This article provides a general overview of the tax system as it applies to self-employment, assuming Spanish ‘tax resident’ status. It is not intended to represent legal advice or replace advice from a qualified and reputable financial advisor. Where specific tax rates are presented, these have been derived from sources at the time of writing (2024/2025). Rates can also vary between Spanish municipalities.

When considering relocation to another country and self-employment, a crucial element of the business plan is anticipation of potential taxes payable. As far as Spain is concerned, let’s face it—it has one of the most challenging tax systems in Europe.

Self-employed individuals, or autónomos, typically pay three main types of tax: IRPF (personal income tax), RETA (social security) contributions, and IVA (value added tax). There are also further considerations for tax not related directly to autónomo status, but which affect everyone who is a home owner.

These taxes are due at different intervals. Compared to the UK and some other countries, relatively cheaper living costs in Spain may mitigate effects of a tax burden. However, business survival and success depend on the availability of funds to cover taxes due.

IRPF (Impuesto de la Renta de las Personas Físicas)

Anyone who stays in Spain beyond 183 days in a single year is automatically recognised as ‘tax resident’. As such, they are eligible to pay personal income tax (IRPF). This is applied to all income, including that from business and pensions. Income derived from stocks and shares or financial profits from property sales are also subject to tax.

Of particular note, for self-employed Spanish tax residents who conduct business overseas (e.g. provision of a digital service to international business clients or sending goods to customers in another country), IRPF is due on income from any location—not only that generated within Spain.

Current IRPF rates range from 19% to 28% or greater, depending on the amount of income, savings and municipality. The highest rate applies to income over 300, 000 euros. For accounting purposes, the tax year runs from 1 January to 31 December, as opposed to the UK tax year (6 April to 5 April). The tax return (Declaracion de la Renta) should be submitted within the following tax year and is usually required to be filed and paid between 11 April and 30 June.

The amount of IRPF payable is reduced by a national personal allowance which increases by age category. The personal allowance is also adjusted in the taxpayer’s favour if there are dependents within the family, or if a family member has a disability.

Some autónomos may be working, and simultaneously be claiming a pension from their country of origin. For UK expats, it’s worth noting that their workplace pensions and personal private pensions are taxed in Spain. Most UK government pensions, such as those associated with police force or civil service or armed forces are taxed only in the UK. They should still be declared on the Spanish tax return.

NHS pensions are taxed in Spain because they are not considered to be government pensions (they are paid by the NHS Business Services Authority). A dual taxation exemption agreement exists to stop the NHS BSA deducting tax in the UK, but this requires completion of the appropriate form which is available from the HMRC in the UK.

RETA (Régimen Especial de Trabajadores Autónomos)

RETA is the social security system which provides autónomos access to the national healthcare system and various social care benefits. As such, RETA is similar in purpose to the UK’s National Insurance system, but contributions paid are much higher in Spain. The minimum owed is 293 euros per month. However, new autónomos pay a reduced rate for the first two years.

Others who benefit from reduced rates include women returning to work after having a baby, and those who work full time for an employer, but with additional hours as a self-employed individual such as working in the evenings or weekends. To have access to unemployment benefits, a minimum of 12 months social security contribution is normally required.

These contributions are payable monthly by direct debit, and by the end of the month in which they apply. The fact that RETA is due even in periods of little or no income can present a major challenge for many self-employed individuals, particularly in quieter periods, where profit margins are narrow, or if the nature of the work is seasonal. Charges of between 10% and 20% are also incurred for late payments. Clearly sound business planning is required, including an ability to manage a steady cash flow or have access to ‘emergency’ funds.

IVA (Impuesto Sobre el Valor Añadido)

This is VAT, due on the sales of items or services within Spain. Unlike the UK where VAT registration is only mandatory above a certain income bracket, all autónomos are required to register for IVA. It is payable each quarter, in most circumstances at a fixed rate of 21%. Certain hospitality services, food, books and pharmaceutical products attract lower rate, from 4% to 10%. The business should charge the client or customers additional VAT on top of the value of goods and services provided and record it as IVA in book-keeping. Records should also be kept of any IVA paid by the business itself on goods required for its operation. The difference between the two is then the total amount payable to the government. IVA is filed and paid quarterly in most cases. An additional summary form for IVA is completed annually and submitted by the end of the same tax year.

PROPERTY TAXES

These are payable by all residents who are home owners, including autónomos.

For those who have purchased a brand new purchased property, an IVA (VAT) tax is payable at 10%. This is paid directly by the buyer to the ‘promoter’ of the urbanisation or new build as part of the purchasing process. It is then their responsibility to pay this IVA to the government.

When purchasing properties other than new builds, a sales transfer tax known as ITP (Impuesto Transmisiones Patrimoniales) is due. The amount varies with property value and locality, but is around the 6% to 13% mark. It is paid within 30 days of property purchase at the local tax office rather than to central government. A different tax system exists in the Canary Islands, although the percentage payable is in the same range. Note that property related taxes are currently under review and are expected to increase.

IBI (Impuestos de Bienes Inmuebles) is the equivalent to the UK council tax, currently between 0.4% and 1.1% depending on the registered value of the residence. This is paid either quarterly or annually according to municipality.

SUMMARY

Spain has a number of taxes relating to self-employed. In 2025, individuals should typically expect to pay at least 293 euros per month, plus 19% to 28% on any income (excluding allowable adjustments). Autónomos should also charge customers IVA (VAT) on their goods and services, and forward this to the government after adjustments. Additional taxes will be payable on purchased residential property of between 6% and 13%, plus a ‘council tax’ equivalent of up to 1.1%.

For those moving from the UK to Spain and selling their UK property in order to relocate, look out for a future article from Cultura on Capital Gains tax implications.