What are the Deadlines that Independent Workers can't miss?
Self-employed workers have to fulfill certain tax
responsibilities from the moment they start their business activity until the
moment they stop. Some appointments are punctual, others monthly and quarterly,
which can cause some confusion throughout the year. So, you don't miss a thing,
we've listed all the commitments and respective deadlines you have to meet if
you want to work on your own!
Declaration of Start of Activity
The declaration
of activity is one of the first responsibilities of those who want to work for
themselves. It is a document that must be delivered when you intend to start
your activity as an independent worker. Find out how to open activity on the
Finance Portal.
Quarterly Declaration and Payment of Social Security
All self-employed workers must submit a declaration
every three months, referring to the previous quarter's earnings. For example,
in January 2022, workers with green receipts must submit the declaration with
the income received between October and December 2021.
The quarterly statement allows you to calculate the
amounts that self-employed workers must pay per month. It is important to
mention that the declaration must be delivered even if no income was obtained
in the previous quarter, in which case, there is a stipulated amount to be paid
per month which is 20 euros.
To complete and deliver the quarterly statement, you
must access Social Security Direct. It is only necessary to access the site, select
the option “Direct Social Security” and follow the steps indicated to obtain
the access password. Learn how to join Social Security Direct to deliver the
quarterly statement and consult relevant information.
Issuance of Green Receipts
Green receipts are the documents that self-employed
workers must issue as proof of payment for the provision of a particular service.
Green receipts are issued through the Finance Portal.
If it is a regular service, you may have to issue
receipts monthly, if not, there will always be a payment. Learn how to fill out
electronic green receipts.
Withholding and Payment on Account
In the same way as contract workers, the self-employed
person has to hand over a part of their income to the State. The IRS - personal
income tax - can be paid in two ways:
Withholding tax - if the self-employed person has received more than
12,500 euros in the previous year, he/she has to withhold tax on the green
receipts issued. Retention fees, which vary between 11.5% and 25%, are retained
by the customer, the entity that pays for the service provided and receives the
green receipt issued by the independent professional.
Payment on Account - if the self-employed worker does not withhold the
green receipts issued, he will have to make the payment on account during the
months of July, September, and October.
VAT
Value Added Tax (VAT) is mandatory when the
self-employed person has a real value of income in the previous year that
exceeds 12,500 euros. The tax amount must be declared on the green receipts and
delivered to the Finance Department within the deadlines stipulated by law.
For example, in 2021, if you are on a monthly basis,
the payment dates vary between the 20th and the 31st of the month following the
month of operations. If you are in the quarterly VAT regime, you must deliver
by the 15th of the second month following the quarter to which the operations
relate.
1st Quarter (January, February, and March) - payment
until May 20th
2nd Quarter (April, May, and June) – payment until
August 31
3rd Quarter (July, August, and September) – payment
until November 22nd
4th Quarter (October, November, and December) – payment
by February 24th.
The self-employed person who has not received more
than 12,500 euros of income in the previous year (or who has an expected income
for that year less than that amount) is exempt from VAT - under Article 53 of
the CIVA.
Advantages and Disadvantages of Being an Independent
Worker
Self-employment has many advantages. Some of them are as
follows.
autonomy in the execution of tasks
schedule flexibility - there is no fixed schedule.
workplace flexibility - at home or in a coworking space, the choice is up
to the freelancer.
choice of work to be carried out - the self-employed worker can choose the work he
prefers or is able to deliver in a given period of time.
possibility of working for several entities
However, there are also some disadvantages to being
self-employed.
less social interaction - working from home can be tiring and monotonous and
become a long-term challenge.
income instability - the volume of work is not always the same and,
therefore, the income also fluctuates, with no fixed salary.
no benefits - there are no paid holidays, Christmas allowance, or health insurance.
Congratulations!
For more information, please contact us.
(Author)
Raj Don
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