Doing business in Spain
In a previous article, we talked about what procedures are required to open a business in Spain for self-employed people. The procedures for opening a business are more complicated, but the procedures for closing a business are much simpler.
Steps to close a business in Spain for freelancers
Compared to a limited company, closing down a self-employed business is relatively simple. In addition to the things you have to do with your clients, providers or workers (e.g. return the store to the landlord, dismissal of workers, etc.), legally there are two things you need to do:
– Cancel your registration (baja in Spanish) in the tax office
The Spanish General Tax Code requires that anyone who carries out commercial activities in Spain must be registered for tax purposes in order for them to collect taxes. Therefore, when closing a business you must also notify the tax office that you are closing it. If you don’t declare your closure in time, the tax office will think you are still in business and you will have to pay quarterly taxes then.
To deregister from the tax office, you need to use the official tax office form Modelo 036. The official form can be filled out online ( click here to go to the tax office website ) and submitted with an electronic certificate.
Note: There is a condensed version of Modelo 036, Modelo 037, which can be used if the filer is self-employed and the amount of information to be reported is not too large. Since the information required to close a business is very simple, just to notify the closure of the store, so it is possible to use Modelo 037.
In addition, you should note that if you have multiple stores and just shut down one, then you also need to declare that you changed your store address to open for business.
-Cancel your registration (baja in Spanish) in the Social Security office
The Social Security Law states that all workers who work in Spain are required to pay social security contributions to the state. A freelancer is required to register as an “autónomo” with the Social Security in order to pay monthly social security contributions. If you stop working, you should also cancel your registration. If you forget to cancel it, the government will continue to collect your contributions.
Cancellation can be done online (with an electronic certificate) or in person at the Social Security office. Click here to go to the official website of the Social Security Administration.
What taxes do I have to pay after closing my business?
During the current quarter of deregistration, taxes returns will still need to be filed. For example, if I closed my business in April, I will have to continue to do my quarterly taxes for the second quarter in July. Likewise, at the end of the year, you need to do the annual tax report (declaraciones informativas in Spanish)
Likewise, in the next year, you need to do RENTA tax return.
Social Security contributions will stop
Social Security fees are paid once a month at the end of each month. For the month of deregistration (baja), the Social Security office will only charge it proportionally to the number of days your worked.
