What IRPF withholding rate should you apply on your invoice
The IRPF withholding rate you include on an invoice depends on how long you have been registered as a self-employed (autónomo) professional. The general rate is 15%, but if you are in the year you started your activity or in either of the two following years, you may apply the reduced rate of 7%. That is all there is to it: there are no other standard rates for self-employed professionals. Below I explain when each one applies, what conditions you must meet, and what happens if you get it wrong.
What IRPF withholding is and why it appears on your invoice
When you issue an invoice to a company or another self-employed person for a professional service, the client does not pay you the full amount: they withhold a percentage and pay it directly to the Spanish Tax Agency (AEAT) on your behalf. That percentage is the IRPF withholding. When you file your annual tax return, the amount already withheld is deducted from what you owe, or added to any refund you are due.
In other words, the withholding is an advance payment of your IRPF made by the client on your behalf. That is why it appears on the invoice as a negative amount that reduces the total to be collected.
The general rate: 15%
The 15% rate applies to self-employed professionals in most cases. You use it when:
- You have been registered for more than three years under the economic activity listed in the corresponding IAE heading.
- You have already exhausted the reduced-rate period (see below).
- You are invoicing professional services to companies or other self-employed persons who are required to withhold.
It does not matter whether you have been trading for ten years or thirty: as long as you carry out a professional activity, the general rate is always 15%.
The reduced rate: 7%
The 7% rate is designed to ease the tax burden at the start of your activity. You may apply it if all of the following conditions are met:
- You have not carried out any professional activity in the two years prior to registering.
- You are in the calendar year in which you started your activity or in either of the two following years.
- You inform the client of this circumstance, as they need to know it in order to withhold the correct percentage.
The period during which the 7% rate applies is therefore a maximum of three tax years: the year of registration and the two subsequent ones. When the fourth year begins, you move to 15% without exception.
Example: until when can I use the 7% rate?
Imagine you register on 1 March 2024 and had not carried out any professional activity since 2022. You could apply the 7% rate in 2024, 2025, and 2026. From 1 January 2027 you must switch to 15%.
When withholding does NOT apply
Not all invoices include withholding. You will not include it when:
- The client is a private individual (a natural person not acting as a business owner or professional).
- You are invoicing a company in another European Union country or outside the EU: IRPF withholding is a mechanism of the Spanish tax system and does not apply to foreign clients.
- Your activity is classified under the IAE as a business activity (selling products, for example) rather than a professional one. In that case there is no mandatory withholding, although it is worth confirming this with your accountant, as the boundary between a business activity and a professional one can be blurred.
Practical example with figures
You are a graphic designer, you have been self-employed for two years, and you issue an invoice to a communications agency for a corporate identity project.
| Item | Amount |
|---|---|
| Fees | 2.000,00 € |
| VAT (IVA) 21% | 420,00 € |
| IRPF withholding 7% (–) | –140,00 € |
| Total to collect | 2.280,00 € |
The agency pays you 2.280 € and pays the 140 € withheld to Hacienda via Form 111. When you file your tax return, those 140 € have already been paid in your favour.
If you were already in your fourth year of activity, the withholding would be 15%: 300 €, and you would receive 2.120 €.
How to indicate the reduced rate to the client
The law does not require specific wording, but it is common practice to include a note on the invoice such as: «Retención IRPF al tipo reducido del 7 % por inicio de actividad (art. 95.1 RIRPF). Primer año de actividad: 2024.»
This gives the client a record of why you are applying that percentage and allows them to justify it to Hacienda if necessary. You should also keep a document confirming your registration date with Hacienda, such as Form 036 or 037.
What happens if you apply the wrong rate
If you apply a lower rate than the one that applies (for example, you continue using 7% when you should already be using 15%), the party responsible for paying the correct withholding is the client. However, you could face difficulties if you have communicated incorrect information. In any case, a penalty may be imposed on whoever is at fault, so it is worth keeping careful track of the years.
If you apply a higher rate than the one that applies to you (you use 15% when you could use 7%), there is no infringement, but you are advancing more money than necessary to Hacienda and reducing your cash flow for no reason.
Frequently asked questions
Do I pay the IRPF withholding or does the client?
The client withholds it at the time of payment and pays it to Hacienda themselves. You do not need to take any additional steps regarding that withholding: you simply reflect it on the invoice and, when you file your tax return, you declare it as withholding already suffered.
What happens if my client is self-employed but is not required to withhold?
Some self-employed persons on the simplified flat-rate scheme (módulos) or with business activities are not required to apply withholdings. In that case, the invoice does not include withholding even if you are a professional. If you are unsure whether your client is required to withhold or not, check with your accountant or refer to the AEAT’s electronic office.
Can I choose between 7% and 15% if I meet the requirements for the reduced rate?
Technically you can apply 15% even if you are entitled to 7%, because the reduced rate is an option, not an obligation. However, there is no point in doing so: you would be advancing more money to Hacienda than necessary. If you meet the requirements, use 7%.
Does IRPF withholding also apply to invoices for clients in other EU countries?
No. IRPF withholding is a mechanism of the Spanish tax system and is only applied by payers established in Spain. If you invoice a service to a company in another EU country, that invoice does not include withholding. Furthermore, in that case the service is outside the scope of Spanish VAT (IVA) by reverse charge, so it would not include IVA either. Check with your accountant how to reflect this correctly.
How Kullqi helps you with withholdings
In Kullqi you can configure the withholding rate for each client or each invoice line, and the programme calculates the total to collect automatically. In addition, as each invoice is recorded with Veri*Factu and chained with a tax QR code, you do not need to worry about traceability before Hacienda. The indicative Form 303 summary gives you a quick overview of your quarterly position, although the submission to Hacienda is always carried out by you or your accountant.
If you would like to try it with no commitment, test Kullqi free for 14 days at https://app.kullqi.com/, with no need to enter any card details.