It is increasingly common to carry out several self-employed activities at the same time to be able to make ends meet and adapt to the demands of the market. It could supplement your income and open up new opportunities.

When you sign up to be an autónomo (self-employed) you will need to be registered for IAE (Tax on Economic Activities) also called registration epígrafe. Essentially it’s a numerical code that identifies the activity you carry out.

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Take for example an autónomo who works in marketing. They will have registered for one IAE, but if they want to supplement their marketing income and work as a tour guide or a language teacher at the same (also in a self-employed capacity), they will have to register for another IAE.

Your epígrafe or IAE will determine several factors:

• If your activity is business or professional – If you are going to carry out a professional activity, you must apply withholding tax to your invoices within Spain. The general rate is 15 percent, but if you are a newly self-employed person, the rate is reduced to seven percent during the first year of registration and the following two.
• The Value Added Tax (VAT) regime: The type of VAT you pay, whether it’s general, simplified or equivalent surcharge (mandatory for retailers).
• Personal Income Tax (IRPF) – This can be an objective estimation or a direct estimation. 

If you want to sign up for more than one, you must inform both the Treasury and Social Security, since it can affect the way you pay your taxes as seen above.

To do this, you must make a declaration of census modification and fill out forms (modelos) 036 or 037. This means you will avoid having to present form 840 on the Tax on Economic Activities.

The good news though is that you can sign up for two different activities at the same time without having to pay two lots of social security fees.

READ ALSO: How self-employed workers in Spain should invoice clients abroad 

It’s important to remember that when it comes to accounting, you have to manage income and expenses separately for each of the two or more activities.  

When you present your income statements each trimester, you will have to fill in your income and expenses for each different activity. If the two activities belong to different sectors, you must also apply the VAT deduction regime separately for each sector.

It’s useful to keep in mind that as of January 2023, self-employed people have had to pay social security based on their net income, rather than a flat fee.  

READ ALSO: Will you pay more under Spain’s new social security rates for self-employed?

What to do about IVA or VAT?

The most important thing to remember is that method used to settle personal income tax and VAT must be the same for both activities. The simplified VAT regime is exclusively for taxpayers who declare personal income tax by modules.

Sometimes it may happen that you will have to charge VAT for one activity and not for the other. For example, selling bread in a bakery (with VAT) and giving cooking classes (without VAT). 

Taking this example, the VAT incurred in the acquisition of goods and services that are related to the cooking classes cannot be deducted.

However, the VAT paid on the acquisition of goods and services related to the activity in the bakery is fully deductible. 

The VAT paid for expenses common to both activities is partially deductible by applying the percentage related to the general pro rata.