Registering as Self-Employed in Spain as a Foreigner

You need a foreigner's identity number (NIE), a right to work for yourself in Spain, and a Spanish address. Citizens of the European Union need nothing more. Others need a residence permit that allows self-employment: the general self-employment permit, the international teleworker visa where it applies, or a permit obtained through a family member.

You do not need a company, a business bank account or an office. A separate bank account is strongly advisable, but it is not a legal requirement.

• The activity code. Professional activities and business activities are taxed differently: withholding on invoices to Spanish clients, the instalment return, even VAT exemptions for teaching or healthcare.
• The start date. Costs incurred before it are harder to deduct, and it sets the clock for the reduced social security contribution and for the reduced withholding rate available in the first years.
• The contribution base. A lower base means a lower monthly payment and lower future benefits. It can be changed several times a year, so the first choice is not final, but the estimate should be realistic.
• The special tax regime for new arrivals. Some self-employed newcomers can apply for the regime known as the Beckham law, through the entrepreneur or highly qualified professional routes. The application has a six-month deadline that cannot be extended. See Beckham law before registering, not after.

New registrants generally qualify for a reduced flat contribution during the first twelve months, with a possible extension if income stays low. It has to be requested at registration.

From the first quarter after registration, returns are due whether or not you have invoiced anything. That is where our monthly bookkeeping takes over. Registration with us is €175 when it comes with the monthly service.

If you are an American who will be paid through your own LLC, register through the LLC service, because the invoicing is set up differently from day one.

1. Day 0. We agree the activity description, the start date and the expected income. You send your NIE, residence document and address.
2. Days 1 to 3. Tax registration is filed. It is effective from the date declared.
3. The same days. Social security registration, with the contribution base that matches your expected income and the request for the reduced first-year amount.
4. Week 1. If you will invoice EU businesses, the request for the EU VAT register goes in. You open or designate a bank account for the business.
5. Weeks 2 to 4. First invoices. We set up your numbering and the wording for each type of client.
6. End of the first quarter. First returns.

The order matters. Social security registration must not be later than the start date declared to the tax agency, and invoices should not be dated before either.

The tax agency classifies activities using a list of codes. The same person can describe the same work in ways that fall under different codes, with different consequences:

• Professional activities (consultants, programmers working as independent professionals, translators, designers) invoice Spanish businesses with income tax withholding, and may be excused from the quarterly instalment if most income is withheld.
• Business activities (commerce, some online services, hospitality) invoice without withholding and always pay the instalment.
• Teaching and healthcare may be exempt from VAT, which also removes the right to recover VAT on costs.

More than one code can be registered, and codes can be added later. Registering under a code that does not match what you actually do is the commonest error in registrations done in a hurry.

The international teleworker visa, often called the digital nomad visa, allows self-employed work mainly for clients outside Spain, with work for Spanish clients limited to a fifth of the total. That limit should be monitored in the bookkeeping, because exceeding it is an immigration problem and not just a tax one.

Holders of the general self-employment permit were authorised for a specific activity and, at first, a specific region. The tax registration should match what was authorised.

Non-lucrative residence does not allow work at all. Registering as self-employed while holding it is inconsistent with the permit and should not be done without changing status first.

• Registering with social security days or weeks after the tax start date.
• Missing the reduced first-year contribution because it was not requested at the outset.
• No EU VAT registration, discovered when the first German client asks for a VAT number.
• A home office used but never declared, so its costs cannot be deducted.
• Letting the six-month window for the special regime for new arrivals pass without checking eligibility.
• Deregistering in a quiet month and re-registering later, losing reductions that are only available once.