A self-employed person is an individual who habitually carries out an economic activity for profit, making their own decisions and without having an employment contract with any company that guarantees them a salary.

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The responsibility of the self-employed person is unlimited, being liable for business activities with all their present and future assets, so there is no separation between personal and business patrimony.

To be self-employed, you must be of legal age, have free disposal of assets, or be an emancipated minor with a legal representative.

Types of self-employed

There are several types of self-employed that can be found in the labor market:

• Self-employed worker: One who manages a small business or performs their own work habitually.

• Professional self-employed: A worker who works for their own account in an activity included in section two of the IAE epigraph listing.

• Economically dependent self-employed: Professionals who invoice 75% or more of their income to a single client.

• Collaborating self-employed: Refers to the spouse or direct family member of the self-employed who work with them habitually.

• Self-employed company administrator: All companies must have an administrator. The administrator of a company, also called “Corporate self-employed”, must compulsorily contribute to the self-employed regime.

Self-employed Social Security

Registering as self-employed also implies paying the self-employed fee each month. Just as workers have an amount deducted from their salary for Social Security payment, the self-employed receive a monthly bill.

The amount that each self-employed person pays to Social Security can be different, according to various factors and varies depending on the contribution base and the possibility of benefiting from reductions or bonuses, depending on whether certain requirements are met.

Self-employed taxes

Personal Income Tax (IRPF)

All self-employed, as they are natural persons, their income is taxed by Personal Income Tax (IRPF).

Professional self-employed who do not include withholdings in at least 70% of their invoices, must submit and settle the fractional payment models on account of IRPF.

The models to submit would be these:

• In normal or simplified direct estimation. Submitting model 130 for IRPF fractional payment.
• In objective estimation (popularly known as “modules”). Submitting model 131 for IRPF fractional payment.

They also have other fiscal obligations, like any other entrepreneur, such as VAT settlement.

Value Added Tax (VAT) applies to the sale of certain goods and services.

There are certain services, however, that are VAT exempt, such as educational, health, copyright services…

A self-employed person can be part of different VAT regimes. There is the general regime and then other types of special regimes, among them, the most important are:

• Simplified.
• Equivalence surcharge for retail merchants.
• Agriculture, livestock and fishing.
• Cash criterion.
• Travel agencies. (…).

As self-employed you have to declare the following VAT models:

• Model 303, where VAT is declared quarterly for purchases and sales
• Model 390, which is submitted once a year, and serves as annual VAT summary
• Model 349 quarterly and annual (optional). This model only needs to be submitted for operations with other EU countries.
• Model 347 annual operations with third parties.

We hope this information is very useful to you.