Moving a Freelance Translation Business from the UK to Spain
Many EU citizens living in the UK have been reconsidering their lives since the Brexit referendum in 2016, including myself. I eventually decided to leave the UK in 2017 and move to Catalonia, Spain. However, that move was halted after the tumultuous independence referendum in Catalonia in October 2017 and the ensuing political uncertainty there. Three years later, when things in Catalonia had calmed down and the negative consequences of Brexit became clearer, the Covid pandemic hit, putting a further obstacle to my plans of settling in Spain. After the end of the pandemic in 2022, my time had finally come to move my freelance translation practice to Barcelona.
Uprooting one’s life and moving abroad is always challenging, and as a freelancer, it can be even more difficult. There is no employer that would pay for the move, and the costs of moving from the UK into an EU country are substantial thanks to Brexit, with customs and VAT payments due for the furniture imported out of the UK and into the EU, even if it’s just one’s private household and home office. And there is, of course, a whole raft of tax rules that a freelancer needs to consider when moving to the country of their choice.
Working as a freelancer or sole trader in the UK is relatively straightforward.
Based on my experience gained during my first year of living and working in Barcelona, I would like to share and highlight a few differences of being a freelance translator in the UK and an “autónomo” in Spain. Working as a freelancer or sole trader in the UK is relatively straightforward: In the current tax year 2023/24, the threshold for paying income tax and national insurance class (NIC) 2 and 4 contributions is £12,570. The basic income tax rate above that threshold is 20% (up to £50,270 p.a.), and the higher tax rate of 40% applies to an income above £50,270. The amount of NIC 2 contributions is a fixed weekly amount of £3.45. NIC 4 contributions equal 9% on profits between £12,570 and £50,270 and 2% on profits over £50,270. The current minimum threshold for (VAT) payments in the UK is £85,000 p.a. So far so good.
❝Tax rules for freelancers in Spain are, in general, a bit more complicated than in the UK.
However, first of all, I should mention that according to Eurostat, Spain has experienced a growth rate of 40% in the number of self-employed individuals since 2009, and roughly 70% of freelancers work from home. The status of being an autónomo comes with some benefits: taxes for autónomos are generally lower than the individual tax rates for employees, whereby the exact figure depends on the region where the autónomo is based. In addition, freelancers can contribute to the national social security system, with the aim of accumulating a state pension, and they are eligible for state health cover. One has to register as an autónomo, which nowadays is much easier for EU than for British citizens, as the former don’t need to apply for a Spanish work visa. I chose to work with a “gestor”, an expert helping foreigners who want to settle in Spain to navigate the Spanish bureaucracy. It’s essential to obtain a NIE first, a Número de Identificación de Extranjero (identification number for foreigners), before being able to register as an autónomo. The NIE is also useful for other services, such as health benefits, and for obtaining a driving licence. Once my gestor had registered me with my local tax office, I switched from being a UK sole trader working remotely to being a freelance translator in Spain. It’s important to note that while the UK tax year runs from April to April, the Spanish tax year is identical to the calendar year, hence a period of double taxation may apply, depending on the start date of working in Spain.
In terms of social security contributions, the system has recently become more complicated. Prior to 2023, contributions were flat, independently from the amount earned. However, the Spanish government has introduced a new and fairer progressive system with amounts payable in line with net income, whereby a new autónomo benefits from a discounted rate of €80 per month during the first year of activity. The discount can be extended for a second year, if the minimum wage level of €1,116 (gross) per month is not reached in year 1. Otherwise, the monthly contributions increase, based on a table with 15 different income bands. Before 2023, the minimum monthly contribution was €294. Depending on the freelancer’s net income, this might under the new system be the same, higher or lower. The highest monthly contribution in year 1 is €530 for autónomos with a net monthly income over €6,000. The table is relevant only during the first phase of the new system. From 2026, new bands and amounts apply. Spanish income tax is also progressive, starting at 19% for net income of up to €12,450 p.a. with a tax-free allowance of €5,550. Higher amounts are subject to income tax between 24% and 47%, the latter being the maximum tax rate for an annual income over €300,000.
Last but not least: VAT payments. This has been a new topic for me since the VAT threshold in the UK is so high that I did not need to charge my clients VAT at all. In Spain, a rate of 21% applies on any amount charged. There are only a few sectors that are not subject to VAT in Spain, such as the education sector. However, if the translator works for direct clients or agencies outside of Spain, no VAT is charged unless the client is a private individual. An autónomo has to file quarterly tax returns to reconcile any VAT payments and an annual tax return by the end of June of the following year, the latter also being the basis for future social security contributions.