Working as self employed or autonomo is becoming more and more common in Spain as increasing numbers of Spaniards and expats focus on their own entrepreneurial skills to earn a living.
In the past, there has been much criticism of the red tape surrounding autonomo status as well as the restrictive level of monthly contributions to pay. However, new legislation agreed in December 2013 (law 22/2013) is designed to address this situation and lower the threshold to make it easier for more people to take autonomo status.
Until now working under the autonomo status has been easy and convenient, yet not without its own complications. Many look to a fiscal gestor (accountant) to make sure all the required documentation is properly prepared, yet it is above all the high monthly contribution to the autonomo scheme that has stifled its positive contribution to economic growth.
In addition to lowering these contributions significantly for all new autonomo workers, the new law also promises to streamline the bureaucratic process considerably, with an online system enabling entrepreneurs to set themselves up in business, allegedly within 24 hours!
Often an entrepreneur may have an idea for his dream business while he’s already working for someone else; perhaps he wants to start small and build slowly while maintaining the security of his existing job. In the past, this freelancer would have had to pay a full monthly autonomo social security contribution despite his employer regularly paying a significant amount on his behalf. Thankfully, the law now requires him to pay only half of the monthly contribution until June 2015, when further discounts apply. Those planning a full time self employed role (i.e. not otherwise employed) will also benefit from incentivising reductions, as will those under 30 years old and mothers returning to self employed status after maternity leave.These are enormous steps forward in actively encouraging entrepreneurialism and should inspire many to give it a go!
During the economic crisis, many autonomos were exasperated by the requirement to pay IVA (VAT) on invoices they issued, even when if their clients had failed to pay them! The authorities have been put under much pressure by lobbyists to find a solution to this problem and finally, as of the beginning of 2014, it is no longer necessary to pay IVA until payment has been received.
Another aspect of freelance work in Spain that stopped many from becoming self-employed professionals and entrepreneurs has been the unlimited economic liability potential that put their personal assets at risk. As of 2014, autonomos will be able to work safe in the knowledge that their homes and other basic assets are protected should their business fail. Additionally, it may now be possible for autonomos to refinance their failed business’s debts and repayment terms.
The new changes in the regulations governing independent workers are a very positive step in the direction of liberalising the Spanish labour market and opening the country up to a more entrepreneurial and competitive mindset that will stimulate economic growth and innovation. Reduced monthly contributions have lowered the threshold for those entering the system while simplified processes are promising to make the process easier to manage, yet it remains advisable to work with a qualified gestor or law firm to ensure that the process is indeed easy, rewarding and free of any surprises. After all, when it comes to taxes and official contributions it is important to know where you stand.
Perez Legal Group specialises in providing this service and making it transparent and easy for expatriate professionals and businesspeople to understand and work with. We will help you establish your autonomo status, fill in the required documentation, ensure the exact contributions payable and tax levels to be expected, as well as helping with the regular tax returns that need to be filed by specific dates on the fiscal calendar and assist with anything you need along the way. If you would like more information or advice, contactwww.perezlegalgroup.comwho have dedicated staff ready to help you.
For your information Perez Legal Group is registered with number 759 in the Bar Association of Accountants and Fiscal Advisors of Andalucía.