New law for freelancers in Spain from October 25, 2017: extension of the flat rate of € 50 for up to a year, up to € 500 income tax deduction for health insurance, 30% income tax deductions for those working from home, subsistence allowances, reduction of 100% of the fee during maternity / paternity leave, family allowances, changes to tax contribution bases and many other very positive changes for the self-employed.
Tax deductible expenses
- Health-insurance: With a maximum of € 500 per beneficiary, the freelancer by means of direct assessment may deduct health-insurance premiums from personal income tax. This may be applied to own personal health-coverage, to spouses and to minors under 25 living at home.
- Working from home: The freelancers working from home, that is to say those who carry out their activity in their primary residence, can deduct from their income tax a proportion of utility costs (water, gas, electricity, telephone and Internet), but with a maximum of 30% of the percentage of the costs in the house in which you work.
- Subsistence allowance: by direct assessment freelancers will be able to deduct income tax from subsistence expenses incurred whilst carrying out their business activity. These of course, must take place in catering / restaurant establishments and hotels, and must be paid for by electronic means. The amounts are the same as those subsistence allowances applied to normal workers.
Extension of fee reductions for freelancers
From January 2018, the number of months in which freelancers, who undertake or resume a business activity on their own account, can benefit from a reduction in fees will be extended.
In addition, the requirements have been reduced and newly registered freelancers who have not been registered in the Autonomous Regime for the two years immediately preceding will be eligible for these reductions; until now, this period was 5 years. A freelancer needs to leave three years between registrations in Social Security in order to be eligible again for these benefits.
Other tax allowances
- Work/life balance: reductions of 100% freelance contributions, for a maximum period of 12 months, for a minor of up to 12 years’ old (previously 7 years’ old).
- Special leave for maternity, paternity, adoption, custody leading to adoption, foster care, a potentially dangerous pregnancy or during breastfeeding: 100% reductions off the freelance contributions
- Recruiting of family members: reduction of 100% of the business contributions for 12 months.
Other news
- Freelancers in the “multiple-activity” regime: will be entitled to a 50% refund of the excess if their contributions exceed the amount established in the Spanish general budget.
- fine for late tax payments: reduced to 10% if the debt is paid within one calendar month.
- Modifications: a freelancer will be able to register and unregister up to three times in one calendar year and up to 4 times the change to their contributions base.
