The main concern of a self-employed person is the taxes they must pay, and it is that these self-employed workers have to face a series of tax obligations on a recurring basis. No self-employed person wants to be in debt to the Treasury and Social Security, but what taxes must they pay in 2023?
First of all, we are going to clarify the concept of self-employed. This professional is defined as a natural person who, on a regular, personal and direct basis, carries out an economic activity for profit on their own account. The main characteristic of these people is that they are not subject to any type of contract.
They are self-employed and normally have workers under their charge, in addition to having an establishment open to the public. And of course, since they have no one who has hired them, they have to pay certain taxes to the Treasury and Social Security. At Educa.Pro, we review these taxes and break them down in depth.
Value Added Tax, VAT
VAT is a tax that is added to the value of any good, provision of service or import of goods. If you, as a self-employed person, offer services or products, you must add this VAT to the invoices to later settle the accounts with the Treasury.
Of course, its settlement is calculated through the difference between the VAT accrued on income invoices and the VAT paid on expense invoices in order to complete the activity. How often do you have to pay VAT? It is done quarterly.
How much does a self-employed person pay personal income tax in 2023?
Personal income tax consists of a personal income tax, which also affects the self-employed. In the end, it is about paying taxes for the activity that is maintained. Thus, the IRPF is the same for everyone, depending on the billing rank of each person. The more money you earn, the more you will have to pay in personal income tax.
The first thing that we must highlight is that in Spain we have the objective estimation regime or modules. Here personal income tax is paid based on objective parameters such as the square meters of the premises or the kilometers traveled by the vehicle. Hence, only certain activities can be taxed by modules, never self-employed with a turnover of more than 250,000 euros.
If we go to the normal income tax withholdings, in 2023 we find the following sections depending on the billing:
- Withholding of 19% for those who invoice up to 12,450 euros.
- Withholding of 24% to those who obtain between 12,450 and 20,200 euros.
- Withholding of 30% for those who earn between 20,200 and 35,000 euros.
- Withholding of 37% for those who obtain between 35,000 and 60,000 euros.
- Withholding of 45% for those who invoice between 60,000.01 and 300,000 euros.
- Withholding of 47% for those who exceed 300,000 euros.
Self-employed quotas in 2023
To be a fully-fledged self-employed person, you must first register in the Special Scheme for Self-Employed Workers (RETA). Signing up means that you will have to pay monthly what is called the “autonomous quota”. You will have to pay this fee from the first day you start your activity.
One of the keys in this aspect is that the contribution base conditions the amount you pay, but also the benefits that a self-employed person can receive. In other words, depending on the contribution base, you will enjoy some advantages or others in the event of retirement, leave due to accident or illness, or cessation of activity.
From January 1, 2023, a contribution model was defined for the self-employed. It is a progressive model that will be in force for 3 years, between 2023 and 2025. During these years, the people who pay the least will see their fee decrease, while it will increase for those who earn more.
These are the 15 quota sections for self-employed workers:
| Section | Minimum contribution base 2023 (€) | Fee 2023 (€) |
| Up to 670 | 751.63 | 230 |
| between 670 and 900 | 849.67 | 260 |
| Between 900 and 1,166.70 | 898.69 | 275 |
| Between 1,166.70 and 1,300 | 950.98 | 291 |
| Between 1,300 and 1,500 | 960.78 | 294 |
| Between 1,500 and 1,700 | 960.78 | 294 |
| Between 1,700 and 1,850 | 1,013.07 | 310 |
| Between 1,850 and 2,030 | 1,029.41 | 315 |
| Between 2,030 and 2,330 | 1,045.75 | 320 |
| Between 2,330 and 2,760 | 1,078.43 | 330 |
| Between 2,760 and 3,190 | 1,143.79 | 350 |
| Between 3,190 and 3,620 | 1,209.15 | 370 |
| Between 3,620 and 4,050 | 1,274.51 | 390 |
| Between 4,050 and 6,000 | 1,372.55 | 390 |
| €6,000 or more | 1,633.99 | 420 |
What expenses are deductible from personal income tax?
Surely you have heard a thousand times the phrase “this is deducted by the Treasury”, but what expenses can really be deducted? You can deduct all those that are part of your professional activity and are directly related to it. For some cases, you will only need the ticket and in others you will have to have the ordinary invoice.
Next, we present a list of expenses that you can deduct. Of course, keep in mind that it will depend on the activity you develop.
- Materials and raw materials.
- Commissions of cards, accounts or transfers.
- Gasoline.
- Subsistence allowance.
- Computer.
- Printer, hard drive and other peripherals.
- Car.
- Transportation, commuting or travel.
- Internet bill.
- Mobile bill.
- Domain of your website, hosting and software license.
- Management services.
- Parking.
- Training
- Professional wardrobe.
And what about the Tax on Economic Activities?
The IAE is classified as a municipal tax, which means that it is managed and collected by the councils in each municipality. This tax is levied on carrying out economic activities, be they professional, business or artistic, in the territory of a municipality.
The tax is based on the economic capacity of the activity carried out and is established based on different parameters, such as the specific activity, the size of the company, the income obtained, etc.
The main features of the IAE include:
- Taxpayer: The taxpayer is the physical or legal person who executes the economic activity. In other words, the taxpayer is the businessman, professional or entity that develops the activity.
- Rates and Headings: The IAE is organized into rates and headings that correspond to different types of activities. Each economic activity is classified under a specific heading that defines the tax base and the applicable rate.
- Declaration and Payment: Taxpayers must present a census declaration in the corresponding town hall, where the economic activity carried out is detailed. Subsequently, the amount to be paid is calculated based on the rate and the tax base established for the heading in question.
- Exemptions and Bonuses: There are exemptions and bonuses that vary according to the legislation of each municipality. Some activities may be fully or partially exempt from the tax, and in some cases bonuses are granted to promote certain economic sectors.
- Settlement Period: The IAE is settled annually in most cases, although there may be special regimes for seasonal activities or other particular cases.
If you want to obtain accurate information about the IAE in your country or region, I recommend you consult with the local tax authorities or with tax professionals.