Going self-employed in Spain looks simple until you hit the cuota, the IRPF brackets and the question every freelancer eventually asks: should I incorporate? Here is an honest, numbers-driven comparison for British, American and international expats freelancing, consulting or running a small business in Spain.
Get an Autónomo Insurance Quote WhatsApp Our TeamMost expats arriving in Spain to freelance default to autónomo — Spain's self-employed regime — because it is fast, cheap to start and well-documented. Your rights and obligations sit in the Estatuto del Trabajo Autónomo (Ley 20/2007) ↗, your social security contributions go through the RETA tiered cuota system ↗, and your tax filings sit with Agencia Tributaria ↗.
A Sociedad Limitada (SL) is the Spanish equivalent of a UK Ltd or US LLC — a separate legal entity that limits the owner's personal liability and pays corporate income tax (Impuesto sobre Sociedades) at a flat 25% (15% for newly created companies in their first two profitable years). Since Ley 18/2022 "Crea y Crece" ↗, an SL can be incorporated with as little as €1 of share capital — though the traditional €3,000 minimum still carries clear practical and creditor-perception benefits.
The honest answer: at low and mid incomes, autónomo wins on cost and simplicity. Above roughly €40,000–€50,000 of clean annual profit, SL starts to win on tax efficiency and liability protection — but only if you can actually leave profit inside the company. Most expats overestimate how soon they should switch.
Before you can choose between autónomo and SL, you need to understand what each one actually costs, how each is taxed, and where each one bites. These are the six fundamentals.
Since 2023, the autónomo monthly social security cuota is tiered by declared net income, replacing the old flat €294. In 2026 the floor sits at roughly €90/month for the lowest tier, rising through 15 tiers to around €590+/month at the top. New autónomos still benefit from the tarifa plana — currently around €87/month for the first 12 months. See the official Seguridad Social cuota tables ↗.
Autónomo profits flow straight onto your personal IRPF (income tax) return, taxed at progressive rates from 19% to 47%+ depending on region. There is no separation between you and "the business". You declare on Modelo 130 (quarterly) and Modelo 100 (annual). VAT goes through Modelo 303 quarterly via Agencia Tributaria ↗.
An SL pays a flat 25% corporate tax (15% for the first two profitable years for newly-created entities) on company profit via Modelo 200. The owner-director then takes either a salary (taxed under IRPF, with social security via RETA as administrator) or dividends (taxed at 19%–28% savings-income rates). This two-layer structure is where the tax planning happens.
An autónomo is personally liable for every business debt — your house, savings and future income are exposed. An SL puts a legal wall between you and the business: if it fails, creditors generally chase the company, not you (subject to director-misconduct exceptions). For consultants with low debt risk, this matters less. For anyone hiring staff, holding inventory, or carrying client liability, it matters enormously.
An SL costs roughly €600–€1,500 to incorporate (notary, Registro Mercantil, gestor) plus annual statutory accounts, board minutes, Modelo 200, and obligatory deposits at the Registro Mercantil ↗. A competent asesoría fiscal is effectively mandatory — budget €100–€250/month versus €40–€80 for autónomo bookkeeping.
Below ~€40k net profit, the higher fixed cost and admin burden of an SL usually wipes out any tax saving. Between €40k and €60k it becomes a judgement call, driven mainly by liability exposure and whether you are reinvesting profit. Above €60k, especially if you can leave money inside the company to compound at 25% rather than paying personal IRPF at 37%+, the SL math usually wins.
The numbers only make sense against actual freelance lives. These are the cases we see most often — and what the right structure looks like in each.
The structural decision is rarely the actual problem. The problem is usually one of these six avoidable errors.
Whether you stay autónomo or incorporate as an SL, you need the right cover behind you — civil liability, professional indemnity, health, income protection and business assets. Choosing the wrong policy is as expensive as choosing the wrong structure, and the Spanish market is full of products written for Spanish businesses, not expat freelancers with cross-border clients.
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Structure is one decision. Cover, residency and tax are the next three. Make sure the rest of your Spanish business setup is in order too.
Civil liability, professional indemnity, premises and cyber cover for expat-owned autónomos and SLs.
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Liability, indemnity and income-protection cover designed for self-employed expat freelancers and consultants.
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Private medical cover that satisfies the digital nomad visa, NLV and self-employed residency requirements.
Read the guide ›Other essential reading for expats freelancing, consulting or running a small business in Spain:
Autónomo or Sociedad Limitada, you still need civil liability, professional indemnity and the right health cover behind you. We compare DGSFP-registered insurers and structure cover specifically for expat freelancers and small businesses in Spain — in plain English, 7 days a week.
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