The Expats guide to becoming self-employed in Spain

Xolo
Written by Xolo
on julio 11, 2024 • 4 min of reading

Navigating the journey of becoming self-employed in a new country can be both exciting and challenging, especially for expats in Spain. 

Everything from taxes to documentation and no-nos between different countries might be enough to overwhelm an ill-prepared nomad. Together these red-tape bureaucracies form a challenging but surmountable barrier between you and your work. 

We aim to provide essential information and practical tips to help you understand these intricacies: tax residency, Beckham's Law, declaring foreign properties, and the tax implications of opening an entity in Spain. Whether you are considering a move to Spain or have recently arrived, this guide will help you stay compliant with Spanish tax regulations and make the most of your new business venture.

When does tax residence begin in Spain?

It’s important to know when you need to begin considering your newfound tax residence. Understanding and meeting these criteria is how you get ahead of the game. You may find that you do not need any extra steps.

Spanish tax residency typically begins when you meet one of the following criteria:

  • You spend more than 183 days in Spain during the calendar year.
  • Your primary economic interests or activities are in Spain.
  • Your spouse and/or minor children reside in Spain.

Check a few of these examples and you may just discover your tax residency is up-and-coming or that now is the time:

  • You arrived in Spain at the end of February.
  • Your nomad visa approval is at the end of March.
  • Your residence permit card was received in early June.

Your tax residency generally begins either when you surpass 183 days in Spain or from the time you establish primary economic interests there (e.g., through substantial business activities). Opening an IP (individual business) itself does not determine the start of tax residency but can be part of establishing your economic ties to Spain.

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Chances of receiving Beckham's Law treatment as an “autónomo” on a Digital Nomad Residency

Beckham's Law is designed for employees, but recent changes have extended it to include some self-employed individuals (autónomos). To qualify for this in Spain, specific conditions must be met, such as:

  • You carry out an economic activity considered "entrepreneurial", i.e., you must be in possession of an ENISA report in this respect.
  • You are a highly qualified professional who provides services to an entity considered an "emergent" Spanish start-up company (the company should be able to prove this "emergent" and technological status with an ENISA report) or develop research, training, development, or innovation activities aimed at this type of entity.

While there is a growing trend to include more remote and digital nomad workers under Beckham's Law, acceptance as an autónomo on a Digital Nomad Residency is less straightforward and would depend on meeting the specific criteria and the interpretation by the Spanish tax authorities.

 

🇷🇺 Declaring a property in Russia and paying taxes in Spain

Spanish tax residents are subject to worldwide taxation. For many this includes owning property in Russia. If this is feeling a bit tricky, Xolo is here to help you navigate your specific hurdle. It’s important to note:

  • You must declare all your global income and assets, including properties in Russia.
  • The Modelo 720 form is used to declare overseas assets worth more than €50,000, including real estate, bank accounts and securities.

Whether you need to pay taxes in Spain for your Russian properties depends on a couple of factors:

  • The specific tax treaty between Spain and Russia to avoid double taxation.
  • Spanish tax regulations regarding income from foreign property (e.g., rental income).

Use Xolo to handle these accounting obligations and stay ahead of the loop.

 

Opening an entity in Spain and tax implications for income earned in another country

If you open an entity in Spain, your worldwide income becomes taxable in Spain from the time you become a tax resident. There are two times throughout the year you should take note of:

  • At the Beginning of the Year: If you open an entity at the beginning of 2024 and become a tax resident, your global income for the year, including income from another country, will be subject to Spanish tax laws.
  • In the Middle of the Year: If you open an entity in the middle of the year and have already spent more than 183 days in Spain or established economic interests, you would still be considered a tax resident for the entire year. Thus, your income for the whole year, including that from another country, would be taxable in Spain.

Expats becoming autónomos in Spain involve the understanding and navigating of various tax regulations and requirements. Ensuring compliance with these regulations is essential to avoid potential issues and make the most of your new business venture in Spain.

💡 Xolo handles the registration process for you free in under 24 hours

Frequently Asked Questions

If I obtain a Digital Nomad Visa and become autónomo: Do I become a tax resident in Spain immediately?

When you obtain a Digital Nomad Visa and become an autónomo in Spain, you do not automatically become a tax resident. Tax residency in Spain is typically determined by the 183-day rule: if you spend more than 183 days in Spain within a calendar year, you are considered a tax resident for that year.

Do I need to pay taxes in Spain for the whole year? Even on the income received prior to opening an autónomo in Spain?

If you become a tax resident, you are generally required to pay taxes in Spain on your worldwide income for the entire year, regardless of when you became an autónomo. This includes income earned prior to opening your autónomo status. As an autónomo you'll be entitled to pay quarterly taxes for your economic activity.

Do the answers to the questions above depend on the time of the year I move to Spain? Example: I moved to Spain in September, got my Nomad Visa in October and opened my autónomo in November:

The timing of your move to Spain can impact your tax residency status. For example: If you move to Spain in September, get your Nomad Visa in October, and open your autónomo in November, you would not exceed the 183 days within that calendar year.

In this case, you would not be considered a tax resident for that year. However, you would need to monitor your days in Spain for the following year to determine your tax residency status. Also it's important to prove your residency outside (with a certificate of residency or other type of proof).

In summary, the tax residency status and obligations in Spain are influenced by the total number of days spent in the country within a calendar year. It's crucial to keep track of your time in Spain.

Xolo is here to help you navigate this process, providing support and guidance to ensure you meet all necessary legal and financial obligations.

How does Xolo help expats in Spain

Navigating the intricacies of freelancing in Spain can be daunting, but Xolo is designed to help. Xolo offers everything you need as an expat in Spain:  

  1. Simplified Registration: Xolo takes care of the entire autónomo registration process, ensuring you meet all legal requirements.
  2. Invoicing Software: Xolo provides intuitive invoicing software that supports multiple currencies and automatically calculates VAT when needed.
  3. Tax Compliance: Stay on top of your tax obligations with Xolo’s expert guidance. Personalized quarterly and annual tax filings ensure you avoid any penalties.
  4. Priceless Support: Whether you have questions about VAT, social security contributions, or currency exchange, Xolo’s team of experts is available to provide support.

Invoicing international clients as a freelancer in Spain involves understanding VAT rules, currency conversion and legal registration requirements. For expats in Spain, Xolo offers unshakeable support, making the process of freelancing and invoicing simple and efficient.

Take the stress out of freelancing with Xolo’s comprehensive service, and focus on what you do best: your freelance work.

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