The profits that self-employed people make fall in the ordinary progressive scale of income tax.
A statement of turnover and costs must be provided every quarter. Depending on the deductions (withholding tax) that have already been paid by customers on outgoing invoices, it is determined whether income tax should be paid.
When making the annual income tax return, the deductions made by customers and the payments made during the quarters can be settled. The difference must then be paid up or can be reclaimed.
VAT returns must also be made every quarter. A summary declaration must be made at the end of the year.
Self-employed persons serve registers for keeping outgoing and incoming invoices in case of inspections. An accounting with journal entries per movement is not mandatory.
Small independents can opt for the so-called module system. This means that the tax authorities issue fixed amounts that have to be paid quarterly. The tax authorities determine these relatively low amounts than, for example, on the basis of the number of tables that a restaurant has.
Previously, this was under the motto ‘better taxation than nothing at all’ (it was mainly intended for sectors where a lot of cash was involved and where traditionally not everything was given to the tax authorities indiscriminately).
This has been increasingly restricted in recent years. In the long run, this is expected to only apply to companies with minimal turnover and that only work for private individuals such as small restaurants, barber shops and independent taxi drivers.
Local accounting office (‘gestoria’)
Because of the many specific local regulations we advise you to find a well-known ‘gestoria’ in the municipality where you want to establish your company.
A ‘gestoria’ is an office that provides tax returns and formalities and knows the way in the Spanish bureaucracy. There are great quality differences. Naturally, a pre-selection can be made via internet (google):
• Does the website have a professional appearance?
• Can communication be made in English?
• Is international experience reported?
• Are they specialized on companies (or do they do ‘everything’)?
• Do several people work for each discipline?
• Is there not only a mobile but also a fixed number?
• Is it easy to make an appointment?
If an appointment is made, it is of course also important whether there is a ‘click’ and whether the quotation that is subsequently drawn up seems reasonably cost-effective. In this area, cheap sales can quickly prove to be expensive (problems with the tax authorities).