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TAXES

The big tax declaration change Spain’s self-employed need to know

If you're self-employed in Spain there are a few new changes you need to be aware of when it comes to submitting your income tax return this year.

Published: 22 March 2024 12:08 CET
Updated: 31 March 2024 08:07 CEST
The big tax declaration change Spain's self-employed need to know
The big changes for Spain's self employed. Photo: George Milton / Pexels

As if being self-employed in Spain wasn’t complicated enough, there are several new changes you should know about for 2024. 

The Personal Income Tax (IRPF) campaign for 2023 campaign runs from April 3rd to July 1st this year. This means you must submit your annual Declaración de Renta for the money you earned last year between these dates. 

This year is different for autónomos because you’ll be required to present your tax return whether you had losses or profits in 2023. In previous years, it was only necessary if you had profits over a certain threshold or if it was your first year filing it.

READ ALSO: Everything that changes for self-employed workers in Spain in 2024 

But this year, even if your business has not performed as expected and you actually incurred a loss, it will still be mandatory to present these to the Tax Agency. 

According to experts from the financial comparison site Banqmi, “The Tax Agency does not have complete information on the activity of each self-employed person and that is why an adequate check and verification must always be carried out”. 

The second change that’s new for this year is that the percentage of expenses you are allowed to deduct has been raised from 5 to 7 percent. 

READ ALSO – La Renta: What items can you deduct on your Spanish tax return?

Banqmi expert Antonio Gallardo, states: “It is important to note that only the self-employed who carry out professional activities who are not an actual business, and who do so through the direct estimation regime, are entitled to this right, therefore, those who do it by modules are excluded”. 

The direct estimation regime is when taxes are calculated based on the actual income and expenses of the business during the fiscal year. This means that net profit or loss is calculated by subtracting the deductible expenses of the activity.

READ ALSO: Nine mistakes to avoid when filing your Spanish tax return

The types of tax deductions those on this type of regime can apply include:

  • Monthly Social Security contributions
  • Deductions for the vehicle usage (if it applies to your business)
  • Deductions for business-related training expenses
  • Special deductions, such as research and development expenses
  • Tax relief at a regional level

When it comes to regional tax deductions, self-employed workers have access to special rates depending on the region they live and work in. For example, Madrid, Asturias and the Canary Islands offer these types of tax reliefs.

READ ALSO – Q&A: What is Spain’s flat fee for new self-employed workers?

Additionally, during the first year of being registered as self-employed, 20 percent of your profits can be deducted. If this is the case, you have the right to apply the same deductions as a company registered for Corporate Tax (25 percent of research and development expenses for example).  

One of the main obstacles for self-employed workers when filing their annual personal income tax return is that the Tax Agency does not have complete information on all transactions carried out. 

“Although they receive information about part of your expenses and income, this is incomplete, so you must always carry out adequate verification to avoid errors and the hassle of making rectifications or complementary statements,” Banqmi experts conclude. 

If you’re unsure about any of your tax returns this year, whether you have to file, and exactly what you can deduct, it’s important to contact your gestor or a tax advisor. Remember that everyone’s situation is slightly different. 

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For members

WORKING IN SPAIN

What’s the law on having two jobs in Spain?

With the current cost of living crisis, working more than one job is becoming more and more common, but what are the rules on working multiple contracted jobs in Spain and the tax implications of this?

Published: 25 June 2024 13:24 CEST
What's the law on having two jobs in Spain?

Often it’s necessary to have more than one job at a time, particularly if they don’t pay well and you’re struggling to make ends meet.

In fact, historically that is part of the reason why establishments stay open so late and why siestas were so common – because people would have one job in the morning and then go home for a rest before starting their second.

This is still commonplace today and is in fact becoming more and more popular, with the rise in the cost of living, driving an increasing number of people to take up a second job.

Whatever your reasons for having two jobs or more – to save up more money or gain extra experience and work your way up, there are some financial implications you should be aware of.

What does the law say?

Currently in Spain, there is no restriction that prevents a person from having a second job, with two contracts in two different companies, for 80 hours a week.

According to data from the first quarter of this year from the Active Population Survey (EPA) prepared by the National Institute of Statistics (INE), the number of people with a second job in Spain stands at 591,300, although according to affiliation data of Social Security, some 800,000 people have more than one position.

This trend has been seen in each quarter of the EPA since 2022 and, right now, is close to a historic number.

Categories you should be aware of

There are two types of categories when you work in multiple jobs in Spain – these are pluriempleo and pluriactividad. Pluriempleo literally means multiple employment. This is understood as a person who works as an employee in two or more companies under the same Social Security regime.

In this way, it differs from pluriactividad or multiple activities, which is when people work for others and have their own business at the same time or their second job is under a different social security regime.

For example, if you work as a hotel receptionist in the morning and then in a restaurant at night, these positions are considered to be part of the same regime, but if you work in a hotel in the morning and then as a nurse in a hospital at night, these are two different careers and therefore social security regimes.

If you’re self-employed as well as having a contract job, this is a slightly different situation. To find out more, read our guide below. 

READ ALSO – Self-employed in Spain: What are the tax rules if you do two or more jobs?

What are the tax and social security implications?

If you have two separate jobs, you are required by law to report your situation to Social Security, and to each of the companies you’re employed by.

When it comes to the Tax Agency, it’s important to note that you are obliged to submit your yearly Income Tax return (Renta), when you are paid by more than one employer and your income exceeds €22,000 per year.

READ ALSO – EXPLAINED: The key changes to Spain’s 2023/2024 annual tax return

In 2024, the maximum social security contribution base for employees has been set at €4,720.50 per month. This means, that regardless of whether your income from two positions exceeds this amount, the social security base will not be more than this.

The amount of IRPF (Personal Income Tax) must also be taken into account. If you are combining two contracts, it’s important to calculate the withholding tax.

This is because companies calculate personal income tax based on your annual compensation expectations. They do not take into account the existence of another job, so they apply the discount depending on what they are paying you only.

This means that they will keep less than what they should and when you’re filling out your Renta yearly income tax return, you will most likely have to pay the extra to make up the difference. 

In this case, you should request that both companies calculate personal income tax according to your earnings, so that you can get a good idea of the amount you have to pay working two positions.

You may also consider hiring a gestor or accountant to file your yearly tax return for you if you have a particularly complicated situation and work three or more jobs for example. 

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