An easy guide to handle tax for expat freelancers in Spain

Every solo has been there. You’re flying high on the excitement of moving to a new country with a great business plan in mind. Then a needlessly confusing administrative system drags you down and rains on your parade for good measure.

But it doesn’t have to be that way.

This easy guide demystifies the complex, contradictory world of tax for expat freelancers in Spain so you can breeze through your admin and concentrate on the fun side of your work. 

We’ll look at the different payments you need to make, how to make them, and reveal any deductions you qualify for. But first, a bit of level-setting with FAQs.

FAQs: Tax for Expat Freelancers in Spain

How do I know if I’m a Spanish resident for tax purposes?

This question is smarter than you might think, so pay attention. 

There are two criteria for determining your tax status. 

1. You’re a Spanish resident according to the tax authorities if you spend more than 183 days (half a year 😉) in total in Spain. 
2. You use Spain as your main base for work. Unless you prove otherwise, the government will assume your regular place of residence is where you primarily work from.

What taxes do expat freelancers pay in Spain?

There are three main taxes for expat freelancers in Spain:

1. Income tax (IRPF) that you pay on your earnings
2. Value added tax (IVA) that everybody pays on products and services
3. Social security (la cuota de autónomos). Technically not a tax, but an obligatory monthly payment for social security services

What if I can’t pay my taxes?

Sometimes it comes to the tax return deadline and, for whatever reason, you’re coming up short. In this case, for VAT, income tax, and social security payments, you can ask for an extension, which pushes it back to a later date. 

How do Cl@ve and a digital certificate help to pay tax for expat freelancers in Spain?

Cl@ve and a digital certificate are two online identification methods that you use to log in to the tax and social security portals, respectively the Agencia Estatal de Administración Tributaria (AEAT) and Tesorería General de la Seguridad Social (TGSS). 

Although it can be slightly tricky to sign up to the Cl@ve and digital certificate systems, they will save you a whole heap of time and stress when you need them. 

IRPF: Income tax

Expat freelancers living and working in Spain have to pay income tax on all their income — whether payment comes from Spain or abroad. 

What are IRPF rates for freelancer expats?

Unlike value added tax and social security contributions, income tax for expat freelancers in Spain fluctuates greatly depending on your region, marital status, and children. 

Spain’s general IRPF rates vary from 19% to 47% in a progressive system, with regional taxes added on top. The tax brackets are as follows:

• Up to €12,450: 19%
• €12,450 — €20,200: 24%
• €20,200 — €35,200: 30%
• €35,200 — €60,000: 37%
• €60,000 — €300,000: 45%
• More than €300,000: 47%

Calculating exactly what you owe is a bit of a minefield. That’s why most solos leave it to a specialist in tax for expat freelancers in Spain.

How do I pay the IRPF in Spain?

Register with the tax authorities

The first step to pay tax for expat freelancers in Spain is to register with the tax authority — La Agencia Tributaria. 

1. Get your foreign identity number (NIE) from the foreign residents office (Oficina de Extranjería) or police station. This must be done within 30 days of arriving in the country.
2. Complete the form Model 30 and take it with you to the Agencia Tributaria office. Alternatively, you can complete the process online, an option that became available during COVID restrictions. 

If you’re short on time and you haven’t quite got to grips with the lingo, Xolo will register you as an autónomo for free if you keep your subscription for six months. 

Once you’re registered, every invoice you issue to clients in Spain will include a 15% IRPF retention on it. This basically means your client pays your tax on your behalf. However, the 15% is not a true reflection of what you owe, and you have to make up the difference in your quarterly and annual tax returns — so keep some cash hidden away to avoid any nasty surprises.

For foreign clients, you can’t include your IRPF payments on invoices, but you will make up for it at the end of every quarter. 

If this sounds a little complex, it is. But don’t let that put you off.

How to submit quarterly IRPF tax returns in Spain

Freelancers who receive 70% or more of their income from foreign clients are obliged to file tax returns in Spain every quarter to stay compliant. Think of it as an installment on your annual tax return.

Basically, despite any IRPF retained from your Spanish invoices, you pay 20% of your yearly earnings to date every quarter. But don’t worry, all your accounts will be balanced out in your annual tax return. 

So how do you submit a quarterly tax return in Spain? Here’s a five-step guide.

1. Spanish bureaucracy loves a form, and in this case, it’s Model 130. This is where you upload all your expenses and invoices except invoices to other EU countries. 
2. For invoices to EU countries, it’s Model 349. To do that, you need to be part of the Register of Intra-community Operations (ROI) — more on the ROI in another article.
3. In both cases, using your digital certificate or Cl@ve, you can enter the system and complete the form. 
4. You’ll then receive a certificate telling you how much you need to pay to make up your deficit. 
5. To avoid a fine, make your payment before the 20th day of the following month. This means you have until 20 April, 20 July, 20 October, and 20 January to clear outstanding debts.

How to submit annual tax returns

Commonly known as la declaración de la renta, annual tax returns in Spain cause a 50% increase in headaches (probably, don’t @ us) between April and June when they are to be submitted. The main source of stress is the labyrinth of boxes to fill out in the Model 100 form, and almost everybody gets some form of help for annual tax returns in Spain.

Based on a January through December tax year, the Agencia Tributaria calculates the difference between what you owe and what you have already paid. Then you’ll get a nice rebate or a notification telling you how much you have to fork out.

Am I eligible for any IRPF deductions?

Income tax for expat freelancers in Spain has a series of deductions. But before you get too excited, you can’t just upload your weekly grocery bill and hope to make some savings. IRPF deductions are only for expenses related to your work. Any receipts have to come with a justification and cash payments are not accepted. 

With those caveats out of the way, let’s get started.

Bills

If you’re working from a home that you own, you can deduct around 30% of bills such as electricity, phone and internet, water, and gas. Unfortunately, renters aren’t included in this deduction. 

Food

As we mentioned before, you can’t deduct your groceries. But if you’re travelling for business, or attending a meeting over dinner, you can submit your restaurant receipts in your tax returns and get a little kickback. 

Business expenses

There is a long list of business expenses that can be deducted entirely from tax for expat freelancers in Spain. Here are some of the most common ones:

• Office supplies
• Payments to staff, consultancies, lawyers, and accountants 
• Professional training, including materials and workshops
• Transport costs: Public and private, tickets and gas

Remember that all of these need to be justified, and trying to expense your family holiday will likely lead to a sticky situation with the Agencia Tributaria.

For a more exhaustive list on everything related to expenses, check out the expenses page in Xolo’s FAQs.

The 7% IRPF payment

In your first year, income tax for expat freelancers in Spain can be 7%, rather than 15%. You will still have to make up the difference to your true IRPF obligations in your annual tax return — so don’t think of it as a permanent discount. Having said that, it is a nice little boost for newbies trying to get their business off the ground.

As is quite clear by now, income tax in Spain isn’t a newbie’s game. But help is always at hand! When you sign up with Xolo, you get a personal gestor (accountant) who can help you sort through your deductibles and offer advice on how to get everything you are eligible for.

IVA: Value added tax

Your VAT (we’ll use the Spanish term “IVA” in this article) payments are a simple balancing act between IVA paid and IVA collected. Just as you pay IVA on products and services related to your work (IVA paid), your clients pay IVA on each of your invoices (IVA collected). 

Your invoices will include a standard 21% in IVA, which you collect and hold until your quarterly tax returns, when you pass it on to the Agencia Tributaria. In the same quarterly tax returns, you’ll submit receipts for business-related expenses. 

If you’re working with clients in the education or certain artistic sectors, they may be exempt from paying IVA, so bear this in mind if something sounds fishy. 

What are the rates for IVA in Spain?

The standard rate for IVA is 21%. This applies to almost all services and products, with the following exceptions:

Reducido — 10% for transport, exhibitions, pest control, and more.
Superreducido — 4% for food essentials, medicine, newspapers, and more.

Am I eligible for any IVA deductions?

Aside from the reduced rates mentioned before, you can discount a few little extras to help you save. Like the IRPF, you can deduct business-related expenses such as a tank full of gas for your van or that ergonomic keyboard that keeps popping up on Instagram. 

How do I pay the IVA in Spain?

Just like your IRPF payments, your IVA tax returns come every quarter and clear up any doubts between you and the Agencia Tributaria. 

This time, you submit all your invoices and expenses through the glamorous Model 303. You’ll get a certificate in return telling you how much you owe, and have the same deadline to pay it by — the 20th day of the following month. 

La cuota de autónomos: Social security

Technically not a tax, the cuota de autónomos is still a payment obligation for you as a solo. This contribution goes to the public health service as well as your retirement fund and if you don't pay, the authorities will be in touch!

How much is la cuota de autónomos?

La cuota de autónomos, or the freelance quota, has always been a point of contention among freelancers in Spain. Apart from special circumstances, all solos had to pay the same minimum rate of €294 to the social security authorities (TGSS). 

However, as of 1 January 2023, the freelance quota changes to a progressive amount, in line with your income. The changes will come in incrementally until 2031 but the government has only released definite figures until 2025. Below, you can find a handy guide to show the minumum payable as an expat freelancer in Spain. 

But first, why do we keep saying “minumum”? 

Basically, solos can choose to contribute more to social security, but 85% choose not to. It might seem an obvious choice, but freelancers in Spain receive just 59.4% of the state pension that employed workers receive, so it’s worth discussing your options with an expert. 

Anyway, back to those freelance quotas.

You set your own payment rate with the TGSS based on expected earnings, but don’t worry if you haven’t got it exactly right. At the end of the year, the social security and tax authorities have a little conversation and will send you a bill (or a welcome rebate!) to keep you compliant.

Am I eligible for any deductions on the freelance quota?

Until the end of December, new freelancers can still qualify for a nice €60 payment per month for an entire year. 

And with the new system, there’s still a nice incentive of €80 for your first 12 months. In your second year, you still qualify for the €80 monthly social security payment as long as you don’t pass the Spanish minimum wage — currently €1116 per month. 

How do I pay the freelance quota in Spain?

Although it might seem too good to be true, paying your freelance quota doesn’t require any forms! 

But you do have to first register with the social security agency (TGSS) within 30 days of registering with the tax authorities. As far as tax for expat freelancers in Spain goes, registering with social security is mercifully easy. 

Simply access the TGSS website and head to the registration of self-employment drop down. Enter with your Cl@ve or digital certificate, and fill in the Model TA 0521 form. You can then set up a standing order and take one monthly admin task off your mind. 

Of course you could always skip the admin quagmire and avoid coming up against any language roadblocks by letting Xolo take care of your social security registration. 

With Xolo, tax doesn’t need to be taxing

Tax for expat freelancers in Spain is a confusing, time-consuming world unless you’re an expert in the field. That’s why so many solos decide against this uphill struggle and get some professional help. Local experts who know the system inside out saves self-employed workers hours every month, as well as potential legal implications for simple admin errors.

And that’s where Xolo comes in. 

Whatever your situation, we’ve been there and done that. So instead of fighting a losing battle against Spanish bureaucracy, get in touch with Xolo and leave it to us.

✔️FREE registration with social security and the tax authority

✔️Tax returns and your freelance quota all sorted on your behalf

✔️A team of friendly local experts for any questions or clarifications

So if you want to spend less time navigating forms and more time on growing your business, sign up for Xolo today!

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.