two things for self-employed
















				SHORT AND SWEET - TWO THINGS TO REMEMBER WHEN GOING SELF-EMPLOYED IN SPAIN A: Don’t forget to pay your Social Security B: Don’t forget to fill out your Tax Returns. A – SOCIAL SECURITY Every self-employed needs to make a Social Security contribution, which is around 260 euros a month, which gives you the right to health assistance for yourself and the family, and to a State pension This payment is legally compulsory, regardless of the income. B – TAX In the 20 days following each Quarter (of the calendar year) every self-employed needs to fill out the following tax forms: - INCOME TAX Quarterly, you have to hand over 20% of your profits to the Spanish Tax Agency ‘Hacienda’ At a later stage, between May and June each year you need to submit the annual summary (“renta”), where you may be entitled to a deduction on certain personal expenditure such as mortgage, rent, dependants, etc. At this point the real income tax rate for the full year is calculated, and will result either in having to pay more to the tax agency if you’ve paid too little, or getting money-back, if you’ve paid too much. It’s worth taking note that some activities, for example, bars and retail outlets, are eligible to pay a Fixed Income Tax Contribution; “estimación objetiva”, known colloquially as “módulos”. Regardless of income and expenditure you pay a fixed amount, which depends on factors such as the size of the premises, electricity contracted, number of employees, etc. Many people erroneously believe that under this system there is no need to keep accurate accounts. But this is not true, the annual VAT summaries need to reflect always the true income and expenditure, both to keep within the Law, and to ensure successful business management. – V.A.T. Each quarter you have to pay to the tax agency the difference between the V.A.T charged to customers and the V.A.T paid on business expenses. If the difference is negative, it’s rolled over into the next tax year. In January you can ask for a rebate, or use it over the following year. – RETENTIONS If you rent business premises or employ staff, you need to make a retention on the rent (19%), and a retention on the monthly salaries (percentage depending on the salary), and pay it quarterly to the tax agency. Daniel Herranz - Lawyer Lex Consilium Lawyers and Tax advisers - Valencia-Oliva-Ayora daniel.herranz@lexconsilium.com http://www.lexconsilium.com Lex Consilium is an English-Speaking Legal and Tax-advising firm, helping new business starters setting-up, and on-going businesses keep one step ahead of their accounts Please note that the social security and tax principles established in this article are correct to date (June 2010), but may vary in the future; more complex businesses and import-export activities may differ in their tax liabilities.