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Taxes freelance translator Spain or UK
Thread poster: Lara Walsh
Kevin Clayton, PhD
Kevin Clayton, PhD
Spain
Local time: 13:20
Member (2012)
Spanish to English
+ ...
That's pretty accurate for me in Spain Oct 7, 2016

Michael Wetzel wrote:


Is that a vaguely accurate figure for someone with a fairly typical personal situation? I also looked at the calculator, but it was too complicated for me, I'm just trying to get a general idea.



Last year, I paid roughly 29% of my income (money in, before expenses) on tax and social security. It was a good year so maybe that's higher than most. I was able to reduce my tax bill via pension contributions and charitable donations but, at the same time, I don't try to deduct every thing I'm entitled to include in my declarations (e.g,. internet and utilities). They wouldn't make much of a difference though.

Accordingly to https://www.gov.uk/self-assessment-ready-reckoner and a guestimate of my expenses, I would have to pay ~21% in tax in the UK. On the other hand, life, in general, is cheaper here than in the UK.


 
Michael Beijer
Michael Beijer  Identity Verified
United Kingdom
Local time: 12:20
Member (2009)
Dutch to English
+ ...
30% (ES) vs 20% (UK) doesn't sound too terrible Oct 7, 2016

Kevin Clayton wrote:

Michael Wetzel wrote:


Is that a vaguely accurate figure for someone with a fairly typical personal situation? I also looked at the calculator, but it was too complicated for me, I'm just trying to get a general idea.



Last year, I paid roughly 29% of my income (money in, before expenses) on tax and social security. It was a good year so maybe that's higher than most. I was able to reduce my tax bill via pension contributions and charitable donations but, at the same time, I don't try to deduct every thing I'm entitled to include in my declarations (e.g,. internet and utilities). They wouldn't make much of a difference though.

Accordingly to https://www.gov.uk/self-assessment-ready-reckoner and a guestimate of my expenses, I would have to pay ~21% in tax in the UK. On the other hand, life, in general, is cheaper here than in the UK.



Thanks everyone for all your help! 30% (ES) vs 20% (UK) doesn't sound too terrible, and is sth I could manage, both financially and morally.

Hey Kevin, do you also use a gestor? And if so, how much would they cost you annually? As I mentioned elsewhere, I pay around £200-300 a year for a UK tax assistant.

Michael


 
Kevin Clayton, PhD
Kevin Clayton, PhD
Spain
Local time: 13:20
Member (2012)
Spanish to English
+ ...
I pay a bit more but it might not be necessary Oct 7, 2016

Michael Joseph Wdowiak Beijer wrote:

Hey Kevin, do you also use a gestor? And if so, how much would they cost you annually? As I mentioned elsewhere, I pay around £200-300 a year for a UK tax assistant.



I've used a gestor (Spanish speaking only, found online) for the last 2 years or so and he costs me 47€ a month. That's cheaper than I've seen mentioned on here but a lot considering he probably only does about half an hour work for me every month (with only a few clients and few expenses, my trimestral declarations are easy and most months he doesn't do any work for me).

Before that, I used an Excel-based template for Spanish tax returns (created by Timothy Barton). It works well and any problems I had were my own fault. And, in fairness, my gestor has made a mistake or two as well. With that template, you might be okay with just a gestor for the once-yearly personal tax returns.


 
Ieva Kupruka
Ieva Kupruka  Identity Verified
United Kingdom
Local time: 12:20
Member (2006)
English to Latvian
+ ...
Quite confusing Apr 26, 2017

Hi guys,

The post is quite old, but the subject is the same.
Seems, that the tax system in Spain might be better than my ability to grasp it.

I have the same question - move or don't move to Spain and all potential tax implications,
as we both are self-employed and tax payers in the UK.

As per topic above, seems that the Spanish monthly social security payment (or payment to be able to do a freelance work) yearly works out pretty much the same
... See more
Hi guys,

The post is quite old, but the subject is the same.
Seems, that the tax system in Spain might be better than my ability to grasp it.

I have the same question - move or don't move to Spain and all potential tax implications,
as we both are self-employed and tax payers in the UK.

As per topic above, seems that the Spanish monthly social security payment (or payment to be able to do a freelance work) yearly works out pretty much the same as my 9% NI in the UK. However, question about taxes are more puzzling. Here are repeatedly mentioned 20% income tax, but other sources suggests otherwise, i.e.

< Spanish tax rates 2017

Although tax rates in Spain are not uniform across the country, for simplicity purposes below are the basic Spanish tax rates applied to employment income. In reality, your total liable tax will be a calculation of the state's general tax rates plus the relevant regional tax rates. For tax rates in Spain for each region, see here.

Spain's tax rates in 2017 (for income earned in 2016) are below.

Up to EUR 12,450: 19 percent
EUR 12,450–20,200: 24 percent
EUR 20,200–35,200: 30 percent
EUR 35,200–60,000: 37 percent
More than EUR 60,000: 45 percent

http://www.expatica.com/es/finance/Taxation-in-Spain_471614.html#TaxSpain >

Is that true that Spanish tax rate changes as per income level or the income rate for the self-employed is flat (i.e. at 20%).

Question two: how to treat the VAT, which isn't included in my invoices in the UK for my clients from the EU? Just to increase my rate by 20% or treat this decrease of my income as a token for a better life in sun? Any other detours?

I will appreciate any suggestions/comments.
Collapse


 
Enrique Bjarne Strand Ferrer
Enrique Bjarne Strand Ferrer
Spain
Local time: 13:20
Member (2017)
English to Norwegian
+ ...
Taxes Apr 27, 2017

Ieva_Kupruka wrote:

Hi guys,

The post is quite old, but the subject is the same.
Seems, that the tax system in Spain might be better than my ability to grasp it.

I have the same question - move or don't move to Spain and all potential tax implications,
as we both are self-employed and tax payers in the UK.

As per topic above, seems that the Spanish monthly social security payment (or payment to be able to do a freelance work) yearly works out pretty much the same as my 9% NI in the UK. However, question about taxes are more puzzling. Here are repeatedly mentioned 20% income tax, but other sources suggests otherwise, i.e.

< Spanish tax rates 2017

Although tax rates in Spain are not uniform across the country, for simplicity purposes below are the basic Spanish tax rates applied to employment income. In reality, your total liable tax will be a calculation of the state's general tax rates plus the relevant regional tax rates. For tax rates in Spain for each region, see here.

Spain's tax rates in 2017 (for income earned in 2016) are below.

Up to EUR 12,450: 19 percent
EUR 12,450–20,200: 24 percent
EUR 20,200–35,200: 30 percent
EUR 35,200–60,000: 37 percent
More than EUR 60,000: 45 percent

http://www.expatica.com/es/finance/Taxation-in-Spain_471614.html#TaxSpain >

Is that true that Spanish tax rate changes as per income level or the income rate for the self-employed is flat (i.e. at 20%).

Question two: how to treat the VAT, which isn't included in my invoices in the UK for my clients from the EU? Just to increase my rate by 20% or treat this decrease of my income as a token for a better life in sun? Any other detours?

I will appreciate any suggestions/comments.


The tax system in Spain isn't that bad. As self-employed, you have to pay a flat rate of retention on what you earn (19%) plus a flat monthly fee for social security (about 330 euros).

The next year, in the income declaration, the tax authorities will calculate the amount of taxes you should have paid. The use the table you showed and add some regional taxes. However, you also have deductions, meaning that the rate on incomes below 12-13 000 is zero. But 19% is around where you get at with a decent income (in the range of 25 to 35 000 here in Spain). If you earned less, you will get a refund, if you earn more - well, you know....

The social security fee is only included into the tax calculation as a deduction.

The main problem of being self-employed in Spain is the social security fee, which has to be paid regardless of your earnings. However, if you are out of business, you can temporarily suspend your membership in the social security system. I am not sure if that implies that you loose health coverage in case of being a foreigner - Spaniards are covered anyway.


 
Angie Garbarino
Angie Garbarino  Identity Verified
Local time: 13:20
Member (2003)
French to Italian
+ ...
a link regarding health coverage for foreigners Apr 27, 2017

enrfer wrote:

I am not sure if that implies that you loose health coverage in case of being a foreigner - Spaniards are covered anyway.

https://www.elblogsalmon.com/conceptos-de-economia/quien-tiene-derecho-a-la-sanidad-publica-gratuita-en-espana


 
Ieva Kupruka
Ieva Kupruka  Identity Verified
United Kingdom
Local time: 12:20
Member (2006)
English to Latvian
+ ...
19% of total after expenses? Apr 27, 2017

enrfer wrote:

The next year, in the income declaration, the tax authorities will calculate the amount of taxes you should have paid. The use the table you showed and add some regional taxes. However, you also have deductions, meaning that the rate on incomes below 12-13 000 is zero. But 19% is around where you get at with a decent income (in the range of 25 to 35 000 here in Spain). If you earned less, you will get a refund, if you earn more - well, you know....



Thanks for your input, and it's a bit clearer now, however - these 19% is still confusional.
Did you mean that income of 25 to 35 000 euro in Spain IS a decent income
AND AFTER allowances and deductions (expenses etc) it's feasible to decrease the income to EUR 12 450
and pay just 19% of tax?

It sounds too good to be true, and doesn't seems real,
as even in the UK I'm not able to write down so much in expenses and non-taxable allowances.
In fact, my present income would be in Spanish rate bracket of 37% and along with added VAT requirement
it's very worrying, as - with husband with start-up business, kids, mortgage etc. - I'm not feeling too rich at all.


 
Andy Watkinson
Andy Watkinson
Spain
Local time: 13:20
Member
Catalan to English
+ ...
IRPF + VAT Apr 27, 2017

Ieva,

When making out your bills as a freelancer in Spain you automatically deduct 15% in respect of income tax (IRPF) - you don't deposit this on account with the Tax authorities - your client does.

If at year end you have underpaid because you should really have been paying a higher rate, you'll be sent the bill for the difference.
If you've overpaid because your yearly income didn't justify paying that much and you have allowances for children, etc..., you'll h
... See more
Ieva,

When making out your bills as a freelancer in Spain you automatically deduct 15% in respect of income tax (IRPF) - you don't deposit this on account with the Tax authorities - your client does.

If at year end you have underpaid because you should really have been paying a higher rate, you'll be sent the bill for the difference.
If you've overpaid because your yearly income didn't justify paying that much and you have allowances for children, etc..., you'll have loaned the government an interest-free amount which you'll get back in the form of a tax rebate and no apology for having overcharged you.

The VAT is nothing to worry about - you don't change your rates to include it. You simply charge your client the 21% VAT on top of the work delivered and if you're careful, you'll put it into a separate bank account (so as not to see extra money swishing about in your regular account which isn't actually yours) and pay that VAT (which has cost you nothing) to the Tax authorities every three months.

A typical bill would be:

xx words at yyy equals: €100

Minus 15% IRPF €15
Plus 21% VAT €21

Total = €106

The €15 you deducted will be deposited by the client towards your IRPF.

The €21 you added in respect of VAT you hang on to until the end of the quarter and then you pay it to the authorities. This doesn't affect your rates or your pocket - that money was never yours to begin with. Clients (companies, agencies...) don't mind paying it because they can deduct it from their own VAT payable.

What your final tax bracket would be depends on your personal circumstances - children, payments to private pension plans, whether or not you file a joint return as husband and wife or separately - I need a gestor to work these things out, but not everyone's as useless as me when it comes to paperwork.
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Enrique Bjarne Strand Ferrer
Enrique Bjarne Strand Ferrer
Spain
Local time: 13:20
Member (2017)
English to Norwegian
+ ...
Taxes Apr 27, 2017

Ieva_Kupruka wrote:


Thanks for your input, and it's a bit clearer now, however - these 19% is still confusional.
Did you mean that income of 25 to 35 000 euro in Spain IS a decent income
AND AFTER allowances and deductions (expenses etc) it's feasible to decrease the income to EUR 12 450
and pay just 19% of tax?


You will have to pay 19% in retention on your income. But the final tax is determined the next year.

If you made 30 000 you will probably pay around 6 000 in taxes (final). If you earned below 13 000 you will pay 0 euros. If you have kids and husband you support you can raise this threshold to above 20 000 euros. If you owe 4 000 in taxes, and had paid 5 000 in retention, you will get 1 000 back. This is usually paid out (or in) around June the following year. That is, in June 2017 for income during 2016.





[Edited at 2017-04-27 17:38 GMT]


 
Ieva Kupruka
Ieva Kupruka  Identity Verified
United Kingdom
Local time: 12:20
Member (2006)
English to Latvian
+ ...
Clients in the EU Apr 27, 2017

Andy Watkinson wrote:

When making out your bills as a freelancer in Spain you automatically deduct 15% in respect of income tax (IRPF) - you don't deposit this on account with the Tax authorities - your client does.

The VAT is nothing to worry about - you don't change your rates to include it. You simply charge your client the 21% VAT on top of the work delivered and if you're careful, you'll put it into a separate bank account (so as not to see extra money swishing about in your regular account which isn't actually yours) and pay that VAT (which has cost you nothing) to the Tax authorities every three months.

[..]

The €21 you added in respect of VAT you hang on to until the end of the quarter and then you pay it to the authorities. This doesn't affect your rates or your pocket - that money was never yours to begin with. Clients (companies, agencies...) don't mind paying it because they can deduct it from their own VAT payable.

[/quote]

That's very useful to know, but - does these both things (IRPF depositing by the client and companies, who don't mind paying VAT) works, when clients are based in other EU countries?

[Edited at 2017-04-28 16:51 GMT]


 
Andy Watkinson
Andy Watkinson
Spain
Local time: 13:20
Member
Catalan to English
+ ...
No Apr 28, 2017

Ieva_Kupruka wrote:

That's very useful to know, but - does these both things (IRPF depositing by the client and companies, who don't mind paying VAT) works, when clients are based in other ES countries?


Assuming you actually mean "EU countries", no.

You do not deduct the 15% personal inc. tax - IRPF.
You don't collect the 21% VAT.

You obviously have to invoice the job and include it along with all your other invoices when filing your returns but that's it: IRPF and VAT don't come into it.


 
Ieva Kupruka
Ieva Kupruka  Identity Verified
United Kingdom
Local time: 12:20
Member (2006)
English to Latvian
+ ...
No VAT for clients from the EU? Apr 28, 2017

Andy Watkinson wrote:

You obviously have to invoice the job and include it along with all your other invoices when filing your returns but that's it: IRPF and VAT don't come into it.


Thank you very much, no questions regarding income tax / IRPF anymore.

OMG... though I'm still feeling very thick.
I have read long articles about VAT, general rules, exceptions and reversed charges, but I'm still not much smarter.
What happens in a practice, when a freelance translator, which is located in Spain, invoices a client in other EU country?
Am I automatically VAT exempt, dealing with my business customers, or I still should ask my clients for some related paperwork?
Or it still depends on mercy and separate considerations of Spanish autorities?


 
Sheila Wilson
Sheila Wilson  Identity Verified
Spain
Local time: 12:20
Member (2007)
English
+ ...
Just to be clear Apr 28, 2017

IRPF retention only applies to clients in Spain, business clients that is. Anyone else invoiced gets the full bill. if less than a certain percentage of your income is from Spanish businesses then you make a quarterly return and pay some tax. I've only had a half dozen or so retentions in five years so my accountant calculates my quarterly tax bill.

VAT will not affect any business client. It isn't an extra cost to them. However, it does mean that private individuals will have to pa
... See more
IRPF retention only applies to clients in Spain, business clients that is. Anyone else invoiced gets the full bill. if less than a certain percentage of your income is from Spanish businesses then you make a quarterly return and pay some tax. I've only had a half dozen or so retentions in five years so my accountant calculates my quarterly tax bill.

VAT will not affect any business client. It isn't an extra cost to them. However, it does mean that private individuals will have to pay the VAT. This will put you at a disadvantage compared to translators who are not registered for VAT. In the UK you may have a choice; in Spain you have to register for VAT (unless you live in the Canaries).
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Ieva Kupruka
Ieva Kupruka  Identity Verified
United Kingdom
Local time: 12:20
Member (2006)
English to Latvian
+ ...
Finally got it! Apr 29, 2017

Thank you so much!
I tend to work for business clients only, so no problem at all!


 
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