Self-employed in Spain: the €254 monthly fee debate and the UK route
An entrepreneur asks what happens if he doesn't pay Spain's €254 self-employed contribution; the thread drifts into setting up UK companies and doubts about…
English · Original discussion in Spanish · Published
Self-employed in Spain: the €254 monthly fee debate and the UK route
An entrepreneur with €240 in his pocket wants to set up an online chair shop. His problem isn't finding a supplier or customers: it's that the self-employed contribution (RETA, Spain's mandatory social security scheme for the self-employed) eats up his budget before he ships his first parcel. "With that I pay for the server, advertising, the domain and I still have some left over," he sums up. The question he poses — what happens if I don't pay — sparks a 40-reply thread that, 5,177 days later, still has no clear official answer.
The figure stings: €254 a month as the minimum self-employed contribution against a minimum wage of €640 back in 2012. You pay from minute zero, even if you haven't invoiced a single euro. That's the crux of the matter.
Can you invoice without registering as self-employed?
The short answer: it depends on who you ask. Some argue that the mere act of invoicing already obliges you to contribute. Others claim that if the activity is sporadic, you can invoice without paying self-employed contributions. And a third version, the most repeated: as long as annual turnover doesn't exceed the minimum wage, there's no need to register with the RETA. The problem is that even the civil servants themselves can't agree. "Depending on which official you get, they tell you one thing or another," sums up a participant who says he makes regular enquiries at the relevant office.
The middle path suggested is registering with the tax agency only, using form 036, free of charge, and filing income tax and VAT returns. As long as you turn over less than the minimum wage, you don't register with Social Security. There are court rulings on this, but the interpretation isn't clear. If they catch you, it's time to fight. And precedents do exist.
The offshore route: a UK company and servers abroad
The alternative gaining ground in the conversation is setting up the company outside Spain. Creating a Ltd in the UK costs about 18 euros at Companies House and takes no time at all. Corporation tax is around 20%, and the first £10,000 of profit could be tax-free, though the figure isn't confirmed. The Isle of Man, Malta or any other territory with 0% corporate tax comes up as an option that's more expensive to set up but more opaque.
The problem is that setting up a company anywhere is legal; what's not quite so legal is running it from Spain without paying taxes here. "If the company in country X is managed from Spain, it has to pay taxes in Spain," one participant warns. And another adds the most sensible advice in the thread: talk to a Spanish lawyer before taking the risk.
The 50% reduction that doesn't apply to online shops
There's a rumour going around that online shops get a 50% reduction on the self-employed contribution. It's false for the case at hand. The reduction only applies to CNAE codes 4781, 4782, 4789 and 4799 (market stall trading and door-to-door sales). An online shop falls under 4791, retail trade via mail order or internet. Anyone claiming the reduction would be underpaying contributions.
The IAE business tax heading is another matter: 665, retail trade by mail or catalogue. Registering under these headings is free, and some suppliers require it to tell professionals apart from individuals. The most frequently cited binding ruling, from April 2010, classifies online furniture sales under heading 653.1 even without a physical shop.
The competitive advantage of those who don't pay
Here's the heart of the matter. If you don't pay the fee, you work off the books and have an advantage over other entrepreneurs who do comply. That's not an opinion: it's the argument made by the person defending the system. The entrepreneur's reply is just as blunt: then only people with capital they can afford to lose can start a business. Rich get richer, poor get poorer.
The most optimistic calculation in the thread: with 240 euros, if the chairs cost 10 and sell for 14, you buy 24 units. Or you pay for 800 advertising clicks. The pessimistic scenario is summed up by another participant with a smirk: "What are you going to sell, air?"
The discussion drifts into the double-standard argument: a pensioner with 2,000 euros renting out flats off the books doesn't face the same scrutiny as a self-employed worker invoicing pennies. The tax agency goes after the little guy and looks the other way on holiday rentals. With all this, the original question — what happens if I don't pay — still has no official answer. The real answer, judging by the thread, is that nobody will give it to you in writing.
An entrepreneur with €240 in his pocket wants to set up an online chair shop. His problem isn't finding a supplier or customers: it's that the self-employed contribution (RETA, Spain's mandatory social security scheme for the self-employed) eats up his budget before he ships his first parcel. "With that I pay for the server, advertising, the domain and I still have some left over," he sums up. The question he poses — what happens if I don't pay — sparks a 40-reply thread that, 5,177 days later, still has no clear official answer.
The figure stings: €254 a month as the minimum self-employed contribution against a minimum wage of €640 back in 2012. You pay from minute zero, even if you haven't invoiced a single euro. That's the crux of the matter.
Can you invoice without registering as self-employed?
The short answer: it depends on who you ask. Some argue that the mere act of invoicing already obliges you to contribute. Others claim that if the activity is sporadic, you can invoice without paying self-employed contributions. And a third version, the most repeated: as long as annual turnover doesn't exceed the minimum wage, there's no need to register with the RETA. The problem is that even the civil servants themselves can't agree. "Depending on which official you get, they tell you one thing or another," sums up a participant who says he makes regular enquiries at the relevant office.
The middle path suggested is registering with the tax agency only, using form 036, free of charge, and filing income tax and VAT returns. As long as you turn over less than the minimum wage, you don't register with Social Security. There are court rulings on this, but the interpretation isn't clear. If they catch you, it's time to fight. And precedents do exist.
The offshore route: a UK company and servers abroad
The alternative gaining ground in the conversation is setting up the company outside Spain. Creating a Ltd in the UK costs about 18 euros at Companies House and takes no time at all. Corporation tax is around 20%, and the first £10,000 of profit could be tax-free, though the figure isn't confirmed. The Isle of Man, Malta or any other territory with 0% corporate tax comes up as an option that's more expensive to set up but more opaque.
The problem is that setting up a company anywhere is legal; what's not quite so legal is running it from Spain without paying taxes here. "If the company in country X is managed from Spain, it has to pay taxes in Spain," one participant warns. And another adds the most sensible advice in the thread: talk to a Spanish lawyer before taking the risk.
The 50% reduction that doesn't apply to online shops
There's a rumour going around that online shops get a 50% reduction on the self-employed contribution. It's false for the case at hand. The reduction only applies to CNAE codes 4781, 4782, 4789 and 4799 (market stall trading and door-to-door sales). An online shop falls under 4791, retail trade via mail order or internet. Anyone claiming the reduction would be underpaying contributions.
The IAE business tax heading is another matter: 665, retail trade by mail or catalogue. Registering under these headings is free, and some suppliers require it to tell professionals apart from individuals. The most frequently cited binding ruling, from April 2010, classifies online furniture sales under heading 653.1 even without a physical shop.
The competitive advantage of those who don't pay
Here's the heart of the matter. If you don't pay the fee, you work off the books and have an advantage over other entrepreneurs who do comply. That's not an opinion: it's the argument made by the person defending the system. The entrepreneur's reply is just as blunt: then only people with capital they can afford to lose can start a business. Rich get richer, poor get poorer.
The most optimistic calculation in the thread: with 240 euros, if the chairs cost 10 and sell for 14, you buy 24 units. Or you pay for 800 advertising clicks. The pessimistic scenario is summed up by another participant with a smirk: "What are you going to sell, air?"
The discussion drifts into the double-standard argument: a pensioner with 2,000 euros renting out flats off the books doesn't face the same scrutiny as a self-employed worker invoicing pennies. The tax agency goes after the little guy and looks the other way on holiday rentals. With all this, the original question — what happens if I don't pay — still has no official answer. The real answer, judging by the thread, is that nobody will give it to you in writing.
Also available in: Deutsch
Summary of a discussion on Burbuja.info - Foro de economía, actualidad y política., translated from Spanish and reviewed before publication. Read the full discussion (40 replies).
More summaries
-
Spanish insurer blocks self-employed sick pay over unpaid social security fees
A Spanish freelancer on sick leave since March receives no benefits because the insurer demands prior payment of two overdue Social Security contributions.
-
Developer claims AI bypassed software licenses in hours
A developer claims that with AI he accessed three commercial programs in hours. For him, the fault is in the software, not the model.
-
Starting a local political party: less than €500?
Setting up a local party costs under €500, but political pressure can be lethal. The case of the Democratic Karma Party in Bilbao.
-
Sol, Terra or Astra: which AI is cheapest for coding
AI coding plans range from 20 to 100 euros a month: a 20-dollar subscription delivers 45 to 75 minutes of intensive work per day.
-
Virtual payment terminals in Spain: fees from 0.5% to 0.95%
Virtual card terminals in Spain charge between 0.5% and 0.95%, with banks rejecting risky businesses and contract clauses that shift fraud costs onto the merchant.
-
Online quote sites: you pay for leads that often don't exist
Tradespeople pay between 6 and 30 euros for leads that often never reply. The business model of online quote websites always leaves the bill on the same side.