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Four benefits struggling self-employed people in Spain can apply for

If you're an "autónomo" (self-employed person) in Spain who is struggling to make ends meet due to the coronavirus pandemic, there are several financial support packages that you should know about.

Four benefits struggling self-employed people in Spain can apply for
Photo: Martaposemuckel/Pixabay

Many of Spain's 3.2 million self-employed people (around 16 percent of the country's working population) have seen their income sources dry up during the country's lockdown and subsequent economic recession. 

Fortunately, a new set of government measures came into force on October 1st which aim in part to help self-employed workers who may have seen their businesses suffer during the pandemic. 

These financial support measures will be available until January 31st 2021. Find out below which type of aid you might be eligible for. Each one can be applied for through your mutua, which was assigned to you when you became autónomo

1)   Cese de actividad ordinario (cessation of normal business activity)

This benefit covers autónomos who have had to stop doing their usual economic activity because of the pandemic or those whose income has dwindled because of it. It was brought into force in July, but has now been extended.

Requirements: Applicants must have been contributing social security payments and been signed up to the autónomo system for the past 12 months. Your turnover for the fourth quarter must have fallen by 75 percent compared to the same period in 2019, and your income cannot exceed €5818,75 or €1939,58 per month.

2)   Ayuda por bajos ingresos (help for low earners)

The benefit for low-income workers has been put into place for all those autónomos who do not meet the conditions for the benefit above, such as those who have not contributed to the social security for the past 12 months. They will receive around 50 percent of the minimum contribution base, approximately €760.

Requirements: To be eligible for this benefit, income must not exceed minimum wage, set at €950 per month. You will also have to prove that your income has fallen by 50 percent in this fourth quarter, compared to the first three months of the year.

Taxes for autónomos. Photo: Steve Buissinne/Pixabay 

3)  Ayuda por suspensión de actividad (Suspension of business activity)

This help is aimed at autónomos who have had to close their businesses due to Covid-19 restrictions, such as those who might work in nightlife venues that have now been ordered to close.

Workers who are eligible for this benefit will receive 50 percent of the minimum contribution base, approximately €760 or 70 percent of the minimum contribution base (€950) if they have a large family and they are the sole earner.

Requirements: The applicant must have been discharged from their work within the last 30 days, prior to the application, in order to benefit.

4)  Ayuda para temporeros (Help for seasonal workers)

Like the first benefit, this help for seasonal workers has now also been extended. This is for those who have worked at least four months between June and December of this year. 

Requirements: You must have worked less than 120 days during 2018 and 2019 to be eligible. In addition to this, your income so far in 2020 can't have exceeded €23,275. 

READ MORE:

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

 

Autónomo: What we know about Spain's plan to change freelance contributions

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WORKING IN SPAIN

Do I have to register and pay taxes in Spain if I’m a remote worker?

With the rise of remote working, many foreigners are looking to move to Spain whilst holding on to their jobs back home. But do you have to register and pay taxes in Spain if you're working here remotely? Here's everything you need to know.

Do I have to register and pay taxes in Spain if I'm a remote worker?

Picture this – your company has decided that you no longer need to go back to the office after the Covid-19 pandemic and you can continue to work remotely from wherever you want, perhaps from another country.

You may decide to move to Spain, attracted by its good weather, great food, lower cost of living and many other perks, including the fact that already having a job resolves one of the major obstacles of living in the country.

However, this is where it gets complicated and you start asking questions – do you have to register and pay tax in Spain if you’re working remotely and is tax already deducted from your salary in the country where you previously lived and worked?

Many people are confused by this and online forums are filled with comments claiming that they don’t need to pay tax because they’re not working for a Spanish company or don’t have any Spanish clients.

So do remote workers whose work has nothing to do with Spain have to pay tax in Spain?

In short, the answer is yes. If you live in Spain for more than 183 days, you must pay tax here. Regardless of where your company or clients are based, if you are physically living in Spain and working from here, you are liable to pay tax.

On their website, the Spanish government states that if you’re resident in Spain you “must pay tax in Spain on your worldwide income, i.e. you must declare in Spain income obtained in any part of the world”.

But what if I’m already taxed on my salary back in my home country?

If you have a permanent remote job, you may already be paying tax on your salary back in your home country. Technically though, if you no longer live in that country, you shouldn’t be paying tax there. You should really only be paying tax in Spain if you decide to move here.

While Spain does have double taxation agreements with several countries, including a treaty for the avoidance of double taxation with the UK and the US, you are still expected to declare your income in Spain.

How do I register legally as a remote worker in Spain?

As Spain’s digital nomad visa is still not up and running yet, and all the details of how this will work haven’t been released by the Spanish government, there are currently limited options of how to legally register and pay taxes as a remote worker in Spain.

Below we outline the options for EU and non-EU citizens.

EU citizen

If you’re an EU citizen, you can simply move to Spain without the need for a visa. However, you will need to register your residency here within the first three months. One of the easiest ways of declaring the income you earn from your remote job is to register as self-employed or autónomo.

Ideally, your company would stop paying you a salary with the tax already deducted and you would simply invoice your company every month for your wage. You would then be responsible for declaring and paying your own taxes.

As an autónomo, you will declare and pay your taxes every three months. You will then also have to submit an annual tax declaration in June each year.

You should be aware that as an autónomo in Spain you will more than likely pay more taxes on your remote income than you did back in your home country. This is partly because of the higher social security fees you will be charged, regardless of how much you earn. Currently, it’s €294 per month (€60 for the first year and working progressively up to €294 over the course of the second year).

The income tax bands also mean that you may end up paying more personal income tax in Spain as well, particularly if you are a low to mid-earner. 

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

Of course, not all companies are happy to do this, so you will need to speak with them and see what your options are. You should also talk to a gestor or tax advisor in Spain for your particular situation to see if there is another option of declaring your income here.

This could include creating a subsidiary company here and being paid a salary from that company, or finding an international accounting company that could arrange for you to be paid as a Spanish employee. Again, thess options are not necessarily available to most remote workers.

READ ALSO: What does a ‘gestor’ do in Spain and why you’ll need one

Non-EU citizen

If you’re from a non-EU country, you first have the challenge of getting a visa to legally be allowed to live in Spain for longer than 90 days, even before you start thinking about how to register as a remote worker and if you need to pay tax on your income.

Unfortunately, there’s currently no visa that allows you to simply move to Spain and work remotely. As mentioned above, Spain’s digital nomad visa is still not in operation yet. Here’s everything we know about it so far.

For a working visa, you have to be offered a job in Spain and be sponsored by a company that can prove that the job can’t be filled by someone else in the EU. For an entrepreneur visa you have to set up a business in Spain with an economic interest for the country and with a student visa, you’re only allowed to work 20 hours a week.

READ ALSO – Worker, retiree or investor: What type of Spanish visa do I need?

One option is the Golden Visa, which will allow you to work in Spain and register as an autónomo like above, but the catch is that you’ll have to have a spare €500,000 to spend on a property here before you can.

Many people mistakenly believe that they can work remotely on the Non-Lucrative Visa or NVL, however as the name suggests you can’t work on this visa. As mentioned above, the Spanish government says that you have to declare tax on your worldwide income, so if you continue to work for your company or clients abroad during this time and get found out, you could incur hefty fines.

Particularly since the start of the Covid-19 pandemic and the rise in remote workers, Spanish consulates have been rejecting NVL applications from anyone they believe might be trying to continue working remotely while they’re here.

If you don’t have €500,000, one of the best options is to apply for the NVL and take a sabbatical from your job for a year or quit your job when you move here.

Then after the year is up, you can exchange your visa for a different residency permit that allows you to become self-employed (autónomo). You can then start working remotely for your company again if you’ve been on sabbatical or apply for a new remote job and start working and declaring your taxes legally in Spain. 

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