Taxes and Labour for selfemployed

Key Tax Obligations for Self-Employed Individuals

1. Quarterly Income Tax Payments

As a self-employed person, you are required to make quarterly income tax payments on your business earnings. These payments are based on your estimated income and are due on the 20th of April, July, October, and January. The tax is calculated using the form Modelo 130, where you report your income and expenses, and pay a percentage of your net profit.

2. VAT (IVA) Returns

If your business activities involve selling goods or services, you are also responsible for collecting and reporting Value Added Tax (VAT). You must file quarterly VAT returns using Modelo 303, reporting the VAT collected from your customers and the VAT paid on business expenses. The difference between these amounts is either paid to or reclaimed from the tax authorities.

3. Annual Income Tax Return

In addition to quarterly payments, you must submit an annual income tax return using Modelo 100. This comprehensive return consolidates all your quarterly payments and provides a full account of your income, expenses, and final tax liability for the year. It’s due between April and June of the following year.

4. Social Security Contributions

Self-employed individuals in Spain are also required to make monthly contributions to the Social Security system. These contributions, provide you with access to benefits such as healthcare, retirement pensions. The amount varies based on your declared income and chosen contribution base.

5. Record Keeping and Documentation

Accurate record-keeping is crucial for fulfilling your tax obligations. You must maintain detailed records of all business transactions, including invoices, receipts, and expense reports. This documentation is necessary for completing your tax returns and in case of audits by the tax authorities.

6. Other Potential Obligations

Depending on your business type and activities, there may be additional tax obligations, such as special taxes or industry-specific requirements. It’s essential to stay informed about any sector-specific regulations that might apply to your business.

Managing Your Tax Responsibilities

Understanding and meeting your tax obligations is crucial for the smooth operation of your business and avoiding potential penalties. At Salvador Tax & Legal, we specialize in helping self-employed individuals manage their tax responsibilities efficiently. Our team can assist with filing tax returns, ensuring compliance with all tax regulations, and providing ongoing support to help you navigate the complexities of Spanish tax laws.

Labour and Employment for Self-Employed

As a self-employed individual in Spain, you have the ability to hire employees, just like a limited company. Managing employment responsibilities correctly is essential to ensure compliance with Spanish labour laws and to create a productive work environment. At Salvador Tax & Legal, we provide comprehensive guidance to help you navigate the complexities of hiring and managing staff effectively.

Hiring Employees as a Self-Employed Individual

1. Registering as an Employer

Before hiring employees, you must register as an employer with the Spanish Social Security system. This registration is necessary to comply with the legal requirements for payroll and social security contributions. You’ll need to complete and submit the Modelo TA.6 form to the Social Security office to initiate this process.

2. Employment Contracts

Employment contracts are a legal requirement and should detail the terms and conditions of employment. This includes job responsibilities, working hours, salary, and other benefits. Contracts can be fixed-term, permanent, or part-time, depending on the nature of the job and your business needs. It’s essential to ensure that contracts comply with Spanish labour laws and collective bargaining agreements if applicable.

3. Registering Employees with Social Security

Once you have hired employees, you must register them with the Spanish Social Security system. This registration ensures that your employees are covered for health care, pensions, and other social security benefits.

4. Payroll and Deductions

As an employer, you are responsible for calculating and withholding employee payroll taxes, including income tax and social security contributions. These deductions must be reported and paid to the tax authorities on a monthly basis using the Modelo 111 form for withholdings and Modelo 190 for the annual summary. Payroll also includes managing salaries, bonuses, and any other compensations in compliance with Spanish labour laws.

5. Health and Safety Regulations

You are required to ensure a safe and healthy work environment for your employees. This involves complying with occupational health and safety regulations, conducting risk assessments, and implementing necessary measures to prevent workplace accidents. Failure to comply with these regulations can result in significant fines and legal consequences.

6. Employment Rights and Obligations

Employees in Spain are entitled to various rights, including paid holidays, sick leave, and parental leave. You must ensure that these rights are upheld and that you comply with all relevant labour laws. Additionally, maintaining accurate records of working hours and employee attendance is crucial for compliance and operational efficiency.

7. Labour Inspections

The Spanish Labour Inspectorate (Inspección de Trabajo) regularly conducts inspections to ensure compliance with labour laws. It’s important to keep all employment records and documentation up to date and to be prepared for possible inspections. This includes maintaining up-to-date contracts, payroll records, and documentation related to health and safety measures.