Freelancing and Remote Work in Spain 2023

Maya Middlemiss  0:12  
Welcome to the future is freelance podcast for solopreneurs digital nomads slow Mads consultants, remote workers, ie residents, and people living a life without traditional boundaries. We're here for everyone who defies categorization and makes a living and a life their own way. Every other freelance Friday, were serving up an audio cocktail of expert tips inspired insights and stories from the frontiers of freelancing to help you achieve success with your borderless business. whatever success means to you as you live life on your own terms, thanks for listening to the future as freelance and for being part of the future of work revolution.

Hello, hello, and welcome to Episode Eight of the present season of the future is freelance. And first of all, thank you so much to everybody for the fascinating feedback and discussion that came off the back of last episode all about using AI and chat GPT as a freelancer, really fascinating subject and one that we will definitely revisit, so please keep your comments and feedback and reviews coming in. I really love to read them. For today's episode, I wanted to deal with another subject that is important to me as a freelancer. But I hope is also going to be interesting and important to many of you as well. That was because I wanted to do an episode all about freelancing in Spain. Freelancing in Spain is obviously something I've been doing for quite a while. But this year is so much has changed. And in a good way, more and more people are getting the opportunity to join us here in Spain and enjoy the remote work lifestyle. And the opportunity to freelance here for clients within Spain within EU and further afield, more than ever before due to some important legal changes. To help me unpack that I decided to talk to my accountant, not the kind of things I normally talk to him about, especially not this time of year. But he's somebody who operates a business here and works with freelancers and remote workers extensively. So I thought who better to sit down and unpack all the recent legal changes, and what that means for the culture and realities of freelance business in Spain. I hope you enjoyed this conversation. For me, I found it really interesting actually to look more broadly at the political and social context of what's going on, and country than I've lived for a lot of years. So I will introduce you to Louis Williams from entered parameters. And his contact information and services will be in the show notes in case you need any of his help and support to get all of the fascinating Spanish paperwork sorted out as a remote worker, a freelancer or a digital nomad. Louis Williams, welcome to the future as freelance. Thanks very much for joining us.

Louis Williams  3:13  
Thank you for having me.

Maya Middlemiss  3:14  
Well, it's it's great to have you with us for this special episode about freelancing in Spain. And before we dig into that, and why aren't you you would be the perfect person to speak to this subject. Please tell me a little bit about your business and background and why you're the expert in this subject as far as I'm concerned,

Louis Williams  3:33  
of course. So I'm currently with my firm in three parameters, which is an online remote accounting and immigration business. I've got staff across Spain, across Colombia, and mainly covering actually Spanish clients, but we cover the whole of Spain despite being remote. So wherever you are in Spain, you can work for us, we'll be our clients. And we can operate and on top of that we've got staff out in Colombia. Before that, I've worked as both freelance freelance basically finance specialist and temp temporary CEO for different startups when needed. across the UK. I've lived in the UK, China, Argentina, Peru and the US in all but the US working to some extent, and operating. So quite used to different labor markets and freelancing in different markets, even from the semi student days of being an English teacher in China, to the more serious running a 3040 person wellness, tech startup, helping people with their drinking issues. So been back and forth on that and got very used to work with people remotely and working with both kind of contracted freelancers who aren't really freelancers as well as, let's say genuine freelance who you paid for project. So quite used to both being on the buying and selling side of this equation. I'm and we have lots of clients as digital nomads and everything operating with as a remote workers more alike than digital nomads I feel digital nomads a bit of a misnomer within this whereas people actually tend to remotely work for clients. And actually people tend to like having a home base, the number of digital nomads is pretty small. But yeah, so you've been both freelancer and contractor plenty of freelancers on the other side.

Maya Middlemiss  5:24  
Yes. And as a freelancer, you're somebody I trust to help me navigate through all of the admin background in Spain, which can be quite complicated. I've been here for a long time. And in terms of being a remote worker in Spain, but it's it's taken me a while to find somebody who I think really understands the international context and what it's like to be a remote worker, a digital slowmode, in Spain in 2023. And it's also an exciting time for Spain right now, because we have lots of legal changes to what has been a somewhat fossilized admin and accounting background situation, I think it's fair to say so would you agree with that, Louie, do you think things are changing in Spain,

Louis Williams  6:06  
on your terms? I mean, the thing, the thing, which is very interesting is actually let's take back 20 years, 30 years, let's not go immediately back to the recent past, but actually remember that going back 2030 years ago, you didn't use the phrase, Spain, France and Italy together. You talked about Spain. He talked about Portugal, he talks about developing Eastern Europe, Spain, actually, since the Franco regime and everything has not been considered a wealthy country. And interaction. It's been a heavily bureaucratic kind of actually, we're it had a period of almost a national socialism not Nazism, but National Socialism, it was a socialism with national and specially right wing characteristics. And then a socialist movement. It was always built around a fairly heavy government intervention, lots of paperwork administrative system, which takes time to unfurl and develop. And actually the kind of extraordinary thing about Spain for all the different criticisms, which of course are levied at the current administration, the prior administration, potential elements of corruption is actually how far it's advanced. And one of the biggest remaining barriers was actually the silly bureaucratic system where effectively you had paperwork, which you had to queue up in a queue in your local town and submit it. One of the most extraordinary things which has happened is actually, they've changed from that to, you can do almost everything online, finally makes a massive increase in transparency, and submissions and makes it way easier to follow up. And it's not like you turn up in an office and then you hear well, we've lost your submission paperwork, what do you mean, you've lost my submission paperwork, where you've got a lack of trust with the new digital system, you know, there's an email record of what was submitted. So even if you're not happy with the conclusion they might come to, it tends to be quicker, and there tends to be more clarity on it. And in light of that, the to give credit to the socialist government at the moment, they've made a pretty extraordinary immigration reform to immigration reforms, actually, in the last year and a half. One which facilitated people off to educational to convert to work afterwards, both on employment or working for other people much more easily, facilitated the route to work for lots of non european migrants. And then on top of that, the other part is with the startup law coming in now. It's actually loaded up with digital nomad visas and other elements, which actually enables remote workers to come and work from Spain. Take advantage of the good climates, the infrastructure and everything else. But actually live on the digital nomad visa arriving in Spain is critical because although many other countries have got digital nomad visas, there are very few countries which actually have so many people who would like to live there. And Spain as a kid, clear tourist destination, people want to go live enjoy the life there. So if you have the ability to work remotely, that's a significant improvement. Previously, we were talking about nine to 12 month delays on getting an immigration visa. We're now talking about with the digital nomad visa being able to do it one or two, maybe even less. Yeah, it's an extraordinary improvement. Now, there's still plenty of hoops to jump through. But I would say that on the freelancing side, it's got lighter now there's we can talk about tax and Social Security burdens and touch on those which are a bit trickier. But it's definitely got easier if you've got clients outside of Spain, if you've got where you can remotely work for freelance life in Spain is actually potentially a quite attractive scenario.

Maya Middlemiss  9:33  
Yeah. And it's, as you say, it's something that lots of people have wanted to do, particularly speaking for us as Brits, even if we've been here long enough that it doesn't apply to us. It's now much more difficult for people to simply come and bring their work with them until we have the digital nomad visa. So I know a lot of people who've struggled to get the autonomy of the freelancing visa over the last year or so and been declined because they haven't had a robust enough business plan. And now finally, you can do Say I've got an income, I'm gonna I want to come and spend it in Spain. Let me show you here.

Louis Williams  10:05  
And in practice, many people were using the non lucrative visa and using it as a digital nomad visa, even though they had to sign a document saying that you wouldn't work, which is a bit absurd, right? But But yeah, the digital nomads is a clear break breakthrough. Yeah, collaborate.

Maya Middlemiss  10:20  
Definitely. Obviously, it's coming off the back of a lot of other digital nomad visas Around the world that we've seen exploding over the last 18 to 24 months or so. One criticism of these visas, which I think you could definitely say applies to Spain is that they're not really aimed at digital nomads at all. They're aimed at resettlement at people wanting to come and work here as a remote worker for at least a year or so. And ultimately, as a path to residency. Is that how you see it being applied?

Louis Williams  10:48  
So it's an interesting one. I think, yes, I see it as being opposed to that. But it's also more realistic reaction to what the market is. If you think practically, countries tend to enforce their tax systems and immigration systems based on people who reside in a country for more than six months, if you're hopping between different countries, and you pop in and out with the exception, where Europe is a Schengen area, so you can only spend basically six months under most under most nationalities within a year in the whole of Europe, not in one individual country, which is a slight consideration if you want to be a digital nomad running around around Europe, where this is, of course useful for you. But actually, in practice, digital nomads didn't require a visa, most of them could arrive on tourist visas and operate because they never were registered in any particular system, they tend to be registered in where their home country or prior country was. And because they never spent more than 90 or 180 days in any of the countries where they pass through. They really didn't need a visa. So actually, the thing is, lots of people call themselves digital nomads, when actually they are remote workers, and they want to work from another jurisdiction, and maybe they will go travel for three months. So I think the next thing of more with remote workers is remote workers a remote, who are able then to be nomadic for few months a year rather than actually think of people as nomadic. Because actually, most people want to set a base. And that's where the majority of the market is. I mean, all my personal perspective, I've got a remote company. What does that mean? It means very easily, I can go out to Argentina to a friend's wedding, go for a couple of weeks work there not need to take any holiday or maybe take one day for the flight. It's it's it completely opens up. Now, of course, I'd much rather have all the time exploring there, but it opens up the ability to do things like that. Yeah. And I think that's that's one of the big parts that to consider this digital nomad visa is much more to do with Yeah, remote work. But that's also 90% of the people who work remotely are not digital nomads.

Maya Middlemiss  12:45  
It's interesting, isn't it, because in terms of the technology, and the social and the ways we want to work and collaborate, many of us have completely decoupled the work from any fixed location at all, you know, we can literally pick up a laptop and go to Argentina or wander around the Schengen area or hop across the border to recharge a visa or whatever. Whereas we're still waiting basically, for all the regulatory stuff to catch up with that. And maybe digital nomad visas, in their present form are merely a transitory stage. And in a few years, we will either have moved away from them altogether. And we'll have much greater freedom of movement based on what you actually earn and contribute and what you do rather than it being based on what genetic lottery you won. In terms of where you were born in the first place, and what document fell in your lap.

Louis Williams  13:32  
I think one thing which can affect that more, and I know we're deviating a little bit. But here's the thing, that there's a big changing demographic transition moment. Many of the developing countries that we see in reference to we're getting rich, relative to the developed world every 10 years, you close the gap by 15%. If he goes to close the gap 10 15% Every, every 10 years, what's the ending result of that the ending result of that is the desire to be permanently potentially based in no country away from your family, and your context might be less. The other thing is demographically as Europe gets older, and the US to a degree as well. There's an increased need for migrants.

Maya Middlemiss  14:11  
Absolutely, yeah. And a younger generation that's never known a non digital work environment, can pick up those skills and bring them wherever they want to use them.

Louis Williams  14:21  
And with more digital remote work, it would remove parts of the capacitor barrier, why you need to be located in certain jurisdictions and certain countries, I could see remote work, potentially, I think globally for the world. It's going to be a fantastic improvement. But one of the effects that it might have is actually a lowering of the living standards for professional workers whose work can be done remotely in wealthier countries as competition rises from the developing world. It's very similar to what happened with multinationals. Previously multinationals out in Asia would be hiring Western Western officials to take control lead Even in graduate programs, and now they hire locally because educational standards actually very good in many local markets. And so the difference becomes less so and as the difference shrinks, also the resistance to migration and movement to people reduces that we need more people to support the ventures that will likely lead to Yes, much freer movement between countries of working age people,

Maya Middlemiss  15:23  
definitely otherwise, we're just going to end up with a generation of Geriatrics in Schengen. Nobody coming in and contributing to the tech space. So yeah, things will have to chill out a bit, but we're moving in the right direction. Hopefully, by unlocking the work from specific locations, then eventually, the paperwork will hopefully catch up, more and more people will be able to make the choice that we've done, and many others to come and live in Spain and bring our work with us. But one of the things that often comes up when we talk about freelancing in Spain is people say it's an expensive and difficult place to freelance now visas and things aside, let's now we've we've got access to the digital nomad visa or whatever it should be called. One of the things that people criticize is the high social security bargain. Could you could you speak to that at all? Do you think? Do you think that's a fair? Yeah.

Louis Williams  16:13  
I think it's a fair criticism for some owners, lower owners within Spain, I think the issue that you have is, I often hear this, Chris is much more coming from people from the let's call it the white Anglo split. So the UK, US, Canada, Ireland. This is because these countries don't have much lower rates of taxation on self employment and very profitable self employment regimes compared to most countries. One of the effects of that has is yes, in Spain, your Social Security fees are higher than you pay in the UK, or the US. Actually, in the US, not necessarily, but general taxation is a lot lower in the US has very wealth is much wealthier. So because if you imagine within the US, you're, if you're earning $60,000, in the US, that's the normal income $60,000 in Spain is two to three times the average earnings, three times the average earnings. So actually earning 180,000 In the US think what tax rate you pay on that that's the same tax rate you should expect to pay in Spain on 60,000. And I think that's one of the areas where we disconnect because Spain is not as wealthier country. So you naturally will shift up income tax regimes. But if you look at social security payments, particularly for the more highly paid, so those with 40k 40,000 euros, 6000 euros upwards, Social Security payments are actually lower than most European countries, with the exception of a couple of parts of Eastern Europe, where you've got some very nice of our programs, but compared to Germany, France, even the Netherlands, or classical Freelancer hub, or Scandinavia, your actual tax rates in Spain is lower on the self employed on Social Security. The problem point comes when you talk about low earners. So one of the things that is is very difficult is let's say you're only making 10,000 13,000 a year, euros, the expectation on Social Security that ratchets very quickly up to 230 260 300 euros a month, is a very hard push. And unfortunately, very high taxation of the lowest paid in Spain has an effect of pushing many people into the black market. And that would be what I would highlight probably as the biggest weakness, I would very much like to see some form of development of a mini jobs sort of program, replicating Germany or others or self employment allowance where you could earn, let's say, 5000 euros without starting to pay any social security, just to really help people get used to contributing without paying without being in the black market.

Maya Middlemiss  18:47  
Yeah, have a chance to be a little bit entrepreneurial, and try out a new idea to support themselves as well. I think this idea that you can only get that discounted year, and it's only a single year now, of the social security contributions. Is it once every three years or something. So if you blow it basically, then you know, you can't have another shot

Louis Williams  19:07  
for I think this is one of the the biggest weakness that I would identify in the self employment system has this. Social Security rates are high. And I mean, it points to the other weakness which you have in Spain, which is a completely unfunded pension system, which is actually by European standards, very generous, which none of the Spanish ever believe. But actually, it's one of the most generous relative to average earnings, state pension systems in the world. And it's one of the reasons I believe that the Spanish have one of the lowest savings rates of any country on earth. Because Because when you know that you're going to get a pension from the state or you perceive that you're going to get a very high pension from the state you tend to save less. And so that can lead to a high consumption activity and high consumption behavior. And many people everyone always says no, it's because they're low earning, well actually Spaniards today, if you compared to 30 years ago, were twice as wealthy.

Maya Middlemiss  19:58  
Yes. But there is that sense of, I don't know, there isn't much encouragement to save that you might see in the UK and other countries where there are tax incentives to contribute independently to your retirement savings and things here, I think there's more of a sense, you might as well spend it.

Louis Williams  20:13  
Yes, completely. And the only thing that make it easy for you to save money into as a property. The other thing in Spain is you get, it's actually quite a good place for if you built up wealth. Because as long as you've got a good lawyer, you can often avoid the wealth tax in practice. And the dividends and capital gains tax only capsules are really 23% or 28%, of the very highest compared to dividend taxes of almost 40% in many other countries. So you actually end up with a system where low earners savings is not necessarily incentivized high earners are so I would say the biggest and trickiest group is let's call it small startup entrepreneurs, small startup freelancers, and small responsible savers, those who want to build their initial small fortune, small, not fortunate, small savings pot. They're the group who I believe within Spain made the biggest help. And that's the weak points that I would see that and you can potentially talk about educational funding. But if we look at a comparative, that's the areas now on the bright side, infrastructure is fantastic. It's very safe, you end up with, with, I mean, the climate and everything else that we talk about, obviously, is given internet signals, very good. Spain has a lot of big positives, but it does have a slight issue structurally, when it comes to and this unfortunately, forces far too many people into the black markets, you have a bizarrely innovative black market in Spain, where lots of innovative wanna get want to get going. small entrepreneurs actually ended up taking parts of their earnings in, in black in. And that that's not healthy for the development of a good market economy.

Maya Middlemiss  22:00  
It's a very difficult thing culturally to get back from, isn't it? I think it's so ingrained into the economy. I know they're trying to crack down on cash transactions at every level. I mean, you can't even spend cash in any meaningful amount. But even the fact that the decade ago, people were buying half their property and suitcases full of cash, things like that it is changing. But

Louis Williams  22:23  
I mean, you could think of the robberies and everything where people didn't want to declare their safe deposit boxes, because they were all with black black market cash, which they'd never declared. I think the one thing into give credit, and the reason I always like to relate back to thinking of Spain, 30 years ago, maybe 4050 years ago, and think of how amazing it's changed as a catch up where we associated now with France and Germany and Italy in the same conversation is uneven. I mean, look at Italy, Italy, has stagnated and Spain has basically caught up with Italy, Italy was as wealthy as Germany, we we forget this within the relative performance levels, and Spain's done a lot better quality wise. The the element within that, and that's why I say work in progress is if you go back to the UK, in the 1970s, if you go back to the 1950s, when we still have rationing the beginning, the level of black market activity and the normal amount of everything passing cash in hand. In formal books, secondary Ledger's, this all existed in the UK previously, it still does, to an extent there is still a black market ledger is much reduced. But I'm not as pessimistic on Spain. And I see the difference in behavior between color, the younger generation and the older generation on this. That they will develop out of it. And the really nice thing is when your economy gets kind of cleaner, you get a really interesting effect. Because as people started contributing more, and people start playing more cleanly, competition in those markets works a lot better because sectors previously which are dominated by black market money so you can compete legally, suddenly, that automatically excludes a bunch of entrepreneurs who want to compete. And lots of them therefore do not go into entrepreneurship. But as soon as businesses effectively go legal, and industries go legal, lots of people who would otherwise not think of as entrepreneurs or come and enter into the market and that's that's one of the real positives that we never talked about when you legalize sectors which were previously in the semi black market.

Maya Middlemiss  24:24  
Yeah, so that's why everybody's asking receipts for the Spanish lessons now because they get a tiny tax break on it, but it's putting all of those tutors into having to register Yeah, yeah, it's a tricky one because as I say, those tutors don't have any kind of a minimum earning threshold over which they can be spared that to 300 a month autonomo in year two I don't know quite how do we bridge that gap but hopefully it's coming

Louis Williams  24:51  
I think I think there's gonna there's gonna have to be a realization over the Social Security financing side that It needs to be an exclusion of income. I mean, we had the quota zero campaigns, which we're trying to get to zero payments, which I think at the very lowest earnings, you should be able to apply. But I think there there could be some decent progress on this part. We've seen some green roots on it. And if growth accelerates now coming out as actually things are looking up in Spain relative to other countries, I wouldn't be too pessimistic that we could see further reforms on the autonomo part, particularly, to really get rid of this black market economy. Because if you get it legal, and you're taking even if you take half the tax you did before, but now it's legal, you suddenly transform your tax take, and you can pay for tax cuts in the other areas. Yes.

Maya Middlemiss  25:49  
And that's better for all of us who are paying.

Louis Williams  25:53  
It can lower the general burden the rest of us for compliance. Yeah,

Maya Middlemiss  25:57  
no, that makes total sense. So overall, then Spain's looking like a good place to be freelancer, a digital nomad, provided you're not on the lowest income. And if you can use the digital tools and collaboration industries that we have available to us now to get out of the really low paid, kind of coaching and things like that, that language tuition, which frequently been driven to the bottom by academies wanting to only pay temporary contracts and things like that. And there is real scope. Now to put down some roots in Spain and enjoy a great lifestyle here as a freelancer

Louis Williams  26:29  
completely and go, I'm really happy you mentioned coaching, because although there are some very successful coaches, it's quite a dangerous path for many who can buy into it on the freelancing side. And one of the unfortunate parts are that you start thinking you do it, you can get a very good pay rate for maybe three, four sessions. But the problem is, you then realize that you can't actually get enough work to really justify and make it work. And so then you spend, and you feed money back into other coaching of coaching courses, who then charge you more money to actually do it. So actually, one of the things a lot of people look for life coaching as a way out, and although there are some very good life coaches out there, I would put pause to thought of your think of this as your first freelance venture that you want to get into. And look for potentially maybe semi freelance contracting for direct projects, building on skills you previously worked to work, because that can be far more profitable in the short term. And then maybe over time, you can build relative life coaching businesses, but I have encountered this quite a lot. Because we deal with a lot of freelance guides of life coaches who really are struggling to make a good income.

Maya Middlemiss  27:35  
Yeah, it can be particularly in the digital nomad space, you can have an awful lot of people coaching each other on how to be digital nomads, and no actual external income, feeding into that network that it's ultimately not sustainable. So leverage the skills that you've got from whatever other industry or background find a way to make them work for you remotely entrepreneurially, there's bound to be something you can bring to the world. And it really is the whole world now. And moving on from freelancing then to the next stage up of business entities, the reason that you and I met, Louis was talking about Estonia and residency, which I know is something a lot of listeners to this podcast are interested in. And it's something that I know that Spain is a huge growth area for the residency program at the moment, which is great. But I also know a lot of other people have bumped into the whole issue of I'm a tax resident in Spain, I want to have a business entity that's resident in Estonia. How will the Spanish Tax Office react to that? How do I present that? And what case do I make to stop it becoming a Spanish person? Grace?

Louis Williams  28:38  
Great question. So one of the things that we've got and Okay, now we're going to go into the boring world of tax. But on tax, there's a very fundamental concept. It's called substance. What does substance mean? Substance basically says, Where are you? And the things which make up your business? It's all very well and good that you've got a registered business in Estonia, in the UK? Hey, if you want it in Dubai, but what matters is the work which has been done, where is it? The reason you see tech firms hiring lots of staff into Ireland is not because of the good weather, but because in order to have the staffing that they need, and to be able to get the corporation tax rate, they need to have enough substance or workers in that territory to justify the allocation of profits to that area. So why is this relevant? Well, if you're self employed, and you're working from your computer, you might think a it's a great idea to set up a company in Dubai and pay no tax. What happens under this scenario? Well, tax authorities very clearly established what actual operations German Dubai, when they realize it's a one person firm or two person firm and you are located in Spain, operating or you're located in Germany or France. They will say Well, look, actually your company is German, Spanish or French wherever you are located because you and your laptop are the factory of your business. And this A very important concept because many people think, Oh, well, I can store lots of money over that. Now my saying get rid of yours. Don't you know you? Oh, no, not at all. There's a good reason to keep mine. Yeah, there's a good reason to keep it because it is fantastic for giving invoicing structure giving you limited liability protection. But what is the risk? The risk is if you accumulate profits in that company, the Spanish government could declare that that entity is really Spanish and you owe corporation tax plus fines on the profit center. So how do we get around this? Well, although it could be ruled to be a technical infraction, if you invoice to eliminate all the profits from the Estonian entity, that way, there are no profits for them to suddenly interpret as Spanish corporate profits. You set up a self employed invoice out the income, which you've built up into Estonia an entity. And from that there is no tax liability, because you are already paying your liability as self employed in the country where you're based. And this can work very nicely. If you are remote work, and let's say your freelance work, you're saying I'm going to work from Spain for two years, then I might move to Georgia for a year, then I might move to back to the UK. And then I might continue on till Australia, who cares like wherever you're thinking you want to or Bali or Thailand. And the Estonian entity allows you to keep a clear structure and constant business address for the other countries. This is the area where it comes into its own. There's also a benefit, big advantage when we're talking about e commerce stores. But that's a separate area where if you're looking to launch e commerce stores, Estonia has got a very nice system associated. But critically, you should not accumulate profits in these entities. What you are stably living in a country do not build up profit in an offshore entity. So wherever it is, and if you don't do that, you're safe and dry. That's why some people have the mistake of thinking they could set up an Estonian entity. And that's a great tax saving tactic. All right. Unfortunately, that's not quite true. There is some advantage on pushing through sub expenses, which might not be deductible in other jurisdictions, but the biggest benefit is limited liability, and a clear, reliable, clear, reliable address where you can invoice clients consistently, no matter where you are located. Yes.

Maya Middlemiss  32:08  
And just the sort of admin overhead, I think of doing business in Spain, even a firm with its fair pricing as your own charges a lot more to do the tax return for a limited company than it does for a self employed person. And it doesn't compare with a stamping out when you're a one person band living as too much to pay for limited liability.

Louis Williams  32:31  
Exactly as it's a really nice thing you touch on this when you're looking just for limited liability and protection and the ability of consistent invoicing address, it's a great solution. If you're looking for tax saving, because you're a high earner, I'd say 80,000 90,000 100,000 or more. This is the real moment where looking at an SL in Spain could be advantageous because you have substance in a location and you can split income between salary and dividends. If you're not looking for the tax saving benefits, if you're looking much more for operating structures make it easy giving you limited liability, Estonia is a fantastic way to go.

Maya Middlemiss  33:03  
Yeah, just invoice it out. Don't pay yourself dividends don't build up. Profit realize profits in Estonia. Soon as soon as you make some money, bring it back into Spain and have it fully taxed here, then everybody will be happy. That should be a situation in the long run. Great, okay. I mean, the reason that I turned to Estonia five years ago now was basically for the speed of incorporation for the lack of hassle. Doing Business in Spain at that time, and even in five years has changed incredibly, just things like digital signature, and that the way that administer transforming, if we could just get the crystal ball out for a moment and try and look another five years into the future or less than that if you're not comfortable with that, but what what do you see as the future changes and hopefully, good things that we should be looking out for us freelancing in Spain? What do you predict?

Louis Williams  33:55  
So politically, it's going to be very interesting to see what happens next election. So there are plenty of negatives which I'll say about the most likely incoming governments of a combination of both evil popular and Vox what I expect to see is a reduction in immigrant visas for the for illegals yourself any illegal migrants or people who are regular in Spain. So if you are regular and listening to this, please get your application in as early as possible. For for those who, but on the positive side, what is quite likely going to be happening when we're talking about potential tax free allowance. There's many jobs adjustments on this to free up the ability to work partially. I can very much see this the Spanish government enabling a for instance, if you're in an employee at the moment, and you'd want to do some freelancing on the side for them to free up the ability to do some freelance work without registering for Social Security, provided you are contributing as an MP so to do adult jobs, which I think would be a fantastic way to start liberalizing the sector, I suspect they won't go for full way of the what we would hope which is giving let's say a 5000 tax free allowance, which you could start operating as an autonomous without registering for Social Security, and expect they won't go quite that far. But I can see them easily doing it. If you are contributing already as an employee, which I think would be a great thing to starting to generate the innovative system.

Maya Middlemiss  35:21  
Yeah, bring on the side hustles.

Louis Williams  35:23  
Exactly. It's it's a great form productivity. And it's silly that in Spain, you can only work 40 hours and legally, you're limited to two hours of overtime, a week on average maximum, which in practice, loads, loads of no professional services company does. And so you normalize again breaking the law. I expect to see some level of simplification, because although the startup law reform was very, was a step forward, it was a very badly drafted piece of legislation. In truth. I think nobody wants to vote against startup law, even though I think either popular accidentally voted against it, and then proved it on the next ceasing, seeing, saying that afterwards that it was an accidental vote against. But it was legislation which needed some revision, because it's got lots of odd requirements, for instance, for the new backups, Lord, procedure, which gives you a 24% tax break. And still to this day, it is unclear exactly how that's playing out with digital nomads. We know it's working for employed digital nomads, but self employed digital nomads who apply and remotely working through contracts and arrive when they can apply to bank employees currently unclear. There's other parts where you need both by becoming a company director or an innovative company director, you can get access to this law. But why would you need a separate classification for innovative company director if a company director gets it anyway?

Maya Middlemiss  36:47  
Yes. Want to be a non innovative company director?

Louis Williams  36:51  
Exactly. It's a it's a bit puzzling. So I would say the general parts, I'd look as positives, I expect to see a simplification of some of the complexities which emerged in the current reforms to make it clearer, cleaning up the books, I expect to see something on the side jobs to come in. And then on the other positive areas, I could there's there's the hope that they would add a small VAT exempt threshold where you can start operating, I think that's unlikely as the haciendas currently advancing EMR using is still a long way off for a lot of small providers. So they keep on pushing it back. And I expect for it's that's still a good 10 years away before they implement obligatory IE, if I've told us where you have to basically have QR codes on all your transactions. But yeah, I think the biggest thing will be many jobs, opening up for many jobs, some simplification of legislation, and I would expect, the incoming government could do some pretty aggressive stuff on corporate tax, this might make it quite advantageous for people who want to set up so so badly with others essays.

Maya Middlemiss  37:56  
I'm not allowed to say never again,

Louis Williams  38:00  
not allowed to say Never again, never again yet, but I do emphasize that I really would only recommend them for at least people who are earning 60,000 words when they're starting over they're projecting it and 80,000 upwards is a is a very good level to leverage. Hopefully it is. And because there is higher admin, yes, there is also one big potential change, which could happen there is talk at the moment of autonomous, not requiring quarterly filing for VAT, but changing annual filing for VAT. So although you'll have to make installment payments on income tax, they might allow it to be done on estimated income with VAT, which could lower the route amount of paper filing. However, I expect, if this does come this is four or five years down the track. Right.

Maya Middlemiss  38:44  
Okay. And just to be clear, these changes that you're predicting would be if we had a new PP led coalition,

Louis Williams  38:52  
I think it would most likely the PP lead part of the popular led coalition. I think it is unlikely that we will see any simplification. With the socialist coming in, I think at the socialists come in again, what I would expect to see is the Social Security to continue moving more progressively to reflect employment. I could see Mac Social Security going up to 1200 euros a

Maya Middlemiss  39:13  
month. Right. Okay. But then hopefully also coming down for the lowest earners.

Louis Williams  39:17  
Exactly, which would be fairer. So I could see I could see that that coming into place, although it could have some bizarre effects of we would see whether there'll be an increase in semi black market activity of all of us really trying to shield them marginally.

Maya Middlemiss  39:33  
Yes, absolutely. Yeah. There are lots of reasons to not drive, innovation and money offshore. But I guess we'll just have to see because as with so many things, it depends so much on those electoral outcomes. And I think that you know, a lot of freelancers who are non Spanish are obviously very concerned that if there was a right leaning coalition that was propped up by Vox that that could make the environment more hostile.

Louis Williams  39:55  
For all I would be. I think there's a geographic issue as well, I think And what you will likely see is a rekindling of unrest in Catalonia. Catalan independence movements being rekindled, it's actually in a remarkably amicable state of, yes. But I could see a clash occurring with part of the popular Vox with the box for language rulings and everything else, that there would be a genuine concern on that. And I could see this, there could be a bit of scapegoating. But for the other regions, I suspect, for most migrants, you wouldn't have too much of an impact. But if you were a regular you could see a real issue. Yeah. Folks coalition.

Maya Middlemiss  40:40  
Okay, well, there's stuff to look forward to stuff to be concerned about stuff to get out in front of one of the best ways if you are registered and living here is make sure that you are registered to vote, which you can you can't do nationally, but you certainly can do regionally and I'll in your autonomous community. So it's towards the end of the year that we're expecting elections,

Louis Williams  41:02  
end of the year will be national elections. I believe the local mayoral elections and communal elections might be in

Maya Middlemiss  41:09  
May, okay, so need to kind of move on do your tax return,

Louis Williams  41:13  
I need to check on my registration because I was in my old flat registered. So I actually my friends, I need to get that. So

Maya Middlemiss  41:18  
okay. So even for Louie the admin of living in Spain never quite ends. Okay. It's

Louis Williams  41:23  
done. Yeah. You know, the funny thing is, you do it as a job and you really don't want to deal with it on anybody else. It's all on yourself. It's

Maya Middlemiss  41:29  
just houses. Everything else. Yeah. Well, for some reason, we do it anyway. And for those of us who makes been our home long term, you know, we decide that it's worth it despite the paperwork and the admin and the politics and everything else. We love being freelancers in Spain being remote workers in Spain, it's great that we now do have a little bit more digital infrastructure. We have providers like yourself who understand the international situation and things like E residency and cross border tax to help us navigate all of this. And hopefully the future is bright for freelancing in Spain. Yeah, excellent. Well, thanks so much. Louie Williams from Manchester, amateurs for joining us on the future as freelance

Louis Williams  42:13  
absolute pleasure and have a fantastic day. Thank you very much.

Maya Middlemiss  42:21  
Thank you for listening to the future as freelance podcast. We appreciate your time and attention in a busy world and your busy life. If you enjoyed this episode, please share it with a fellow Freelancer help us grow this movement of independent entrepreneurs. If you rate and review the future is freelance and whatever app you're listening to this right now or over at Future is freelance dot x y Zed, then that will help spread the word and help us reach more people who need to hear this message and join the conversation. Together we can change the world and make sure the future is freelance. This is Maya Middlemiss Wishing you success and happiness in your enterprise. Until our next episode.