The status of the 'autónomo societario' (corporate self-employed) is one of the most confusing in the Spanish tax system. If you are a partner and director of your own limited company, it is crucial to understand how to declare your income and apply Personal Income Tax (IRPF) withholdings correctly to operate smoothly and avoid future audits by the AEAT (Spanish Tax Agency).
Payroll or Invoice? The Two Income Streams
The key to correct taxation lies in distinguishing the nature of the services you provide to your company. There are two main ways for a corporate self-employed person to receive income:
1. Director's Payroll: If you perform management and directorial duties (what the law calls a “mercantile relationship”), you must receive your income through a payroll. This is considered income from employment and does not include VAT. The IRPF withholding is a fixed rate and does not depend on your personal or family situation.
2. Invoice for Professional Services: If, in addition to being a director, you provide specific professional services to your company (e.g., you are an architect and your company is an architecture firm), you can invoice for them. This income is considered income from economic activities. Your invoices must include 21% VAT and the corresponding IRPF withholding.
It is essential that this dual role is well-justified and reflected in the company's bylaws to prevent the Tax Agency, under the "theory of the link" (teoría del vínculo), from considering that all remuneration should be paid via payroll.
IRPF Withholdings: Keys to Getting It Right
Applying the correct withholding is the company's responsibility, which will pay it quarterly to the Tax Agency using form 111. The rates are:
* On the director's payroll: The general withholding rate is 35%. However, this is reduced to 19% if the company's turnover was less than €100,000 in the previous year.
* On invoices for services: The general withholding rate is 15%. New self-employed professionals can apply a reduced rate of 7% during their first year of activity and the following two.
VAT and Adapting to VeriFactu Invoicing
Remember: a director's payroll never includes VAT. Only the invoices you issue for professional services to your company must include it.
With tax digitalization underway, it's vital to prepare for new invoicing systems. If you invoice your own company, you will be affected by the VeriFactu system (Anti-Fraud Law). The deadline for freelancers and micro-SMEs to adopt verified invoicing software is July 1, 2027. Your company, in turn, will have to adapt to B2B electronic invoicing according to the deadlines of the 'Crea y Crece' Law, which for most companies will be January 1, 2027.
Now is a good time to get informed. You can find all the details in our guide on VeriFactu 2027: Deadlines for Freelancers in Spain and about Electronic Invoicing for Freelancers in Spain: Guide to the 'Crea y Crece' Law.
In summary, being a corporate self-employed individual requires careful tax planning. Correctly defining your income streams and applying the right withholdings will allow you to meet your obligations and optimize your taxation.