Every freelancer in Spain must pay Personal Income Tax, called IRPF (Impuesto sobre la Renta de las Personas Físicas). This guide explains how to calculate your tax, pay quarterly installments, and file annual returns.
The Spanish tax system uses progressive rates that increase with your profits.
How IRPF works for freelancers
As an autónomo, you do not receive a salary with taxes pre-deducted.
You must pay income tax based on your net profits.
Your net profit is your gross business income minus your deductible business expenses.
You make prepayments towards your income tax throughout the year.
Withholding tax on invoices (Retención)
If you invoice other businesses in Spain, you must include a withholding tax on your invoices.
This tax is called retención (withholding).
Standard and reduced rates
The standard withholding rate is 15%.
New freelancers can choose a reduced rate of 7% during their first two years of activity.
This reduced rate helps new businesses retain cash flow during their launch phase.
You must request this option when you register with the tax office.
How withholding is paid
The client deducts the withholding amount directly from your invoice.
They pay this money directly to the tax office on your behalf.
This amount counts as a prepayment towards your final annual tax bill.
Example: You invoice a Spanish company €1,000. You add 21% IVA (€210) and subtract 15% IRPF (€150). The client pays you €1,060 and pays the €150 directly to Hacienda.
When to omit withholding
You do not apply withholding tax if your client is a private individual.
You also do not apply withholding when invoicing clients located outside of Spain.
Quarterly prepayments (Modelo 130)
If you do not withhold tax on most of your invoices, you must file a quarterly form.
This declaration is called Modelo 130.
Who must file Modelo 130?
You must file Modelo 130 if less than 70% of your total income was subject to withholding.
This is common if you work with individual clients or foreign companies.
If more than 70% of your income has withholdings, you are exempt from filing this form.
Calculating the payment
Modelo 130 requires you to pay a flat 20% tax on your year-to-date net profits.
You subtract any IRPF you already paid via invoice withholdings in the same year.
You also subtract the payments made in previous quarters of the same year.
The deadlines for Modelo 130 match the quarterly IVA deadlines.
The annual tax return (Modelo 100)
Prepayments do not represent your final tax liability.
You must calculate your final tax bill on your annual tax return.
Filing the return
Every autónomo must file an annual declaration called the declaración de la renta (tax return).
You file this return between April and June of the following year using form Modelo 100.
Hacienda calculates your tax using Spain’s progressive tax brackets.
Progressive tax brackets
Spain’s progressive income tax brackets apply to your total annual net profit.
The rates range from 19% for lower brackets to 47% for earnings over €300,000.
Hacienda subtracts all your quarterly prepayments and invoice withholdings from the final calculated tax.
If you prepaid too much, you receive a refund.
If you prepaid too little, you must pay the difference.
Checklist for managing IRPF
Follow this checklist to manage your income tax:
- Check the 70% rule : Calculate if you need to submit quarterly Modelo 130 forms.
- Collect receipts : Save all business receipts to reduce your taxable profit.
- Choose your withholding rate : Apply the 7% rate if you are in your first years of business.
- Save for taxes : Set aside 20% to 30% of your net profits to pay tax bills.
- Hire a gestor : Use a tax advisor to check your quarterly deductions.
English-speaking tax advisors (gestores) in Madrid
Progressive IRPF brackets summary
This table outlines the national progressive income tax brackets in Spain.
| Annual Net Profit Bracket | National Tax Rate |
|---|---|
| Up to €12,450.00 | 19% |
| €12,450.00 to €20,200.00 | 24% |
| €20,200.00 to €35,200.00 | 30% |
| €35,200.00 to €60,000.00 | 37% |
| €60,000.00 to €300,000.00 | 45% |
| Over €300,000.00 | 47% |
Questions and answers
Can I change my withholding rate from 7% to 15%?
Yes. You can switch to the standard 15% rate at any time. This is helpful if you want to avoid a large tax bill at the end of the year.
What business expenses are deductible for IRPF?
Expenses directly related to your work. Common deductions include office materials, software subscriptions, web hosting, and social security fees. You must have a full invoice for each expense.
What happens if my annual tax return is negative?
Yes. If your payments exceed your tax liability, you get a refund. A negative result means your prepayments were higher than your actual tax liability. Hacienda will transfer the refund to your bank account.
Do I pay regional income tax in Madrid?
Yes. The IRPF tax rate is split into national and regional portions. Madrid has the lowest regional income tax rates in Spain.
Do I need to pay IRPF if I have zero profits?
No. If your net profit is zero or negative, you do not pay IRPF. You will still file the quarterly forms, but the payment amount will be €0.00.
Can I deduct restaurant meals?
Yes, under strict limits. You can deduct up to €27.27 per day for professional meals inside Spain. You must pay using a card and keep the complete invoice.
Is the 7% rate applied to all clients?
No. The 7% withholding rate only applies to B2B invoices sent to Spanish businesses. It does not apply to foreign clients or private individuals.
What is the penalty for filing IRPF late?
A progressive surcharge. Surcharges start at 5% of the unpaid tax if you file late before the tax office contacts you. The surcharge increases if you delay payment.
