Most local freelancers in Gran Canaria are self-employed (known as autónomo). Being autónomo means that you contribute to the Spanish social security system and have to declare your earnings and pay tax and VAT (IGIC).
First time autónomos get a big discount on the cost of being autónomo. It costs 50 euros for the first six months, 134 euros for the second year and 186 euros per month up to 18 months after you start your activity.
However, you don’t need to register as self-employed if you start a digital business based on the island.
If you start an online business in Gran Canaria selling digital products, services or courses, you don’t have to register a company and start paying taxes and social security from day one.
Spain allows online business people to start up before they register as self-employed, pay taxes or even open a company.
So, all you have to do when you start is get you online business running and go after the sales.
Once you make your first sale, you register with the Spanish tax authorities (Hacienda), and keep your invoices. You can even register online.
You will also have to declare your earnings to the taxman every quarter or year (depending on what your economic activity is).
It’s only when your sales are regular that you need to register with the social security and start paying into the system.
For more info, read this excellent description of the whole process (in Spanish).
Managing taxes efficiently as a “digital” freelancer Invoicing correctly locally and internationally Social Security, IRPF, IRNR and other tax related.
In order to gain a better understanding of how to invoice a client no matter where he is, let’s do it with an example:
• A company located in Gran Canaria offers an accounting program allowing users to download it by paying in advance.
• The program is downloaded by: A company based in Canary Islands: The company will pay IGIC as a “business to business” operation.
• A private individual in Canary Islands: He or she will pay IGIC as a “business to consumer” operation.
• A company based in the Spanish mainland: The company will pay IVA as a “business to business” operation.
• A private individual in the Spanish mainland: He or she will pay IVA.
• A private individual in the UE: He or she will pay the IVA of the country where he or she lives.
• A company or a private individual outsite the UE: Tax free.
When an entrepreneur sets up a company or startup in Gran Canaria, the taxes will be paid when the first sale is carried out. At this very moment the entrepreneur is required to register with the Spanish and Canaries Tax Authorities and Social Security as a freelance.
In Gran Canaria the freelances, according to the local government laws, have the following benefits:
When the freelance is registered with Social Security, the taxes shall be calculated in proportion to the number of days worked and not for the whole month.
The freelance fee is 50 euros for the first year.
For working lunches, the freelance gets a daily discount up to 26 euros.
If the freelance works from home, the energy and water consumption and telephone charges are 30% deductible.