How to work for foreign companies while residing in Spain
This blogpost offers guidance for freelancers working for foreign companies while residing in Spain. The key takeaway action points are as follows:
- Meet all the remote work and Spanish residency requirements.
- Learn essential vocabulary for Spanish Bureaucracy.
- Register as an expat freelancer in Spain to pay taxes accordingly.
- Invoice forewing clients as freelancer following specific rules and details.
- Pay all the mandatory taxes and contribution for expat freelancers: IRPF, VAT and social security contribution.
- Simplify it with Xolo. We're the all-in-one service for expat freelancers in Spain.
The Pandora's box of remote work is wide open and there’s no closing it. Employees across all industries know that a whole heap of jobs can easily be done from home, and many bosses are fully supportive.
But while you’ve been daydreaming about catching a breathtaking sunset from your apartment in Madrid, or soaking up some rays on one of Barcelona’s beaches during your lunch break, have you ever seriously wondered: Can I work for a foreign company while living in Spain?
Put simply, yes you can. The dream of moving to Spain and keeping your job is now a very realistic prospect, especially with a trusted partner like Xolo at your side.
Sure, working for a foreign company while living in Spain isn’t the easiest process to get started, but it’s definitely possible if your job allows it, and the benefits far outweigh the negatives.
That’s why we’ve produced this article, which will look at all the ins and outs of freelancing with international clients from Spain. From VAT and social security to invoices and tax returns, we’ll explain all the admin and give you some hot tips on how to make the most of your freelance journey.
But before we get to the meaty business, we’ll first give you a quick vocab lesson that will help you navigate the choppy waters of Spanish bureaucracy.
- Agencia tributaria (AEAT) — The Spanish tax agency
- Autónomo — a freelancer
- Cuota de autónomo — Your monthly social security payment
- Darse de alta (de autónomo) — Register (as a freelancer)
- Declaración trimestral — Your quarterly tax reports, which Xolo can take care of for you
- Factura — Invoice
- Funcionario — Any civil servant you encounter
- Gestor — An accountant
- Hacienda — The Spanish treasury department
- IRPF — This will appear on all your invoices and is simply translated as your personal income tax
- IVA — Just like above, but for value added tax (VAT)
- (La Declaración de) la Renta —Your tax return (submission). With a fiscal year from January to December, you should submit it between early April and late June.
- NIE — Your número de identidad de extranjero, or tax identification number for foreign workers in Spain
- Seguridad social — Social security. The payments you make for healthcare, your pension, and more.
Registering as an expat freelancer in Spain
Although you’re billing a different country, when you work remotely from Spain, you need to be a tax resident. There are a few hoops to jump through here, from getting a work visa and your NIE to registering with the tax and social security offices. The process can be tricky, especially if you’re not from an EU country. So, if you’re still at this stage, check out our guide on how to register as an autónomo in Spain.
There’s some exciting news for the future on this front.
The government is in the process of creating a Digital Nomad Visa, specifically aimed at remote workers living in Spain. Slated for approval in January 2023, it will allow you to live in Spain and freelance for foreign clients for between six and 12 months, with the possibility of two later extensions.
EU citizens with freedom of movement (sorry, Britain) already have the luxury to arrive and get started. But the Digital Nomad Visa represents a much easier pathway to work and live in Spain for budding freelancers from the rest of the world. So if you’re in that category, watch this space!
How to invoice foreign clients as a freelancer in Spain
Freelancing with international clients means invoicing follows different rules compared to national customers. So forget what you’ve heard through the grapevine and pay attention here.
What to include on Spanish invoices for foreign clients
- Invoice number
- Issue date
- Your full name
- Your registered address
- Your foreign identity number (NIE)
- The customer’s fiscal name
- The customer’s fiscal address
- The customer’s tax ID number (NIF)
- The customer’s VIES VAT number (for EU-based clients)
- The total amount for your services
- The payment method
If you’re looking at that list and wondering where your tax payments are, don’t worry, we’ll get to that right away.
Income tax (IRPF) on invoices for foreign clients
When you’re working remotely in Spain for a foreign company, your clients can’t pay your taxes on your behalf, which is great news for your invoice creation — simply leave it out.
But it does leave you in debt to the Agencia Tributaria. As we’ll see in the section on tax returns, solos in Spain freelancing with international clients make their IRPF payments through quarterly tax returns and balance their books with their annual tax return.
VAT (IVA) on invoices for foreign clients
If you’re new to the freelancing game, VAT is a tax that your clients pay, but that you have to hold onto before passing it to the tax agency at the end of every quarter.
Just like your income tax payments, if you’re working for a foreign company while living in Spain, your clients don’t pay VAT, which gives you one less thing to worry about. In all cases, your clients will take care of their VAT in their own country, so you can leave it off your invoices to foreign companies.
However, if you’re working for an EU-based company while living in Spain, you do have to take care of some administrative work before you get started. Because of an agreement between EU countries, you and your client need to first get permission to operate as two EU-based actors. You can sign yourself up via form 037, and if you want to check your customer’s status, enter their registered name and VAT number on the VIES VAT checker website.
This will put you on the Register of Intra-communitary Operations (ROI), part of VIES (VAT Information Exchange System). With the VIES VAT number you get upon registration, you can complete your invoices for EU-based clients.
Quick reminder: If you don’t use your VIES VAT number for 12 months, it will expire and you’ll have to reapply through form 037.
Getting paid by foreign clients
Surely you haven’t forgotten about getting paid! It’s the reward from your hard work and your passport to the good life, so you need to get it right.
There are myriad ways of receiving payment as a freelancer with foreign clients, and some are clearly better than others. Channels like PayPal and Payoneer, and even your bank, charge a high exchange rate, and often extra fees. To make sure you’re not losing money, work out which app offers the best rates and lowest commissions, and confirm which currency your client will pay you in.
One issue many freelancers find with international payments is identifying which payment is from which invoice. When your bill is in one currency but the payment comes through in another, tracking which invoices have been paid is a stressful business. Well, unless you’re on a platform like Xolo, which is specifically designed to make it easy.
With Xolo, you do all your billing from one simple dashboard. Whenever money reaches your account, you’ll be automatically notified and the invoice will be marked as paid. For a more detailed breakdown, take a look at Xolo’s FAQ page on receiving payments.
Tax returns for expat freelancers working with international clients
Working remotely in Spain for a foreign company is great for simplifying the taxes on your invoices — you simply remove them. But that does mean some big batch payments at the end of every quarter, so don’t go spending money that is destined for the tax man.
Quarterly IRPF tax returns for freelancers with foreign clients
As we covered before, when you’re working with foreign clients, they won’t take any income tax contributions out of your invoice and pay them on your behalf. Therefore, it’s up to you to file quarterly tax returns, paying 20% of your year-to-date income tax to stay on the Agencia Tributaria’s good side.
All of this tax is calculated when you submit form 130 and you’ll receive a borrador — a certificate telling you how much you owe. Like your VAT payments, payment is due by the 20th day of the following month if you want to avoid a fine. In layman’s terms, these months are January, April, July, and October.
Quarterly VAT tax returns for freelancers with foreign clients
As you’re not collecting any VAT from your clients, it’s unlikely that you’ll have much to pay when you submit form 303 at the end of March, June, September, and December. But keep hold of your business-related expenses, because you could end up getting a nice tax rebate.
If you’re working for a foreign company while living in Spain, you have an advantage over those with national clients. Those working with Spanish companies have to hold onto 21% of every invoice to deliver it to the Agencia Tributaria at the end of the quarter, making budgeting difficult. In any case, if you’re worried about balancing your books, head to our page on budgeting and costs of being a freelancer in Spain.
One thing to remember: if you’re working remotely in Spain for a foreign company, but your Spanish clients make up over 70% of your income, you don’t have to complete quarterly Spanish tax returns.
Annual tax returns — la declaración de la renta
If it was confusing that you pay 20% of your year-to-date earnings in your quarterly IRPF tax return, you’re not going crazy. This flat percentage works as an installment toward your annual income tax payments.
In springtime every year, you have the joy of filling in form 100 — la declaración de la renta. In brief, it calculates the difference between what IRPF you have already paid and what you owe (or what you are owed), and balances the books for the previous January to December tax year.
Social security payments — la cuota de autónomos
In the third major recurring payment for self-employed workers in Spain, we present the freelance quota, or monthly social security contribution.
Before you ask, you can’t avoid it by getting private insurance or simply avoiding the doctors, and any attempt to avoid it is going to land you in a lot of trouble.
At least it’s a relatively easy process. Once you’re registered with the TesorerĂa General de la Seguridad Social, you can take care of it with a standing order. For more detail, take a look at our article on the freelance quota in Spain from 2023.
9 top tips for freelancing with international clients from Spain
1. Communicate like a pro
Communication is king when it comes to freelancing — especially overseas. Find a channel that suits you both best and keep them updated. There’s nothing worse for a client than when you go M.I.A.
2. Agree on working terms
Even if you’re keeping the same job when you come to Spain, your conditions have changed. Discuss areas such as connectivity hours, time zones to work in, cybersecurity and more.
3. Create an onboarding process
If you spread your wings and find your own clients, a replicable onboarding process is both easy and professional. It’s a chance to get to know your client and put down in writing what you expect from one another.
4. Build a relationship of trust
Trust is everything in the freelance world, and using a time tracker is the best proof you can get for an honest representation of your work. From simple on-off software to advanced tools that track the number of keystrokes, there’s a lot out there.
5. Organize invoicing in advance
Most solos don’t want to be scrambling for fiscal details at the end of every month. When you begin a professional relationship, make sure to agree on payment methods and organize VIES VAT numbers for EU clients.
6. Set up a personal routine
Out of the office, it can be hard to stay on track. A beer by the beach will ALWAYS be tempting, but it’s only when you don’t have a routine that you realize the value they bring.
7. Budget for the future
With the unstable working position you put yourself in, financial knowledge is a huge plus for freelancers. It lets you forecast your upcoming tax and social security payments, cutting a massive amount of stress out of your day.
8. Ask for help when you need it
We’re not all financial experts, and Spanish bureaucracy isn’t exactly known for its clarity or coherence. In fact, it’s very uncommon to meet a freelancer in Spain who doesn’t hire an accountant of some sort. So don’t be afraid to call an expert when things get confusing.
9. Get a side hustle
You’re already set up as a freelancer, so you’re now your own boss. If you’ve got a dream project in mind and you can spare the time, take on extra work to boost your salary and get that sense of fulfillment.
Xolo — simplifying solo life
Sure, tax returns, invoices, and social security payments sound like a drag, but they don’t have to be! With Xolo, you can forget about all those complex processes and enjoy all the benefits of working for a foreign company while living in Spain:
✔️Keep your current job and salary
✔️Gain that easy-going Spanish lifestyle
✔️Leave all the hard admin to the pros at Xolo
Xolo is an all-in-one service for freelancers that covers all your needs as an expat freelancer in Spain. With a custom-made platform and a team of expert accountants, you get full access to all the services you don’t have the time or headspace to deal with yourself:
✔️Free registration as a freelancer in Spain
✔️An easy platform for creating and sending compliant invoices
✔️Quarterly tax returns done on your behalf
So if the time for excuses is over and you’re ready to turn that daydream into reality, sign up for Xolo today and get the guidance you need for a freelance career in Spain.
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.