Being self-employed in Spain can be a struggle at times. Whether it be the unpredictability of freelance life, the painfully high social security fees or even just the sheer amount of paperwork, many autónomos in Spain worry about their work, including their earnings and taxes.
Fortunately, there’s a way to save on your self-employed tax bill in Spain and it involves hiring your husband or wife.
Note that this could also apply to a relative who is part of the family unit. This is sometimes referred to as a ‘collaborating self-employed worker’ in Spain (autónomo colaborador in Spanish).
A collaborating freelancer can be any direct family member: spouse, children, or other relatives by blood or adoption.
In the case of married couples, they must live at the same address to qualify for this tax saving.
How to save on taxes by hiring a family member
Imagine that your salary is €60,000, which would be a very good income for an autónomo in Spain. You’d pay income tax (IRPF) of €12,698.
In order to save on taxes by hiring your family member, instead of earning that income of €60,000 alone you would earn it with your partner (ie. that between the two of you, you make €60,000). Basically, you'd be splitting your salary in half (or near enough).
Due to Spain’s progressive tax rates, this would mean the income tax bill would be much lower for both salaries than the original €60,000 gross salary.
So say you set your salary at €35,000 and your husband or wife’s at €25,000. The income tax payable for you would be €5,568 and your partner’s €2,951. In other words, you’d save €4,539 if you decided to share your salary.
Note that your partner would still have to pay social security contributions. But even so, the cost of this contribution will likely be less than the tax savings made, depending on the exact salary figures and contributions.
READ ALSO: Is it better to do a joint or separate tax declaration if you're a couple in Spain?
A warning
A word of caution. If you decide to do this, your spouse or family member must actually have a real job in the company and both your salaries must be reasonable and roughly in line with what other workers would earn. This is a way to save tax if it works for you as a business and family, not a quick fix.
If you don’t and your spouse is simply used as a way to lower your tax bill, without having any role at the company or business, the authorities will likely be onto you pretty quickly for tax evasion.
How to hire your spouse as a freelancer
To formally employ a collaborating freelancer, you need to go to the Social Security website and download form TA0521/2.
This is used to apply for registration in Spain’s self-employed régimen especial, in this case as a family member working with the person registered as the owner of the business.
By Spanish administrative standards it seems a relatively simple process, mainly because it’s not necessary to register any new 'economic activity' with the tax office.
EXPLAINED: How to hire someone if you're self-employed in Spain
However, you will need to provide a copy of the registration, as well as ID and a copy of the family register that proves the relation or marriage.
For those needing some help with the system and paperwork, many autónomos in Spain opt to hire a gestor, which is something of 'jack of all trades' service provided for legal, tax and administrative matters in Spain.
READ ALSO: What does a 'gestor' do in Spain and do you actually need one?
Our journalists at The Local are not tax or legal experts. Before making tax decisions, seek the advice of a professional.
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