All you need to know about tax addresses for self-employed workers in Spain

James McKenna
Written by James McKenna
on julio 04, 2023 6 min of reading

Becoming a freelancer in Spain is complex — even for Spaniards. But for expats coming up against terms like domicilio fiscal and domicilio de la actividad, it can be a real uphill struggle.

At Xolo, we want to smoothen your path toward freelance freedom, and today it’s time to demystify the idea of a tax address for self-employed workers in Spain.

In this article, we’ll switch the complex legal lingo into simple, accessible information to help you understand:

  • What a tax address means for freelancers in Spain
  • The difference between your tax address, address of activity, and residence
  • How to register your address of activity with the tax authorities

Even with our complete guide, we know that every freelancer is different. So if you have any questions that are unique to your situation, remember you can reach out to the experts at Xolo for one-to-one advice and guidance.

What is a tax address for self-employed workers in Spain?

A tax address for self-employed workers or a tax domicile for a freelancer, it’s all the same thing, so don’t worry if the wording shifts. They’re both the English translation of domicilio fiscal de un autónomo

These are just fancy terms that refer to the place you call your business home. In other words, it's the location you've registered as the central hub for your freelancing activities with the Spanish tax authorities

It's actually a pretty big deal. Firstly, it's where all your tax-related documents and notifications will be sent. It's kind of like your business's postal address in the world of tax. 

Your tax address also determines which tax office you need to register¡ with. This has implications on how much tax you’ll pay, as income tax obligations vary depending on which office you’re paying to. Spanish newspaper Cinco Días created an income tax calculator where you can compare regions in terms of income tax payments.

Your tax domicile could be your home, a coworking space, or wherever you primarily carry out your freelancing work. Within reason, of course. Just because you spend most afternoons at that beachside café, it doesn't make it your tax address! Your location has to be somewhat stable and permanent.

Keeping your tax address up-to-date and correct is one of those pesky little tasks that will rarely be a top priority for freelancers, but can land you in big trouble if you fail to do it. More on registering and updating your tax domicile later 😉.

What’s the difference between an expat freelancer’s tax address and their residency?

First things first: Your tax address and residency may be the same, but it’s not guaranteed.

Your residence, or domicilio habitual, is simply where you live. It's the place where you hang your hat, cook your meals, and probably where you do most of your work. Don’t forget to make your residency official, a process called empadronamiento. You have to do this at your local town hall, which you can find online.

Your tax address, tax domicile, or domicilio fiscal on the other hand, is all about your business. It's the address you provide to the tax authorities for all things tax-related. As we mentioned earlier, it's the spot where you primarily conduct your work or the headquarters of your freelancing operations.

What’s the difference between a tax address and an address of activity?

Now that we've covered tax addresses and residency, we’re going to add a third element into the mix: Your address of activity, or domicilio de la actividad.

Your address of activity is where you physically carry out your freelancing work. Again, most expat freelancers, such as writers and graphic designers, will likely work from home. However, a yoga instructor might work from their own studio or in an established business that has hired them. 

Similarly, you might be registered in a coworking space, but do most of your work at home. In this case, your tax address would be the coworking space, while your address of activity is your home. 

You might now be wondering why your tax address, residency, and address of activity matter. And who could blame you? It’s hardly an exhilarating element of freelance life.

Basically, the Spanish tax authorities care about where you make your money. The address of activity can impact the local taxes you pay, like the Economic Activities Tax (IAE). Also, certain expenses related to your address of activity could be tax deductible, so it's important to get it right.

Remember, both your tax address and your address of activity should be officially registered with the tax authorities. That way, they know where to find you (or at least, your business) when it comes to tax time.

How do you choose your tax address?

Alright, now that we've got our terms straight, let's move on to the practical stuff: How do you actually define your tax address as a self-employed worker in Spain?

1. Identify your primary place of business

This is the place where you carry out most of your business activities. As mentioned earlier, it could be your home, a coworking space, or any other stable location where you do your freelancing work.

2. Fill out the necessary paperwork

To officially assign your tax address, you'll need to fill out Form 036. This form is basically your registration with the tax agency (Agencia Tributaria) and includes information about your business, including your tax address.

3. Submit your form

Once you've filled out the form, you can submit it online through the Spanish tax agency's website (Agencia Tributaria), or in person at your local tax office. Remember to keep a copy of the form for your records. 

4. Wait for confirmation

After you submit the form, the tax agency will process your information. They'll send a confirmation to your registered tax address when your registration is complete.

5. Keep your addresses up-to-date

If you’re moving house, switching your tax address, or changing your primary location of work, don’t forget to let the Agencia Tributaria know! You’re unlikely to be thrown straight into prison for missing this step, but it can lead to a messy, time-consuming administrative situation if your documents don’t align.

Of course, if you want to streamline the registration and updating of your tax address, sign up with Xolo and our local experts will do it on your behalf.

How do different tax addresses affect expat freelancers?

Let’s be honest, Spain has a LOT of places you’d want to live in. You have the bustling cities of Madrid and Barcelona, the year-round beautiful weather of the Canary Islands, and the stunning culinary delights of the Basque Country. 

And while your tax address will affect how much tax you pay, the differences are very small. Therefore, we would strongly advise you not to prioritize taxes when choosing to move to Spain as a freelancer. You’ve got to consider other costs of living, business opportunities, and quality of life. After all, freelancing isn’t about avoiding taxes, it’s about creating a lifestyle that gives you freedom and pride in what you do. 

But just for a bonus bit of info, here is a rundown of a few differences that your tax address can have on your life.

1. Madrid

The capital of Spain is known for having one of the lowest regional income tax rates in the country. This could potentially result in lower tax bills, particularly for higher earners. The bustling city is also home to numerous coworking spaces, which can be beneficial for networking and business growth.

2. The Canary Islands

This archipelago off the coast of Africa is not just a vacation paradise, but also a tax haven. The Canary Islands have a special economic and tax regime, which includes lower VAT rates and certain income tax benefits. 

3. Andalusia

This southern region is known for good inheritance and gift tax laws, which might be beneficial if you're planning long-term wealth management. It recently joined Madrid in scrapping wealth tax too. Andalusia also boasts a vibrant expat community, providing a supportive network for freelancers.

4. Basque Country and Navarre

These northern regions have their own tax regimes, independent from the rest of Spain. That means they set their own tax rates, which offer freelancers more beneficial conditions than in other regions. 

How to simplify your freelancing journey in Spain

Understanding how to choose your tax address as a self-employed worker in Spain is important, but it’s really the absolute tip of the iceberg. Becoming a freelancer isn’t easy and there are a plethora of other skills to master, forms to fill out, and processes to understand. Spain is uniquely complex in this regard, and if you’re new to the country, it can be overwhelming. But that doesn’t mean you should abandon your dream. 

Almost all freelancers in Spain use a gestoría — a financial management entity that organizes all your bookkeeping, accounting, and taxes. 

Sign up to Xolo for the full freelancing package

Xolo is the next generation of gestorías, allowing self-employed expats like you to handle invoicing, expenses, and taxes online. We were made by freelancers for freelancers, and our friendly team of experts is on hand to offer clear guidance on the Spanish system in English.

✅ Invoicing: Xolo helps you create automated invoices from professional templates in minutes, saving you time and effort every month.

✅ Expense tracking: With Xolo, you can submit all your expenses to our team, lowering your taxable income and saving you money over time. We’ll track your business expenses, helping you stay organized and informed about your financial situation.

✅ Tax management: Xolo guides you through the tax registration process, including registering your tax address and address of activity. It also helps you stay on top of your tax returns and other obligations, so you don't have to worry about missing deadlines or making errors.

✅ Professional support: Got any other questions? Xolo's customer support team is here to help. They understand the challenges of freelancing in Spain and are on hand to provide the support you need.

So rather than spending all your time in your new country trying to work out every little admin process by yourself, leave it to the experts. Sign up for Xolo today and start simplifying your freelance career.

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About James

James McKenna has been a freelancer since 2017, working in subtitling, translation, and his main passion — writing. He loves nothing more than falling down a rabbit hole, a habit that has helped him specialize in areas as diverse as biotech, climate change, higher education, and business strategy.

Based in Barcelona, James learned the ropes the hard way, making mistakes that turned into valuable learning experiences. After working hard to establish himself, he is now working smart, and is always on the lookout for ways to streamline his business.

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