Invoice Amounts
📊 Invoice Calculation Breakdown
In Spain, professional IRPF withholdings on freelance invoices represent advanced tax payments deposited quarterly with the State Tax Agency (AEAT) on the freelancer’s behalf. Not all self-employed individuals must apply withholdings: this obligation is restricted to freelancers registered under the Professional Activities sections of the IAE (sections 2 and 3) who issue invoices to companies, startups, or other freelancers. If you are invoicing an individual private customer (end consumer), withholdings are legally prohibited, and you must declare IRPF prepayments yourself using Form 130.
🔍 Applicable IRPF Withholding Rates in 2026
Depending on the freelancer’s circumstances and activity type, Spain’s Personal Income Tax Act (Art. 101) specifies several rates:
- Professionals - General Rate (15%): The standard default rate applied to most professional services.
- New Professionals - Reduced Rate (7%): Applicable during the calendar year of starting activity and the subsequent two years, provided the freelancer was not registered under professional sections in the preceding year.
- Agricultural, Livestock & Forestry Activities (2%): A specialized reduced rate for livestock farming and forestry operators.
- Modules - Special Rate (1%): For certain activities taxed under objective estimation that have a legal obligation to withhold (e.g., carpentry, masonry).
📝 Worked examples
Example 1: Established Web Designer (Standard IRPF and VAT rates)
Profile: Web design services rendered to an online retailer. Agreed taxable base: €1,500.00. Standard IRPF withholding (15%) and general VAT rate (21%).
- Charged VAT (21%): +€315.00
- IRPF withholding (15%): –€225.00
In this case, the client pays €1,590.00 to the designer, and pays €225.00 directly to AEAT on the designer’s behalf in the next quarterly return.
Example 2: Newly Registered Freelance Developer (Reduced IRPF and general VAT)
Profile: First year of activity as a software engineer. Invoice issued to a tech startup for €2,000.00. Applying the reduced new-freelancer rate (7%).
- Charged VAT (21%): +€420.00
- IRPF withholding (7%): –€140.00
The 7% rate allows freelancers to keep more cash-flow during their initial years, though it must be planned carefully to prevent a large tax liability during the annual declaration.
Example 3: Educational Content Writer (VAT Exempt)
Profile: Writing course articles for a vocational school. Taxable base: €800.00. Under Article 20 of Spain’s VAT Act, educational content is exempt from VAT (0%), applying the standard IRPF rate (15%).
- Charged VAT (0%): +€0.00
- IRPF withholding (15%): –€120.00
⚠️ Common mistakes
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Applying withholdings when invoicing private individuals: IRPF withholdings only apply to invoices sent to businesses or other freelancers. If you invoice a private customer, do not apply a withholding. If you do, the customer cannot pay it to the tax agency, and you will owe the amount to AEAT.
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Failing to notify clients of your new-freelancer status: To apply the reduced 7% rate, you must provide your client with a signed declaration certifying that you meet the requirements (not registered in the previous year). Otherwise, they are legally required to apply the standard 15% rate.
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Spending VAT collected from clients: Although your net bank deposit may look higher than the base, the 21% VAT is not your income. You are acting as an intermediary collector and must pay it to AEAT every quarter using Form 303, deducting any business-related expenses.
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Confusing professional freelancers with commercial businesses: Self-employed people conducting commercial or industrial activities (e.g., shops, restaurants, general building contractors - section 1 of IAE) never apply withholdings, even when invoicing corporate clients, and pay tax via Form 130 instead.
❓ Frequently Asked Questions (FAQ)
Your **client** (provided they are a company or a freelancer) is legally required to deduct this amount from your invoice and pay it to the Tax Agency on your behalf every quarter using **Form 111**.
No. You are exempt from submitting quarterly Form 130 declarations if at least **70%** of your self-employed income in the preceding year was subject to tax withholdings at source.
You can apply the 7% rate during the **year you start** your freelance activity (your first IAE registration date) and the **two following calendar years**. After this period, you must apply the standard 15% rate.
Invoices issued to foreign clients (both EU and non-EU) are issued **without IRPF withholdings**, as foreign companies have no tax obligations with the Spanish AEAT. You must settle this income tax during your annual return or via Form 130.
Under Article 20 of Spain's VAT Act, exemptions apply to **certified education and training**, medical services, literary and journalistic collaborations paid as author rights, and official translations.
No. Withholdings are simply prepayments. In your annual tax return (Declaración de la Renta), your actual tax is calculated on your net yield. If your final tax rate is 18% and you only prepaid 7%, you will have to pay the difference in June.
Professional activities (sections 2/3 of IAE) involve personal intellectual or technical services and require withholdings on invoices to other businesses. Business activities (section 1) involve retail, hospitality, or commercial services and do not require withholdings.
Yes, you can request a higher withholding rate by written agreement with your client. This is common if you anticipate high earnings and want to avoid a large bill during the annual filing season.