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Self-employed in Spain: What you should know about being ‘autónomo’

Spain is an incredible country to live in but those thinking of becoming self-employed while enjoying their Spanish lifestyle should carefully consider the pros and (mainly) cons that come with being "autónomo" here, writes Alex Dunham.

Self-employed in Spain: What you should know about being 'autónomo'
The incredible 'work from home' view from Sella near Alicante. But are Spain's natural and cultural wonders enough to make the move there? Photo: Euan Cameron/Unsplash

There are 3.2 million self-employed people in Spain, around 16 percent of the country’s working population. 

This may seem like a large amount for a nation that isn’t famed for its entrepreneurial spirit, but it’s more a product of a dire labour market for salaried employees than a consequence of advantageous conditions for autónomos (self-employed workers).

The self-employed option allows many foreigners to move to Spain and start working without a formal contract.

Spain is a country that most foreigners move to for its high quality of living, great weather, friendly people and relatively low cost of living among other perks, but not really for jobs as is the case with other EU countries.

So the self-employed option allows many foreigners to move to Spain and to start earning a living without a formal contract or being fluent in the language.

Having flexible working hours whilst settling in can also be a great advantage to being self employed.

But there are of course downsides to being autónomo that people should know about. 

The following list applies primarily to people who are looking to register as self-employed in Spain but some of the points mentioned also apply to those setting up a company (sociedad limitada/SL).

Convoluted bureaucracy

Fully understanding Spain’s tax system is a minefield for most people, and for self-employed people who essentially have to become their own accountants, this is no exception.

Whether it’s the complicated Spanish legalese of forms or other archaic elements which sadly are still prevalent in Spanish bureaucracy, bookkeeping in Spain takes up a lot of time and is far from user-friendly.

That somewhat explains why most autónomos in Spain end up paying a gestor, a type of accountant in this case, to navigate through the muddy waters of quarterly tax returns, VAT and so on.

The fact that there is no direct translation for the word “gestor” (the closest word in English is agent) showcases how the existence of this profession is pretty much unique to Spain; a jack of all trades for matters relating to jumping through bureaucratic hoops.

Average monthly autonómo fees for a gestor are around €60. There are many English-speaking ones available and they can help with other important processes as well, so it’s an added cost that’s usually worth paying.

READ ALSO: The general downsides of moving to Spain for work

The highest monthly flat fee in Europe

Self-employed workers in Spain pay the highest monthly social security fees on the continent.

This “tarifa plana” (flat fee) starts off at €60 a month for the first year of self-employed work and moves up progressively over the next couple of years to roughly €283 a month.

The fee gives access to Spain’s public health system among other welfare benefits but has to be paid regardless of whether an autónomo has any monthly earnings, and on top of other taxes.

These monthly payments which add up to almost €3,400 a year are far higher than the UK’s €14/month (minimum fee), the Netherlands’s €50 a year and Germany’s €140 for those earning more than €1,700 a month.

In some countries such as in neighbouring Portugal or in Italy there is no flat fee for self-employed workers at all.

*Some Spanish regions offer self-employed people the chance to extend the minimum €60 flat fee for an extra year and there are often different fees for self-employed workers depending on their age. There is also the possibility of adding a spouse or family member as your social security beneficiary. An autónomo who earns less than the minimum wage (€1,050) technically doesn’t have to pay the flat fee.

More taxes

“If you are self-employed, you pay tax on the same scale as other people in Spain,” Sebastián Reina, the President of the Union of Professional and Working Self-Employed People (UPTA) told The Local in a previous interview.

Income tax (IRPF) for autónomos starts at 19 percent (increasing incrementally depending on salary bracket) and has to be paid every three months.

There’s also value-added tax which has to be paid if your clients are European, which in mainland Spain is 21 percent (IVA) and in the Canary Islands is 7 percent (IGIC).

You will also have to deal with the system of retenciones, or withheld tax.

Basically, any time you invoice a company for a service, that company will have to pay a portion of the bill directly to the tax office.

In this way, the Spanish government can make sure self-employed people don’t run off without paying their tax.

This withheld sum is not an additional tax, but it does mean that if you have paid too much in taxes, you will have to wait until the government refunds you at the end of the year.

There are of course ways of claiming expenses, ranging from deductions for working from home to a tax cut if a spouse is currently unemployed, so again it’s probably worth paying a gestor to get the best possible deal.

Photo: Andrew Neel/Unsplash

Widespread climate of exploitation

Whether you’re an employee with a full-time contract, an autónomo or a seasonal worker in worker in Spain, there is a widespread attitude among employers towards bending the rules, especially in times of financial crisis when workers are left with no choice but to accept what’s on offer.

It’s called “la picaresca” in Spain, the guile so often seen by employers which results in delayed payments, zero-hour contracts and unpaid extra work hours, with workers under the age of 35 the most affected by this ingrained will to cut corners.

A 2015 report by the European Union Agency of Fundamental Rights found that Spain was among the EU countries where worker exploitation was most prevalent.

For freelancers, who generally have less protection than contracted workers regardless of the country, this can mean having to deal with more follow ups regarding payments or sleights of hand vis-à-vis agreed working hours.

A government that doesn’t make it easy for the self-employed

There’s a general consensus among autónomos in Spain that the government makes it hard for them to “emprender” (be entrepreneurial or do business).

This headline in Spanish newspaper El Confidencial sums up how many self-employed workers feel: “Spain is no country for entrepreneurs and it’s the fault of politicians and their parasites”.

There’s a sense among autonómos that the government feeds off their ability to be self-sufficient by taking more from them than they give back (as seen in some of the points above), especially when compared to contracted workers, who tend to get more social protection.

Eight out of every ten self-employed people in Spain gave the government a poor mark for the handling of their situation during the coronavirus crisis, a recent ATA survey found.

Autónomos received financial support from the government later than the ERTE furlough scheme for contracted workers, they were made to continue paying the flat fee during lockdown and there are reports of the refund of amounts corresponding to 2019’s tax rebate being delayed or cancelled altogether.

Less access to mortgages and loans

Even though the uncertain nature of self-employment usually results in having to think ahead and keep your books in order, for banks in Spain ‘autónomos’ are always considered more unreliable than contracted full-time employees, regardless of earnings.

It’s not impossible to get a loan but the self-employed worker’s credit score and other documents which prove solvency will always be greater than for those with a nómina (payroll).

“There are many banks that don’t want to finance self-employed workers, unless they already have knowledge of their financial behaviour because they are long-term clients,” Ricardo Gulias, general director of brokerage firm Tu Solución Hipotecaria (Your Mortgage Solution) told El País daily.

And it seems that many autónomos are aware that providing the bank with all the paperwork and guarantees they need to trust them might still not be enough.

A 2018 survey by Spain’s Association of Self-Employed Workers ATA (Asociación de Trabajadores Autónomos) found that only 3 in 10 autónomos in Spain ask for a loan from the bank.

Pitiful pensions

Autónomos may dream of putting their feet up and being able to enjoy a good pension at the end of an arduous career, but the evidence suggests the contrary.

Even the OECD has had to step in to warn the Spanish government that as things stand, there will be an army of old people in twenty years’ time struggling to make ends meet.

“In the case of a full career (35 years), the future theoretical pension for self-employed workers in Spain is 42 percent of the pension for contracted employees with similar incomes”, wrote the OECD in its report ‘Pensions at Glance 2019’.

In 2019, retired self-employed people in Spain received an average €686 monthly pension whereas the average for retirees who were on the payroll was €1,091. The numbers fluctuate year to year but in general the gap between both groups is widening.

The argument by the Spain’s Inland Revenue is that 86 percent of autónomos in Spain pay the minimum monthly social security contributions during their working life.

Of course there is a silver lining…

If you manage to jump through all the autónomo obstacles and create a work setup that you’re happy with, you can focus on enjoying all the great non-work-related perks Spain has to offer.

A 2019 HSBC Expat Explorer Survey ranked Spain as the fourth best country to move to for foreigners, only behind Switzerland, Canada and Singapore.

Respondents already living in Spain gave it sky-high scores for “quality of life”, “physical & mental wellbeing”, “cultural, open and welcoming communities”, “political stability” and “ease of settling in”.

The “little expat” scores reviewing what it is like for foreign families with children in Spain were equally encouraging: second best globally for “learning” and making “friends”. 

So remember – once you sort out your work situation, life in Spain can be very enjoyable. 

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Do I have to take most of my annual leave in August in Spain?

Many Spanish companies still expect their workers to take their holidays at specific times of the year, primarily in August, right in the height of summer when many hotels are fully booked. So what are your rights, are you obliged to take your vacation in one particular month?

Do I have to take most of my annual leave in August in Spain?

While it’s your right as an employee to be able to take holiday days, do you have to take them when your company wants you to take them, or are you able to choose and have more flexibility?

Despite August being one of the hottest months in Spain and the one month of the year when many official companies and offices shut up shop, not everyone necessarily wants to take their break at the same time as everyone else.

Taking your holidays in August means less availability in hotels, overcrowding and more expensive transport and accommodation. If you don’t have children who are off from school during the summer months, then you may wish to take your vacation days at another time of the year, when it’s less busy and cheaper.

To answer the question it’s important to know the details about what the law says about how paid time off is taken, requested, imposed, or granted.

What laws or regulations dictate the rules about paid holiday time?

There are three different sets of rules and regulations, which are responsible for regulating the laws on vacation time in Spain. 

Firstly, you need to look at the Spanish Workers’ Statute, which includes rights, duties and obligations applicable to all salaried workers in Spain.

Secondly, you need to be aware of the collective sector and/or company agreements, which may dictate the rules for a particular industry for example.

Thirdly, you need to look at the contract, which you signed with your employer when you started working for them. This sets out your individual circumstances and the rules you must abide by.   

Workers Statute

As a general rule, all employees are subject to the Workers’ Statute. Holidays are part of this and are the subject of article 38. These conditions can never be contradicted by individual companies and are set as a guaranteed minimum. 

The minimum number of holidays in Spain is 30 calendar days per year. This equals two and a half days per month worked, in the case of temporary contracts. The statute states that vacations must be taken between January 1st and December 31st in separate periods, but one of them must be for at least two weeks. They are always paid and cannot be exchanged for financial compensation.

The period when you can take them is set by a common agreement between the employer and the worker, in accordance with what is established in the collective agreements on annual vacation planning. If there is disagreement, the social jurisdiction is resorted to.

At a minimum, the company must offer vacation days at least two months before the beginning of the holiday period, so that the employee has time to organise and book.   

When the planned time to take vacations coincides with a temporary disability, pregnancy, or childbirth, you have the right to enjoy the vacations at another time, even after the calendar year is over.

Collective agreements on vacations  

Your sector’s collective agreements may also help to answer this question. These aim to improve upon the basic and general rights that are included in the Workers’ Statute. They seek to adapt the rules to each type of industry or company. They could, for example, set out extra vacation days, which are greater than the standard 30 calendar days. 

You will need to find out what your specific sector or company’s collective agreement is. There is a possibility that your sector or company has mandatory summer vacations for the month of August and in that case, you can choose vacation dates, but only within this month.

Your work contract 

Lastly, you will need to consult your individual contract which you signed with the company when you were hired.  As well as the minimum conditions set out in the Workers’ Statute, your contract sets out your particular agreement with your employer in terms of holiday duration, the work calendar and other details.

Therefore, you should state in your contract whether you have to take your holidays during August, or if you’re free to take them at other times of the year.

If after consulting these three sets of regulations and there are still in doubt or in disagreement with your company about vacations, such as having to take them during the month of August, you should consult a lawyer specialising in labor law. They should be able to give you an answer specific to your situation.  

Can I appeal or disagree and what are the consequences? 

To appeal or express disagreement with what is proposed by the company, there is a period of 20 business days from when the vacation schedule is sent out, after which time you don’t have the right to show that you disagree.  

Companies can proceed to disciplinary dismissals due to abandonment of the job if you decide to take vacations that have not been granted or agreed upon with your employer. To avoid this type of problem, always make sure you have a record in writing of your request for vacation time and subsequent approval by the company.

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