in case of having paid less than what corresponds to him/her, or otherwise, will receive the overpaid amount from the Social Security.
Year 2023 → Self-employment tax calculated according to estimated revenues.
Year 2024 → Communication of income by the tax agency .
→ Regularization of fees.
→ Deposit of difference by the self-employed when the contribution has been lower than the corresponding one .
→ Automatic reimbursement when the contribution has been higher than the corresponding one.
Flat rate for new self-employed
Another new feature is the maintenance of a flat rate, which was previously €60, but now becomes €80 per month for self-employed and corporate self-employed persons registered after 1st January 2023. This flat rate will be maintained for the second year only if their net income does not reach the Minimum Interprofessional Wage. Additionally, women under 35 years of age who register as self-employed and self-employed workers under 30 years of age may also benefit from this flat rate, with the difference that these two groups may extend the enjoyment of this rate for one more year with respect to the general self-employed, provided that their net income does not exceed the minimum wage in that third year.
In terms of the corporate self-employed, they also have the right to opt for the flat rate. It’s also established that they have the option of requesting this aid retroactively, provided that the registration was after September 2016.
As an extension and improvement of this flat rate, Andalusia, Madrid, and Murcia will apply a 100% bonus of the Social Security contributions, both to new self-employed and new corporate self-employed. Thus, those who register as self-employed from 1st January 2023, and have requested the flat rate in these Autonomous Communities, will not pay monthly self-employed Social Security contributions during the first year, and this bonus will be maintained during the second year if the net income does not exceed the Minimum Interprofessional Wage, as it happens with the flat rate.
News in the benefits applicable to the contribution for self-employed workers in 2023
The approval of Royal Decree-Law 13/2022 of 26th July 2022, also establishes some benefits applicable to contributions for self-employed workers in Spain, such as:
Bonus for caring for a minor affected by a serious illness.
Bonus for returning to their activity after the cessation of activity due to the birth of a child, adoption, guardianship for the purpose of adoption, foster care, and guardianship.
Self-employed quota tables 2023-2031
The general and reduced tables, in effect for each year in the first period from 2023 to 2025, are as follows:
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Calculator of the new fee for self-employed 2023
To calculate the corresponding contributions, the Social Security has made available on its web page a contribution calculator, https://portal.seg-social.gob.es/wps/portal/importass/importass/tramites/simuladorRETAPublico.
The introduction of this new system will be carried out gradually over the next 9 years, with reviews every 3 years. With this system coming into effect, we have the tables with the contribution bases established for the years 2023, 2024 and 2025.
As a guideline, the resulting minimum contributions to be paid for each bracket would be as follows:
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Contact with a tax adviser
In which cases does this new measure harm or benefit me?
The new contribution system has advantages and disadvantages for the self-employed, the main ones being the following:
Advantages:
✓ As it is a progressive system, it will be adapted to your actual income, thus those who earn less will benefit. According to the Ministry of Social Security, the self-employed, with an income equal to or less than €900 per month, will benefit the most.
✓ It will provide you with more social coverage, since now it is compulsory to contribute for cessation of activity, and as you will contribute according to your real income and not for the minimum, you will have more protection for sick leave and other benefits such as the cessation of the activity itself.
✓ Likewise, by paying contributions based on your actual income and not the minimum, you will be entitled to a better pension adjusted to your actual income.
✓ You will have the flexibility to adapt your contribution to your real income, with the possibility of modifying it up to 6 times during the year.
Disadvantages:
✓ Less flexibility to choose the contribution base.
✓ Those with lower income will have to allocate more of their income to the payment of the corresponding contribution.
✓ Possible increase in the price of their services or products.
✓ Greater difficulty in hiring workers, due to the increase in monthly fees.
Self Employed System in Spain FAQ’s
Exactly. By contributing your real income (profit), and not always for the minimum, you will be entitled to a better retirement pension. Likewise, you will have more social coverage, since, with the new system, it will be mandatory to pay contributions for the termination of activity. In addition to this, doing so according to real income will give rise to greater protection for sick leave and other benefits such as termination of activity.
The new self-employed fees, regulated by Royal Decree Law 13/2022, came into effect on 1st January 2023. The application of these will be gradual, over a maximum period of 9 years, which will be reviewed every 3 years, so the first period of implementation will include the years 2023, 2024, and 2025.
For those self-employed workers who were already registered before 1st January 2023, a transitional period is established. They will continue to pay contributions to the same bases until they exercise the option to pay contributions under the new system based on their income. The self-employed worker may postpone the application of the new system until 2024.
According to the new regulations, there is no limit for choosing the provisional contribution bases or for determining the definitive contribution bases, depending on the age of the self-employed worker.
The contribution time required to generate the right to receive a 100% retirement pension will increase progressively from 2013 to 2027. From 2023 to 2026, it will be necessary to have contributed 36 years and 6 months, or more. From 2027 onwards, this period will increase to 37 years of contributions.
The flat rate of €80 will last for 1 year and will be maintained for the second year only if your net income does not reach the Minimum Interprofessional Wage. In addition to this, women under 35 years of age who register as self-employed and self-employed persons under 30 years of age, may also benefit from this flat rate. These two groups may extend the enjoyment of this rate for one more year with respect to the general self-employed, provided that their net income does not exceed the minimum wage in that third year.
The self-employed worker will be the one to choose his/her provisional contribution base for the year 2023. If he/she doesn’t, he/she will contribute according to the contribution base of December 2022, having to regularize in the following year.
The resulting self-employed contributions will be provisional until the following year. The Tax Administration will then let the General Treasury of Social Security know the effective net annual income. It will begin the process of regularization of contributions, returning the contributions paid in excess in case of having paid more than what corresponded or claiming the difference to be paid in the opposite case.
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