The 2023 income tax return for freelancers in Spain: La declaración de la renta

✓ verified by Elena Garro Accounting and Tax Specialist

The income tax return, for freelancers, is like a balancing act with the government. Did you have a crazy successful year with your freelance gig, maybe got some inheritance, and made some smart cutbacks on your spending? Well, you’ll probably have to cough up some cash to the Hacienda, the Spanish treasury. On the flip side, if your business took a hit and you barely made any profit, you could be in for a welcome payout. Cha-ching! 💸

It’s hard to get excited about tax returns when you’re stuck in a quagmire of forms, receipts, calculations, and paperwork. But fear not, my fellow freelancers! If you're feeling lost and need a helping hand, Xolo's local accountancy experts have got your back. 

That said, if you dream of the lone wolf lifestyle and like a bit of administrative torture every now and then, keep reading and we'll break it all down for you.

But first, let’s get to grips with a few Spanish terms we’ll be using throughout the article:

• Agencia Tributaria or Hacienda — Tax authorities
• IRPF — Income tax
• La declaración de la renta — Annual tax return 

What is la declaración de la renta — Spain’s annual income tax return for freelancers?

La declaración de la renta, or annual income tax return in Spain, is the process where you and the tax authorities (Agencia Tributaria) sort out any outstanding tax debts from the previous fiscal year. As income tax for freelancers is almost always charged at a fixed rate, it’s highly unlikely you’ll end the year with your books balanced. Your annual income tax return is there to get things straight.

Tax returns in Spain: Quarterly or annual?

Heard about both quarterly and annual tax returns? Well you’re not going crazy. 

If 70% or more of your income comes from non-Spanish clients, you’ll have to file quarterly tax returns. This is basically a pre-payment to the Agencia Tributaria because you don’t include income tax retentions when you make invoices for foreign clients. 

The Agencia Tributaria then takes all your quarterly pre-payments, plus any retentions from invoices to Spanish clients, and compares what you’ve paid with what you owe.

This entire process can’t be done without one of the Hacienda’s favorite go-tos: Forms.

• Forms 130 and 131: These are the forms where we make quarterly declarations as autonomo in Spain. Depending on how you’re registered with the Agencia Tributaria, you’ll use one or the other. But most of us freelancers need Form 130, and use it to pay 20% of our earnings as an advance.
• Model 115: This is the form we use to pay taxes for renting a workspace.
• Model 111: Same logic as 115, difference with 115 is that you don't report it quarterly, it's your clients mission to do it
• Model 100: This is the big one — your yearly income tax return. The result of this form determines how much we owe the Hacienda, or how much they owe us.

What's the difference between an income tax return for freelancers and for salaried workers? 

Almost every worker in Spain, and all freelancers, need to do an annual tax return. It’s more complicated for us freelancers because the Agencia Tributaria has far less data on our expenses. We have to submit all our receipts, which our salaried friends don’t need to deal with. 

If you’re in a line of work where you don’t regularly issue invoices, such as taxi drivers or pop-up bars and restaurants, the poor Agencia won’t even have records of your income either. 

Are tax returns mandatory for all freelancers in Spain?

Since 2023, all freelancers have the obligation to submit this annual tax return, even if they have not make €1 in their activity

What are the key dates for the 2023 income tax return for freelancers in Spain?

Confusing, we know. You do the admin in 2024, but it’s for your earnings during the January to December fiscal year for 2023. 

With that said, here are the dates you need to know to get your freelance tax return in for the 2023 tax year. These dates are for the whole of Spain, except the Basque Country and Navarre which are so cool, they set their own dates.

• April 3, 2024: The day when all the fun starts — day one for filing your taxes online for the 2023 tax year. Let the games begin!
• May 7, 2024: You can now file your tax return over the phone if you're feeling nostalgic for the 90s.
• June 3, 2024: The Agencia Tributaria officials will open their doors to help you file your personal income tax return in person. You can book an appointment from May 25, but bring a snack, it could take a while.
• June 26, 2023: Last day to file your tax return if you're paying by direct debit. 
• July 1, 2024: The window for your tax return is over. Get it in before midnight or face the consequences!
  

What expenses can I write off on my freelance income tax return?

Of course you’ll want to write off some tax-deductible expenses as part of your freelance income tax return. Deductibles are crucial in our careers and can be the difference between breaking even or breaking the bank. Read this article about tax-deductible expenses, but if you are in a rush here’s a brief outline of what you need to know. 

Any expense that is subtracted from your gross income can be included. But before you go and get too excited, you need to make sure they meet these three conditions:

• They must be essential to our professional activity: So don't try to deduct your concert tickets, your PlayStation 5, or your trip to Bali with your buddies. Sorry, not sorry.
• They have to be properly justified: This means that you must keep all receipts, invoices, and other relevant documents to prove the expenses.
• They must be recorded in your freelance accounting records: This doesn’t need to be fancy, just a solid backlog of all your expenses.

What income do I need to report on my freelance income tax return?

Let’s take the money we make from our clients as a given. But there are other sources of income that you need to report too:

• Other personal income from work: This includes any type of unemployment benefit, travel allowances, or remuneration paid by social security.
• Income from movable capital: This includes everything that is not real estate, like selling crypto ₿, cashing out on shares, or getting royalties for your work as a child actor.
• Returns on real estate capital: This includes rent you collect from your property, if you're lucky enough to own an apartment or something. So, make sure you report all your income and don't try to cheat the system — they’ll find you!

How to file your annual income tax return as a freelancer

It's time to file your tax return, and if you're a freelance, you have three options: the difficult way, the expensive way, and the best way. Let's take a closer look.

Filing your income tax return by yourself

If you're feeling brave and want to file your personal income tax return on your own, these are the steps to follow:

• First, you need to access the Renta WEB program. This requires a Digital Certificate or Cl@ve PIN, a reference number, or a new account.
• Next, you'll access your income tax return forms. You'll have to review all the data that was recorded through the quarterly filings of your 130 forms or through your clients' 111 forms, and check that it's all correct.
• Then, you'll add your expenses related, as well as any income that wasn't present.
• Finally, after checking and rechecking that all the data is correct, confirm it and send it!

Easy peasy, right? Lol JK, it’s a nightmare.

Filing your income tax return with an advisor

Given the complications and confusion of doing it yourself, another option is to find finance specialist who can help you file your income tax return.

But be careful — there are so many of them out there, it can be tough to choose. You don't want to end up with a charlatan, so look out references from other freelancers before making a decision.

Filing your annual income tax return with Xolo

And then there's our option. The best one, of course. 

With Xolo, you get

• Absolute confidence 
• English-speaking experts
• Help with everything involved in being a freelancer from 2023 onwards — not just the tax return

Is there a better option out there for freelancers? We don’t think so. So why not go with the best?

Get started now → 

What to do if you have to pay income tax back? 

However you choose to file your income tax return, the key question is the Shakespeare-inspired: To pay, or not to pay.

If you haven’t paid enough tax during the year and you have to pay, you can either pay the full amount at once or break it into installments. If you choose the latter, you’ll pay 60% as the first payment, and the remaining 40% before November 5.

What to do if Hacienda owes you some €€ bills?

Congratulations, you’re eligible for a tax rebate! 

• First, pop open a nice bottle of Spanish cava (this step isn’t 100% mandatory)
• Sit back and relax. The Agencia Tributaria has six months to complete the refund.

So there you have it! A full guide on income tax return for freelancers in Spain. 

If you’re still overwhelmed by all the forms, agencies, and requirements of la declaración de la renta, get in touch with the experts at Xolo and see how much easier freelance life can be.