Working as an autonomo in Spain is the default for many freelancers and small business owners.
It’s flexible and lets you hit the ground running, and is, believe it or not, the least complicated option for self-employed workers.
But at some point, you may ask yourself whether it is time to create a company instead, known as an SL.
We spoke to accountants and life planners in Andalucia who work with countless self-employed clients, below is their advice.
First: Why stay as an autonomo?
Before jumping into company formation, you should know that there are good reasons to stick with the autonomo model.
Lower upfront costs mean you don’t need capital to start. Setting up a limited company (Sociedad Limitada, or SL) requires at least €3,000 in share capital, not to mention notary fees, legal setup and more rigorous accounting.
There are fewer obligations, as autonomos don’t need to file annual accounts or keep formal ledgers like a company does. The admin is lighter, until you start scaling.
You also have more tax flexibility at low income levels. Below certain thresholds, you may actually pay less in taxes as an autonomo than through an SL. But that can change fast.
When to make the switch
Carlos Jimenez Dengra, from Marbella-based ATA accountants, told the Spanish Eye: ‘It is very complex to know when to create a limited company.
‘Everything depends on the type of activity you carry out, for example if it’s a restaurant, it needs to be a limited company from the beginning due to the responsibilities and liabilities.
‘And if you have employees it is better to use a limited company also.’
Carlos said that if you are earning around €80,000 per year as an autonomo, then it is definitely time to consider setting up an SL.
However, others put the figure around the €50,000 mark.
Lucy Hayes-Logan from Solving Spain, a company which helps people moving to Andalucia, told the Spanish Eye: ‘If the annual profits of your business range from €40,000 to €60,000, constituting an SL could be more profitable than continuing as a self-employed person.
‘However, as you can imagine, it is a strictly case by case situation, and the initial phase of setting up an S.L. is obviously very high, where becoming autonomo it is not.’
If you want to work out whether creating an S.L. is worth it, Lucy advises using this online tax calculator.
What you should know
Around €50,000 in profits is the most common tipping point. Spain’s progressive income tax means high-earning autonomos can end up paying over 40% in personal income tax (IRPF).
By contrast, a company pays a flat 25% corporate tax rate (Impuesto de Sociedades).
It means once you consistently earn above €50,000, running your business through a company can save you serious money, even after accounting for extra costs.
Reinvesting profits
As an autonomo, all your profit is taxed as personal income, whether you spend it or not.
With an SL, you can leave profits in the business and pay the lower corporate rate, only being taxed personally when you draw dividends or a salary.
Limiting liability
If your work carries risk, say you’re running events, managing client funds or shipping physical products, an SL offers a layer of legal protection.
Your personal assets are shielded. As an autonomo, you’re fully liable with everything you own.
Hiring staff
If you’re bringing in staff, dealing with larger clients, or planning to grow, having a company improves your credibility. Some clients, especially international ones, may even require it.
What about the costs?
Creating an SL in Spain involves a €3,000 share capital (can be used in the business), plus notary and registration fees (€150–€500) and monthly accounting costs (usually €100–€300).
You must also file corporate tax, VAT and annual accounts.
It’s more complex, but the long-term savings and protection can be worth it, especially if you plan to scale.
In general, if you’re freelancing part-time or earning under €40,000, staying autonomo is usually simpler and cheaper.
But if you’re earning well, reinvesting profits, or taking on bigger risks, it might be time to set up shop properly. Run the numbers, talk to a good advisor, and don’t wait until tax season to make the switch.
