To autónomo or not to autónomo?
Autor de la hebra: Gregory Lassale

Gregory Lassale  Identity Verified
Estados Unidos
Local time: 10:28
inglés al francés
May 24

Hello,

I have already posted a thread about this in a different forum but wanted to post here as well as I have since then done research and have many more questions.

www.proz.com/forum/money_matters/343784-moving_and_taking_your_business_overseas.html


My situation in a nutshell:

... See more
Hello,

I have already posted a thread about this in a different forum but wanted to post here as well as I have since then done research and have many more questions.

www.proz.com/forum/money_matters/343784-moving_and_taking_your_business_overseas.html


My situation in a nutshell:

- I am considering moving from the US to Spain for 2 years.
- I am a French national and can legally work in the EU, so no problem there.
- I have been doing part time translation work in the US for the past 3 years as a DBA (Doing Business As) business entity and I file taxes under my own name.
- All my clients are located in north America, the largest being a translation agency in Canada.
- The yearly income I derive from those jobs is around 10K-15K.
- As a US freelancer, I do not charge sales tax to my invoices.
- I would deposit any money made from freelancing while in Spain in a Spanish bank account.
- My spouse and I are not necessarily looking to benefit from the Spanish social security i.e. we would plan to pay for private health insurance while over there if need be.


My questions:

1. If I'm not mistaken, a couple of options in Spain are either to register as an autónomo or as a Limited Company, correct? Is there any other way to do business for a freelance translator over there?

2. Autónomos have to be registered with the Agencia Tributaria and have to pay a monthly fee (around 275 euros from what I can tell) whether or not they derive any income from their activity - correct?

3. I read The fee above was recently reduced to 50 euros for the first 12 months of activity and increase after that.
www.healthplanspain.com/blog/expat-tips/359-registering-as-self-employed-autonomo-in-spain.html
Regardless of the amount, is the fee still due for someone NOT looking to benefit from social security? I guess, just like in France, that paying toward social security in Spain is not an option...

4. The same link above seems to indicate that the fee is NOT due for someone making less than the Spanish minimum wage (1108 euros / month). Is that correct? Is that determined on a monthly basis, quarterly basis, or a yearly basis, i.e. if over the course of a year I make less on average, is the fee still due for the months that I make more?

5. Autónomos' invoiced earnings have to be declared to the Agencia Tributaria every quarter - correct?

6. Autónomos have to charge sales tax - correct?


Do any or all of the above still apply:

- for a long term but temporary stay of ~2 years?
- for freelance income in the 10-15K range?
- for business done with companies/agencies located outside the EU?


And lastly: as complicated and costly as working as an autónomo seems to be, is operating as a LTD even more so?

Thank you for any light you can shed on the matter.

Greg


[Edited at 2020-05-24 14:35 GMT]
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Monika Jakacka Márquez  Identity Verified
España
Local time: 17:28
Miembro 2006
polaco al español
+ ...

Moderador de este foro
Some answers... May 24

Hello, Gregory!

I'll try to answer your questions and help you with these issues

My questions:

1. If I'm not mistaken, a couple of options in Spain are either to register as an autónomo or as a Limited Company, correct? Is there any other way to do business for a freelance translator over there?


I was allways working as a registered autónomo, so all I can tell you refers to this option.

2. Autónomos have to be registered with the Agencia Tributaria and have to pay a monthly fee (around 275 euros from what I can tell) whether or not they derive any income from their activity - correct?


Yes, an autónomo has to register with the Agencia Tributaria AND with the Seguridad Social. The monthly fee of 283 euros is charged by the Seguridad Social, not by the Agencia Tributaria. And yes, it's charged allways, even if you have a bad month and no work at all.

3. I read The fee above was recently reduced to 50 euros for the first 12 months of activity and increase after that.
www.healthplanspain.com/blog/expat-tips/359-registering-as-self-employed-autonomo-in-spain.html
Regardless of the amount, is the fee still due for someone NOT looking to benefit from social security? I guess, just like in France, that paying toward social security in Spain is not an option...


You don't have any option for avoid paying public social security system (these 283 euros). You'll have this charged even if you prefer not to use public health system and pay a private health security.
Yes, there's a so called "tarifa plana" for new autónomos which consists in a big discounts applied to the montly fee charged by the Seguridad Social. According to this, you'll pay:
- first 12 months (80% discount): 60 euros
- next 6 months (50% discount): 141,65 euros
- next 6 months (30% discount): 198,31 euros

You'll get an additional 6 months 30% discount if you're under 30 years old (men) or under 35 years old (women).

4. The same link above seems to indicate that the fee is NOT due for someone making less than the Spanish minimum wage (1108 euros / month). Is that correct? Is that determined on a monthly basis, quarterly basis, or a yearly basis, i.e. if over the course of a year I make less on average, is the fee still due for the months that I make more?


No, this is incorrect. That option was available years ago, before the government introduced the "tarifa plana" system. Nowadays it's illegal to work on a regular basis and issue invoices without paying the fees to the Seguridad Social.

5. Autónomos' invoiced earnings have to be declared to the Agencia Tributaria every quarter - correct?


Yes, you have to declare your income every quarter and pay the advances for the income tax which is paid once in a year.

6. Autónomos have to charge sales tax - correct?


Yes and no.
We usually charge the 21% VAT tax in almost all the translations made for Spanish market. Nonetheless if you're invoicing a non-EU company (which would be your case, as I understood), you don't apply any VAT tax.


Do any or all of the above still apply:
- for a long term but temporary stay of ~2 years?
- for freelance income in the 10-15K range?
- for business done with companies/agencies located outside the EU?


Yes. See the answers to all your questions

And lastly: as complicated and costly as working as an autónomo seems to be, is operating as a LTD even more so?


No idea. I've only worked as an autónomo (for 14 years, right now).

If you have more questions, please, feel free to ask
Regards,
Monika


 

Gregory Lassale  Identity Verified
Estados Unidos
Local time: 10:28
inglés al francés
PERSONA QUE INICIÓ LA HEBRA
Thank you! May 24

Monika Jakacka Márquez wrote:

Hello, Gregory!

I'll try to answer your questions and help you with these issues

My questions:

1. If I'm not mistaken, a couple of options in Spain are either to register as an autónomo or as a Limited Company, correct? Is there any other way to do business for a freelance translator over there?


I was allways working as a registered autónomo, so all I can tell you refers to this option.

2. Autónomos have to be registered with the Agencia Tributaria and have to pay a monthly fee (around 275 euros from what I can tell) whether or not they derive any income from their activity - correct?


Yes, an autónomo has to register with the Agencia Tributaria AND with the Seguridad Social. The monthly fee of 283 euros is charged by the Seguridad Social, not by the Agencia Tributaria. And yes, it's charged allways, even if you have a bad month and no work at all.

3. I read The fee above was recently reduced to 50 euros for the first 12 months of activity and increase after that.
www.healthplanspain.com/blog/expat-tips/359-registering-as-self-employed-autonomo-in-spain.html
Regardless of the amount, is the fee still due for someone NOT looking to benefit from social security? I guess, just like in France, that paying toward social security in Spain is not an option...


You don't have any option for avoid paying public social security system (these 283 euros). You'll have this charged even if you prefer not to use public health system and pay a private health security.
Yes, there's a so called "tarifa plana" for new autónomos which consists in a big discounts applied to the montly fee charged by the Seguridad Social. According to this, you'll pay:
- first 12 months (80% discount): 60 euros
- next 6 months (50% discount): 141,65 euros
- next 6 months (30% discount): 198,31 euros

You'll get an additional 6 months 30% discount if you're under 30 years old (men) or under 35 years old (women).

4. The same link above seems to indicate that the fee is NOT due for someone making less than the Spanish minimum wage (1108 euros / month). Is that correct? Is that determined on a monthly basis, quarterly basis, or a yearly basis, i.e. if over the course of a year I make less on average, is the fee still due for the months that I make more?


No, this is incorrect. That option was available years ago, before the government introduced the "tarifa plana" system. Nowadays it's illegal to work on a regular basis and issue invoices without paying the fees to the Seguridad Social.

5. Autónomos' invoiced earnings have to be declared to the Agencia Tributaria every quarter - correct?


Yes, you have to declare your income every quarter and pay the advances for the income tax which is paid once in a year.

6. Autónomos have to charge sales tax - correct?


Yes and no.
We usually charge the 21% VAT tax in almost all the translations made for Spanish market. Nonetheless if you're invoicing a non-EU company (which would be your case, as I understood), you don't apply any VAT tax.


Do any or all of the above still apply:
- for a long term but temporary stay of ~2 years?
- for freelance income in the 10-15K range?
- for business done with companies/agencies located outside the EU?


Yes. See the answers to all your questions

And lastly: as complicated and costly as working as an autónomo seems to be, is operating as a LTD even more so?


No idea. I've only worked as an autónomo (for 14 years, right now).

If you have more questions, please, feel free to ask
Regards,
Monika



This was so helpful! ¡Gracias, Monika! I'm glad the sales tax doesn't apply to me. I will probably hire a professional service to help me register with the Agencia Tributaria and the Seguridad Social and a gestor to help me file the quarterly declarations and prepare my income tax return for me. I don't mind paying to avoid dealing with paperwork and bureaucracy, especially in a language I don't speak so well.

I'm now wondering if it's possible to work for some time before having to register as an autónomo. If I were visiting for a shorter stay (say less than 6 months), I think I would be able to work as a US freelancer while in Spain without having to register as an autónomo. I will have to ask a professional about that as well.

So, to confirm, the social security fee is paid *monthly*, earnings have to be declared *quarterly* and income tax is to be paid *yearly*, is that correct? Can the Seguridad Social automatically withdrawn the monthly fee be from a bank account, or do you have to snail mail in a check along with some form or something like that?

Last question: what actual rights does contributing to the Seguridad Social grant an autónomo? Do you get public health coverage and things of that nature?

Thanks again!


Arlete Moraes
 

Monika Jakacka Márquez  Identity Verified
España
Local time: 17:28
Miembro 2006
polaco al español
+ ...

Moderador de este foro
New answers to new questions May 25

Hello again, Gregory!

Gregory Lassale wrote:

This was so helpful! ¡Gracias, Monika! I'm glad the sales tax doesn't apply to me. I will probably hire a professional service to help me register with the Agencia Tributaria and the Seguridad Social and a gestor to help me file the quarterly declarations and prepare my income tax return for me. I don't mind paying to avoid dealing with paperwork and bureaucracy, especially in a language I don't speak so well.


It's a good option if you don't want to learn (in deep) how it works and you don't speak Spanish very well. It would be much easier for you. But try to work with a gestor recommended by someone, as I've seen many times huge mistakes made by gestors which implied quite big fines for their clients. If your gestor makes something wrong, the responsability is yours, not his/her, unfortunately, and you are supposed to pay the fine, not the gestor. It's a nonsense for me, but that is how the Agencia Tributaria works

I'm now wondering if it's possible to work for some time before having to register as an autónomo. If I were visiting for a shorter stay (say less than 6 months), I think I would be able to work as a US freelancer while in Spain without having to register as an autónomo. I will have to ask a professional about that as well.


I think that this might be possible. When living less than 6 months in a country, you don't have to establish your legal and tax residence here. So yes, I think that you would be still able to work as a US freelancer.

So, to confirm, the social security fee is paid *monthly*, earnings have to be declared *quarterly* and income tax is to be paid *yearly*, is that correct?


Yes, yes and yes. But remember that quarterly you'll be asked to pay the advance of the income tax. Later on, once a year, when you make your yearly income tax declaration, you'll be asked to add something more to the amounts you already paid quarterly or (the most likely option) you'll get a partial refund of the money you've already paid quarterly.

Can the Seguridad Social automatically withdrawn the monthly fee be from a bank account, or do you have to snail mail in a check along with some form or something like that?


Yes, here everything works with "domiciliaciones" - they withdrawn all the fees (Seguridad Social and everything else, like the internet, gas or electricity invoice) directly from your bank account.

Last question: what actual rights does contributing to the Seguridad Social grant an autónomo? Do you get public health coverage and things of that nature?


Yes, you mainly get the access to the public health insurance, old-age benefits, the right to sick leave or maternity leave, etc.

Thanks again!


You're welcome
Have a lovely Monday!
M.


 

neilmac  Identity Verified
España
Local time: 17:28
español al inglés
+ ...
My take May 26

1. -> Caveat – the Limited Company option sounds good at first - especially if you’re coming from a country like the US where many people resent paying taxes or social security to the government - but my friend did it and it’s been nothing but hassle.

2. -> Yes – I’m currently paying just over 300 € a month; my friend says she is in a lower bracket and pays around 280€.


5. -> Yes – it’s not an issue. I get a “gestor” (agent cum accountant) t
... See more
1. -> Caveat – the Limited Company option sounds good at first - especially if you’re coming from a country like the US where many people resent paying taxes or social security to the government - but my friend did it and it’s been nothing but hassle.

2. -> Yes – I’m currently paying just over 300 € a month; my friend says she is in a lower bracket and pays around 280€.


5. -> Yes – it’s not an issue. I get a “gestor” (agent cum accountant) to do all that for me.

6. -> You have to add VAT (Value Added Tax) to the bill for most clients. Then you have to declare (and pay) it in your quarterly return.

PS: On a personal note, I just like to add that in the early days I really resented paying such a large amount in Social Security, especially in months when I barely made enough to make the payment, but over the years I have undergone medical procedures and treatments thanks to which I am still alive and kicking, whereas in other countries where private healthcare holds sway, I’d probably be pushing up the daisies by now.
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Philippe Etienne
 

Sheila Wilson  Identity Verified
España
Local time: 16:28
Miembro 2007
inglés
+ ...
My 2 cents' worth May 26

It seems to me that relatively few self-employed people here actually set up limited companies, whereas in some EU countries (e.g. the UK -- which is no longer in the EU ), it's very common to set one up. I don't know why it's uncommon here. As an autónomo you can hire employees, rent premises, etc., so you have a lot of freedom of action. But of course we also take personal responsibility for our businesses, meaning that if anyone... See more
It seems to me that relatively few self-employed people here actually set up limited companies, whereas in some EU countries (e.g. the UK -- which is no longer in the EU ), it's very common to set one up. I don't know why it's uncommon here. As an autónomo you can hire employees, rent premises, etc., so you have a lot of freedom of action. But of course we also take personal responsibility for our businesses, meaning that if anyone were to sue us, our personal assets would be at risk. I sometimes think I should worry more about that, but you can't worry about everything. Although it's relatively simple and cheap to get professional liability insurance that covers Spain, once you start asking for worldwide cover then your request gets refused or the premiums go sky high.

Don't ignore the fact that we're taxed on our net income, which means that we subtract all sorts of things from the total of our invoices before submitting any tax return (quarterly or annual). The main deduction for most autónomos is the social security contribution, and the fee to the asesor/gestor is another important one. You can also deduct office and IT equipment purchases, paper and electronic dictionaries, internet connection, software, training, etc. In fact, if you're only planning to earn EUR 10-15k, you probably won't pay much, if any, tax on your earnings. I know from personal experience that that can cause alarm bells to ring. Immigrants setting up "phantom" businesses to take advantage of free healthcare and pensions is discouraged -- so be prepared to field that problem. The VAT part of purchases will be refunded if you're registered for VAT, which I believe is compulsory on the mainland (?). I'm afraid I know nothing about VAT as we don't have it in the Canary Islands.

The benefits are really quite good. All healthcare is covered, with zero payment demanded for anything other than prescription drugs. A normal fee for those is 40%, although that reduces to 10% with an annual cap or sometimes zero as a pensioner. You'll be provided on request with a European health card (TSE: Tarjeta Sanitaria Europea) that gives you the right to access state systems when holidaying around the EU, on the same basis as the locals. The pension is supposed to be good too -- I'll know more about that in a couple of years!

Finally, your "do you have to snail mail in a check?" query made me smile. We really don't use cheques here at all, even though when I arrived from France they did say they could provide them if I (the daft, backward foreigner) insisted. Everything is done by wire transfers and direct debits. As far as I know, autónomos are actually obliged to file everything in electronic form, although I think non-active people can submit a paper return still.
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neilmac
 

Gregory Lassale  Identity Verified
Estados Unidos
Local time: 10:28
inglés al francés
PERSONA QUE INICIÓ LA HEBRA
Couple more questions May 26

neilmac wrote:

1. -> Caveat – the Limited Company option sounds good at first - especially if you’re coming from a country like the US where many people resent paying taxes or social security to the government - but my friend did it and it’s been nothing but hassle.

2. -> Yes – I’m currently paying just over 300 € a month; my friend says she is in a lower bracket and pays around 280€.


5. -> Yes – it’s not an issue. I get a “gestor” (agent cum accountant) to do all that for me.

6. -> You have to add VAT (Value Added Tax) to the bill for most clients. Then you have to declare (and pay) it in your quarterly return.

PS: On a personal note, I just like to add that in the early days I really resented paying such a large amount in Social Security, especially in months when I barely made enough to make the payment, but over the years I have undergone medical procedures and treatments thanks to which I am still alive and kicking, whereas in other countries where private healthcare holds sway, I’d probably be pushing up the daisies by now.



Regarding the VAT, does "most clients" means clients located *within the EU*? All my current clients are in North America and I **really** hope I won't have to increase my invoices by 20+%, or significantly lower my rates just to remain competitive.

A big thank you to all who have contributed so far. I have a much clearer idea of what I'm looking at. My plan is to keep operating under my US-based DBA for the first 6 months, then to switch to autónomo.

Another question I forgot to ask: how long does becoming an autónomo roughly take, between the day you submit the paperwork and the day you get the green light ? I want to start the process early enough so that the transition is as seamless as possible.


 

Sheila Wilson  Identity Verified
España
Local time: 16:28
Miembro 2007
inglés
+ ...
Do take expert advice May 26

Gregory Lassale wrote:
My plan is to keep operating under my US-based DBA for the first 6 months, then to switch to autónomo.

You should consult an expert on transatlantic labour rights for that. Not just an ordinary gestor as they probably won't know. I really doubt it's legal, and certainly not for so long. If you were registered in France, you would definitely have three months to switch -- I did that. But that's an EU agreement. US citizens don't have any right to work here at all unless they get special authorisation. And although you'd be here as a French citizen, working as a US fiscal resident could well cause problems, I reckon. But that's just my opinion.


Michele Fauble
 

Jean Dimitriadis  Identity Verified
Francia
Miembro
inglés al francés
+ ...
Bordering on borderless May 27

Hello Gregory,

You may indeed need some expert advice to determine the best course of action, but just thought I’d share this page, which shows the tax treaty documents that are applicable between the US and Spain (and take precedence over local tax laws):

https://www.irs.gov/businesses/international-businesses/spain-tax-treaty-do
... See more
Hello Gregory,

You may indeed need some expert advice to determine the best course of action, but just thought I’d share this page, which shows the tax treaty documents that are applicable between the US and Spain (and take precedence over local tax laws):

https://www.irs.gov/businesses/international-businesses/spain-tax-treaty-documents

Section 4 (Residence) and 15 (Independent Personal Services) of the original Income tax treaty seem to be of special interest.

It appears that the 183 days rule is meant for "Dependent Personal Services" only, so maybe you are in for a legal grayish area.

---

As a more general, "political" comment, I just wish moving between countries was not such a massive headache and that free circulation of people was given the same priority as free circulation of goods. But this, even within the EU, is but a chimera.

Good luck!

[Edited at 2020-05-27 06:55 GMT]
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Sheila Wilson
 

Monika Jakacka Márquez  Identity Verified
España
Local time: 17:28
Miembro 2006
polaco al español
+ ...

Moderador de este foro
VAT issues May 27

Gregory Lassale wrote:

Regarding the VAT, does "most clients" means clients located *within the EU*? All my current clients are in North America and I **really** hope I won't have to increase my invoices by 20+%, or significantly lower my rates just to remain competitive.


No, you don't apply VAT tax on invoices outside EU.


These are the rules for applying VAT in case of Spanish autónomos (registered in the Peninsula or Balearic Islands):

Spanish clients (Iberian Peninsula + Balearic Islands): + 21% VAT

Spanish clients (Canary Islands): + 0% VAT

UE clients
- with valid EU VAT no. (always check it here http://ec.europa.eu/taxation_customs/vies/vieshome.do ): + 0% VAT
- without valid EU VAT no.: +21 % VAT

non-UE clients: + 0% VAT



Exceptions: literary or academic translations are VAT free even if the client is Spanish.

Hope that this would solve your doubts
Regards,
M.


 

Gregory Lassale  Identity Verified
Estados Unidos
Local time: 10:28
inglés al francés
PERSONA QUE INICIÓ LA HEBRA
it does! May 27

Monika Jakacka Márquez wrote:

Gregory Lassale wrote:

Regarding the VAT, does "most clients" means clients located *within the EU*? All my current clients are in North America and I **really** hope I won't have to increase my invoices by 20+%, or significantly lower my rates just to remain competitive.


No, you don't apply VAT tax on invoices outside EU.


These are the rules for applying VAT in case of Spanish autónomos (registered in the Peninsula or Balearic Islands):

Spanish clients (Iberian Peninsula + Balearic Islands): + 21% VAT

Spanish clients (Canary Islands): + 0% VAT

UE clients
- with valid EU VAT no. (always check it here http://ec.europa.eu/taxation_customs/vies/vieshome.do ): + 0% VAT
- without valid EU VAT no.: +21 % VAT

non-UE clients: + 0% VAT



Exceptions: literary or academic translations are VAT free even if the client is Spanish.

Hope that this would solve your doubts
Regards,
M.


It does! Thanks for the confirmation, Monika!

And again a big thank you to everyone who provided feedback.

Thanks for the link, Jean. Someone else linked to it in the other thread I posted about this. I will be seeking legal advice to get all the answers I need. Hopefully I can work for a period of time without registering as an autónomo, but we'll see.

Cheers


 


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