Translator in Spain - information, "gestors" etc.
Thread poster: Niina Lahokoski

Niina Lahokoski  Identity Verified
Finland
Local time: 14:45
Member (2008)
English to Finnish
+ ...
Jun 2, 2014

Hello all!
I posted a similar topic on the Spanish forum already, but maybe here my question will get a larger audience.
I'm considering moving my business from Finland to Spain, but I have no idea how the system works there. I'm not looking for the usual "newcomer" advice on how to become a "traductor autónomo", as I already have 9 years of experience, a stable client base etc. What I'm trying to get is information about the financial aspects: company types, taxation + deductions, social security, pension, etc., to compare them with the Finnish system.
Any tips on where to find information in an easy-to-understand form are welcome, and of course your personal experiences, too!

Also, I'd be happy to received your recommendations of reliable "gestors" in Costa del Sol area and thereabouts. Experience with translators and translation companies is a must - our business is quite different from that of a florist or a lawyer, for example.
Feel free to reply in private if you wish, and thanks in advance!


 

Sheila Wilson  Identity Verified
Spain
Local time: 12:45
Member (2007)
English
+ ...
Glad you posted in English Jun 2, 2014

I saw the Spanish post but my Spanish is too limited to reply - I just live hereicon_wink.gif.

I think all translators are just autónomo rather than limited companies, but I suppose there may be advantages, particularly if you're going to outsource. I believe it was easy to set up, though I got my asesor to do it due to my lack of Spanish. There's a minimum social security contribution of around 280€ per month, plus some optional cover for unemployment benefit, loss of earnings due to accidents/illness etc. Your dependants will benefit from state health cover as well as you, and you'll get a pension at some time - can't tell you much about that yet. Taxation seems high to me. If your client is a Spanish company then they pay 21% of the invoice total to the government rather than to you. Unless most of your clients are Spanish you also pay tax quarterly. Then you get some back if you're lucky after the end of the tax year - well after in my experienceicon_frown.gif. We don't pay VAT (IVA) here in the Canaries but I understand there are no exemptions on the mainland and the current rate is 21%.

I think that's all I can tell you.


 

lexical  Identity Verified
Spain
Local time: 13:45
Portuguese to English
consider an "asesor" Jun 3, 2014

The problem with "gestors" is that most of them are used to working with local businesses that only trade inside Spain, and have little experience of translators as clients. If you are going to be working across EU borders, the rules about value added tax and reporting income from EU clients as an "operador intracomunitario" are different and largely outside the experience of most "gestors". I had some bad experiences with one "gestor", leading to fines for incorrect declarations.

You might consider using an "asesor de empresas" instead. They are normally better qualified (mine are accountants and tax lawyers) and give reliable advice. You don't have to be a company to use an "asesor"; they will also advise "autónomos". They are more expensive - I pay €60/month (compared with €60/quarter with a "gestor") but I get the full range of advice and help with all my finances, tax, social security, etc - not just presenting declarations. And their fees are tax deductible, of course.


 

Sheila Wilson  Identity Verified
Spain
Local time: 12:45
Member (2007)
English
+ ...
I quite agree: retain an asesor Jun 3, 2014

lexical wrote:
I get the full range of advice and help with all my finances, tax, social security, etc - not just presenting declarations. And their fees are tax deductible, of course.

I felt the same way and I think it's the right thing to do if you don't know the way the system works. You really don't just want someone to fill in the obvious forms, you want them to advise you on the most cost-effective way of running your business, avoiding double-taxation etc. I wouldn't be happy with a gestor handling my multi-currency invoices and expenses, bank accounts in three countries, properties in two countries... And I'm seriously hoping he'll be able to sort out my pension when it comes to it: I have definite entitlements from the UK, France and here in Spain, and maybe some input from the Netherlands. I doubt that a gestor would know how to handle it (and maybe my asesor won't eithericon_frown.gif).

Maybe your affairs won't be as complicated, but it's clear from your WWA that your clients are not all Spain-based. How many self-employed people export 99% of their services?


 

Niina Lahokoski  Identity Verified
Finland
Local time: 14:45
Member (2008)
English to Finnish
+ ...
TOPIC STARTER
Helpful information is hard to find Jun 3, 2014

Thanks, Sheila and lexical!

Finding a competent gestor/asesor is one of my main concerns. The international nature of our profession makes it quite different from other one-person businesses, just like you said, Sheila. I only have a couple of Spanish clients, most of them are in other EU countries, and some from outside the EU.

I suppose the admin tasks related to the EU and intra-community transactions etc. are pretty much the same in both countries, so that doesn't worry me too much - it's the Hacienda, SS and other in-country stuff I know nothing about! I haven't even found any clear information on what percentage one in reality pays of one's income in taxes and SS in Spain, at least not in any comprehensible form.
I am guessing, however, that moving to Spain would mean paying (a little) less taxes, but also losing some of the "safety net" or benefits Finland offers.

[Edited at 2014-06-03 15:12 GMT]


 

Sheila Wilson  Identity Verified
Spain
Local time: 12:45
Member (2007)
English
+ ...
You're expecting too much, Niina Jun 3, 2014

Niina Lahokoski wrote:
I haven't even found any clear information on what percentage one in reality pays of one's income in taxes and SS in Spain, at least not in any comprehensible form.

The final tax bill calculation is top-secret information that they don't even divulge to the ordinary funcionario público you get to speak to in the Hacienda officeicon_rolleyes.gif.

But the SS is a flat rate, so the percentage varies. As a part-timer winding down a little towards retirement, I'll be paying a much higher percentage than youicon_frown.gif.


 

Alex Lago  Identity Verified
Spain
Local time: 13:45
Member (2009)
English to Spanish
+ ...
A bit of info Jun 3, 2014

Don't know any good advisors or gestores so can't help there.

But as regards taxes you will have to pay the Social Security, how much is up to you, the minimum is around 270€ and the maximum is around 1100€ a month, this entitles you to medical coverage and a pension, how much you get for a pension depends on how much you pay and how many years you pay for.

You will also have to pay any VAT you've "collected", this is paid quarterly and will depend on where your clients are from and whether they are companies or individuals. You will be entitled to deduct any VAT you've paid for business expenses, so if you are like me and none of your clients are in Spain it means every quarter you will get the VAT back from the government (though in truth it usually takes them about 6 months to actually pay you).

Finally you will have to pay taxes every quarter, to do that you have to take all your business income and deduct all your business expenses (no VAT in any of this) for the quarter, the result is considered to be your profits and you pay 20% of that. Then at the end of the year when you do your tax return if you have paid in excess you get a refund and if you haven't paid enough you have to pay the difference. The actual tax rate you pay will depends on a lot of circumstances, but mostly whether or not you are married, whether or not you have children, how much money you make, etc. Taxes go from 24% to 45%, but this is without any deductions so the actual rate can be lower.

It's a good idea to have an advisor for your tax return because there are deductions for people who start new businesses, and you may be entitled to certain deductions according to your age and for being a woman.


 

lexical  Identity Verified
Spain
Local time: 13:45
Portuguese to English
just to add to Alex's excellent summary Jun 3, 2014

After the various deductions that my asesor manages to find, I reckon I pay about 15% of my gross annual income in tax. It will depend, of course, on your annual turnover and what additional income you have. You may be surprised just how much an asesor finds to deduct.

The great thing is that you don't have to worry about "Hacienda, SS and other in-country stuff". Just throw it at your asesor and relax as it's taken care of. What you pay your asesor in a month you can probably earn in an hour or two translating.

To Sheila: my asesor dealt very competently with claiming my UK state pension (which curiously had to be initiated from the Spanish end). They didn't know the answer immediately but they knew who to talk to at SS and pinned him down till they got the answers we needed.


 

Neil Ashby
Spain
Local time: 13:45
Member (2011)
Spanish to English
+ ...
I can tell you what I know.... Jun 4, 2014

I have just this morning completed my Declaracion de la Renta (annual income tax return) with my Asesor. She said that I understand the system, obligations, etc. better than most of her Spanish clients (I did all my own accounts and taxes for 3 years, this year was more complicated because I bought a house so I used a professional accountant "asesor").

I haven't read the rest of the thread for lack of time so I don't know what info you have already been given.

You need to register with the "agencia tributaria" using MODELO 037 (if it hasn't changed number), your Epigrafe IAE will be "774 traductores y interpretes" (this is the type of work you do and determines which taxes you pay, what financial help you may receive,(none, it's basically for farmers, fishermen, etc.), etc.).

then you need to register with the Social Seguridad - I found these people much more helpful than the Agencia Tributaria.....

For the first 3 financial years of being Autónomo you only need to impose an IRPF retention of 9% of the "base imponible" (the total gross invoice before any taxes whatsoever), you add 21% IVA (VAT). After 3 years the IRPF on your invoices goes up to 21%. -This only applies to invoices you send to Spanish companies.

For example, you invoice a client for €200.
The IVA (Value added tax) is 200 x 1.21 = € 42.
The IRPF (income tax) is 200 x 1.09 = € 18. (present all this information on the invoice)
Total to pay by the client = 200 + 42 - 18 = €224 (that is what the client pays you)

Every 3 months you have to pay the IVA you collect to the Agencia tributaria.
At the end of the financial year (Jan - Dec) you don't have to pay any income tax because all your Spanish clients have already 'retained' your IRPF and paid it directly to the State.

Now when you write an invoice to Finland, do not include any IVA and do not 'retain' any IRPF - this IRPF will have to be paid in your annual tax return. The IVA is not charged due to "cargo de equivalencia" - EU tax rules which mean that the IVA will be paid by your Finnish client in Finland (as long as they are registered in the EU VAT tax database, which they will be).


I'm a bit busy now but if you contact me via my profile I will happily answer any questions you may have, I can tell you about the numbers of Modelos that you need etc..... later this evening or tomorrow.

Regards,
Neil


 

Neil Ashby
Spain
Local time: 13:45
Member (2011)
Spanish to English
+ ...
INFOAUTONOMOS Jun 4, 2014

Infoautonomos
http://www.infoautonomos.com/

This is only written in Spanish so I don't know if it helps you, it's a Spanish website that offers lots of very very good and current advice to 'autonomos' - free.

I do all my own books each month, quarterly VAT payments, etc....after the first time it's easy and very good practice for understanding the Spanish system a bit better. Then you can pay € 40 once a year for the Declaracion de la Renta - your accountant will make sure the whole year is correct and reduce what you have to pay, or increase what is returned to you ;@)


 

Neil Ashby
Spain
Local time: 13:45
Member (2011)
Spanish to English
+ ...
@ Alex Jun 4, 2014

You do not have to pay your INCOME taxes quarterly if over 80% of your business is in Spain (because the hacienda has already retained the majority of your IRPF)...... that's why I escape and only have to pay my IRPF in the Declaración de la Renta once a year. However in the case of Niina I imagine she would be the same as you Alex (majority of clients outside Spain).

Retention tables can be seen here http://impuestosrenta.com/tablas-irpf/
but be careful these values (which Alex quoted) apply to 2011 AND TO EMPLOYEES - I'm not sure if it is the same for autonomos.
This years values can downloaded here:
http://www.irpf.eu/ (again these are for employees and not self-employed workers).

IRPF for autonomos to retain in their invoices was 19% - it was increased "temporarily" when the PP entered into government to 21%, it was due to return to 19% again on Jan 1 2014 but the Hacienda decided a "prorraga" was necessary and so it remains at 19%.icon_frown.gif

What % income tax you finally pay depends on your overall earnings for the year.

Regards


 

Niina Lahokoski  Identity Verified
Finland
Local time: 14:45
Member (2008)
English to Finnish
+ ...
TOPIC STARTER
Thanks Jun 5, 2014

Thanks again, everyone, very interesting information!
I'm the type of person that likes to know everything before jumping in. I have an accountant, but I still keep track of income/costs etc. myself and try to stay informed about things. Apparently that attitude is not much supported by Haciendaicon_wink.gif.


 


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Translator in Spain - information, "gestors" etc.

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