Business taxation in Spain

All businesses must register for VAT, which in Spain is called Impuesto sobre el valor anadido (IVA). This must be charged on all services.

In addition you will be required to pay local business taxes called Impuesto sobre actividades economicas (IAE). Just as in the UK, this tax will vary according to location, the type of business and the size of the business. It is collected by the local town hall in the same way as household tax.

You will also be responsible for income tax and payments to the social security system, which as I explained earlier is quite high for the self-employed since you also have to pay the employer’s contribution.

Once more this is an area for your gestor to get involved in to guide you through the red tape.