20 Nov, 2024 @ 08:00
1 min read

Good news for entrepreneurs in Spain: Freelancers will no longer have to pay VAT from next year – thanks to the European Union

THEY have long borne a heavy tax burden in Spain, but a new directive that comes into effect next year may leave autonomos (freelancers) smiling.

The Treasury and self-employed workers’ organisations are studying the possibility of abolishing the requirement for self-employed workers and companies earning under €85,000 to pay IVA (VAT).

Currently, they must include IVA in their invoices and file a quarterly tax return, known as form 303.

Under EU Directive 2020/285, these groups will have the option to opt out entirely, or make just one annual declaration instead.

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Tax Debt Concept. Woman With Heavy Box Full Of Tax Debt Carrying
Freelancers will find their tax burden reduced with a new EU directive that should come into effect next year

Although the EU-wide regulation in fact came into effect in 2020, Spain has not yet implemented it.

But a looming January 1 deadline for EU countries to get cracking and ‘remove’ this tax from some self-employed workers has focused the government’s attention.

The European Commision is pushing members to implement the directive because charging autonomos IVA ‘has a negative impact on competition’.

It hopes that the new rule will simplify the tax burden and reduce overheads for freelancers, allowing them in turn to offer prices that don’t have IVA tacked on.

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“In order to address this issue and avoid further distortions, small businesses established in Member States other than that in which VAT is due should also be able to benefit from the exemption,” the EC added.

There are some downsides to embracing the new regime, however. 

Self-employed workers will lose the opportunity to deduct IVA from their tax bill, and they will be restricted to increasing turnover by no more than 10% annually – although the EU is considering raising it to 25%.

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They will also have to file personal income tax returns.

So how does one apply for this new IVA exemption? Although set to come into effect in just six weeks, official guidelines on the new directive are yet to be published.

La Caixa’s Microbank blog has surmised that: “You will most likely have to submit your income tax returns, invoices and other documents proving your annual turnover is within the established limits to the Tax Agency.”

Walter Finch

Walter Finch, who comes from a background in video and photography, is keen on reporting on and investigating organised crime, corruption and abuse of power. He is fascinated by the nexus between politics, business and law-breaking, as well as other wider trends that affect society.
Born in London but having lived in six countries, he is well-travelled and worldly. He studied Philosophy at the University of Birmingham and earned his diploma in journalism from London's renowned News Associates during the Covid era.
He got his first break in the business working on the Foreign News desk of the Daily Mail's online arm, where he also helped out on the video desk.
He then decided to escape the confines of London and returned to Spain in 2022, having previously lived in Barcelona for many years.
He took up up a reporter role with the Olive Press Newspaper and today he is based in La Linea de la Concepcion at the heart of a global chokepoint and crucial maritime hub, where he edits the Olive Press Gibraltar edition.
He is also the deputy news editor across all editions of the newspaper.

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