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Business set-up and VAT

There are a number of options for setting up a business.  With a business in the UK, I wanted to become an autonomo (self employed). As with the UK unless you've done it before it feels like feeling your way in the dark. And it's in Spanish. And you don't know what the rules and regs are. You will also have to think long and hard about cross-border tax planning.

Having said that, it's not too painful to become an Autonomo. The best description of what you need to do is from a site for teachers in BCN for freelance translators.

You will need to buy the modulo 039 from the tax office (the Agencia Tributaria), fill it in and give it back - this is the Alta - signing on. The form that you need to fill in looks daunting, but there isn't that much to it, and like most things you need a full set of photocopies of all the relevant documents (NIE etc). Spanish tax offices seem to be well used - a lot of business that would be carried out by post is carried out in person in Spain, particular because of the need for the photocopies and official stamps, so it's likely there will be queues. Our local Tributaria also has wonderfully poor signposting so there are about eight desks and you're never sure which one to go to - I guess you learn over time.

Everyone has to charge and pay VAT (IVA). There are no minimum thresholds as there are in the UK. There are language issues. IVA (Spanish VAT) is pronounced 'liva' and naturally the language of tax and finance is more technical so you might need a good dictionary.

Once you've signed, you can start working and billing people via facturas. And you can sign on for the social security. By registering as self-employed you automatically start paying social security - which is a compulsory fixed amount whether you earn money or not - so you immediately have to register with social security with your stamped 039.

You also have to submit a quarterly income statement and pay a proportion of any income you've made each quarter as tax 'on account' as it were. You can pay the tax on account at your local bank.

A minor detail - I did get a personal visit from a tax inspector which was something of a surprise - I was worried I'd done something wrong, but it was just to check why I wanted to be registered for intercommunal trade - that is for doing business within the EU (inter-community). Since I still do work in the UK, I needed to be able bill the UK with VAT from Spain. (Cross-border tax opens up a can of worms). Apart from that I heard nothing for 7 months.

But after 7 months I received a 'you-haven't-filled-in-a-form' letter. Unlike the UK where the VAT office send you a form to fill in every three months, in Spain it's up to you to buy the form (again from the tax office - it's only 20c but you need to get it yourself) and send or deliver it back to the tax office - like I said you can get used to visiting the tax people. Since nothing I had seen prewarned me about this and you get no notice that your registration for autonomo has started, it took the letter to kick things into action. The form is a Modulo 300 declaration for VAT. It's a bit more complex than the UK version, but similar in principle. VAT dates are 20 days from the end of the natural year's quarters - everyone is the same. Then at the end of the year you need an annual declaration. Another form to buy.

You can do this electronically as a certified user. You will have to physically prove who you are to get the electronic certificate so it is another trip round the houses. Or you apply for and use eDNI.

A final twist is that many people registered as self-employed here, only sign-up (Alta) when they have money coming in - eg an invoice has been paid. They then sign-off (Baja) as soon as possible to avoid paying the social security.


Previous article: 5. Trapped in bureaucracy - more forms for autonomos - Modelo 347 Next article: Making business contacts

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