Spain IRPF withholding on invoices: when, how much and Forms 111/115/130

15% general IRPF withholding on invoices. When you apply 7% or 15% on the invoice, what your client does with that withholding, how it links to Form 130 and to Forms 111 and 115 filed by the payer. Clear guide with examples.

IRPF withholdings on invoices are how Spain's Tax Agency collects your tax in advance without waiting for year end. If you are a professional autonomo and your client is a company or another autonomo, your invoice must include a percentage that your client will pay in your name via Form 111. You then coordinate that withholding with the quarterly Form 130 to avoid paying twice. This guide explains the rates currently in force, when they apply and how everything reconciles on the annual tax return.

When withholding applies: professional vs business activities

IRPF withholding applies to professional activities (IAE epigraph in section two or three): advisors, lawyers, architects, translators, private doctors, trainers. It does not apply to pure business activities (section one): retail, hospitality, hauliers. If you are a professional autonomo invoicing companies or other autonomos, you withhold; if you invoice individuals, you do not. The distinction between professional and business is one of the most error-prone points and where the Spanish Tax Agency cross-checks data automatically.

Rates: 15% general and 7% for new autonomos

The general rate currently remains 15% on the amount before VAT. New professional autonomos (in the year of starting activity and the two following years) can apply the reduced 7%, provided they have not exercised professional activity the previous year and formally notify the payer. There are special rates: 1% for objective-estimation autonomos in certain activities, 19% for urban rentals (Form 115), 19% for movable capital income (interest, dividends). Applying the wrong rate leaves one of the two parties with a mismatch.

How to invoice with withholding

The invoice must show taxable base, VAT at the corresponding rate, withholding calculated on the base before VAT and the total receivable. Example: invoice of 1,000 euros + 21% VAT - 15% withholding = 1,000 + 210 - 150 = 1,060 euros your client transfers. The 150 euros are paid by your client to the Tax Agency through the quarterly Form 111, listing your NIF and the withheld amount. You do not receive this money but it counts as advance payment of your annual IRPF. It is essential to keep invoices and, if your client does not provide the annual withholding certificate, to claim it before 31 January.

Form 111 (client) and Form 115 (rent)

Form 111 is the quarterly return filed by the payer (company or autonomo) summarising withholdings on professionals and workers. It is filed between the 1st and 20th of the month following each quarter, with annual summary on Form 190. If your client rents your office, they file Form 115 (withholding on urban rentals), also quarterly, with annual summary on Form 180. As an autonomo you file neither: you only verify that they appear correctly on your annual certificate and on the fiscal data the Tax Agency releases in April.

Quarterly Form 130: your prepayment

Form 130 is the quarterly IRPF prepayment for professional or business autonomos not under objective estimation. It calculates 20% on accumulated net income for the year (income minus deductible expenses) less withholdings already taken on invoices. If your clients have already withheld the equivalent of 70% or more of your income, you are not required to file Form 130. That is why many 100% B2B professionals (who withhold 15% on every invoice) are exempt. Those invoicing partly to individuals (without withholding) do have to pay quarterly through Form 130.

Typical mistakes and how to avoid them

The most common mistakes: applying the 7% without formally notifying the payer of new-autonomo status; forgetting withholding when invoicing a civil partnership or professional cooperative; not withholding on office rent (mandatory Form 115 when the landlord is an individual); including withholding on an invoice to an individual (does not apply); or, worse, not declaring withholdings on your annual IRPF and paying as if you had advanced nothing. Good practice: download the Tax Agency fiscal data each year and cross-check it with your own accounting records before filing.

Detailed withholding rules are in Spain's IRPF Regulation (Royal Decree 439/2007, available in the BOE). The Spanish Tax Agency offers a withholding simulator on its e-portal; review it at the start of each year.

Practical cases: how withholding appears on invoices

Case 1. Professional designer with corporate client. 2,000€ invoice to an S.L. client:

Tax base: 2,000€
VAT 21%: 420€
IRPF withholding 15%: −300€
Total to collect: 2,120€

The client pays 2,120€ to the designer and reports 300€ to the tax authority on quarterly form 111. The designer reflects on form 130/100 that 300€ of IRPF was already advanced.

Case 2. New self-employed (first 3 years) with reduced withholding. 2,000€ invoice with 7% withholding:

Tax base: 2,000€
VAT 21%: 420€
IRPF withholding 7%: −140€
Total to collect: 2,280€

Important: the autónomo must formally communicate to the payer their new self-employed status via signed letter. Without that communication, the payer applies 15% by default.

Case 3. Office rental from individual. Monthly invoice of 800€ from landlord:

Tax base: 800€
VAT 21%: 168€
IRPF withholding 19%: −152€
Total to pay landlord: 816€

The tenant (autónomo or company) files quarterly form 115 reporting the 152€ withheld. The landlord recovers the withholding in their annual IRPF declaration as real estate capital income.

Case 4. Professional with individual client. 500€ invoice to an individual contracting a one-off service:

Tax base: 500€
VAT 21%: 105€
NO withholding applies (individual client is not a withholder)
Total: 605€

Withholding rates by activity

Relevant Spanish tax forms

Form 111: quarterly declaration of withholdings to professionals and workers. Deadline: days 1-20 of the month following the quarter.
Form 115: quarterly declaration of withholdings on rentals. Same deadline.
Form 190: annual summary of form 111 withholdings (filed in January of following year).
Form 180: annual summary of form 115 withholdings.
Form 100: annual IRPF declaration, where the autónomo reconciles the difference between withheld and final liability.
Form 130: quarterly IRPF advance payment. If in the quarter total withholdings exceed 70% of revenue, the autónomo doesn't file form 130 that quarter.

Frequently asked questions

What if the client pays the invoice without applying withholding? It's the client's risk, not yours: they should have withheld and filed form 111. If the tax authority detects the error, they sanction the client. The autónomo still declares the gross income on personal tax.

Can I waive the reduced 7% withholding? Yes, but rarely advisable. Reduced withholding means you advance less IRPF; doesn't mean lower final tax. If you expect a high effective IRPF, it's worth keeping the 7% and paying the rest in the declaration.

If I have a US LLC, are there withholdings? Invoices issued from a US LLC to Spanish clients carry no IRPF withholding (it's withholding on resident professional income, not foreign). The Spanish tax resident declares the LLC's net income on IRPF as foreign income, with no Spanish client withholding anything.

And if I'm a new autónomo in my third year, when do I move to 15%? In the fourth complete fiscal year. The year you register counts as your first fiscal year even if it's incomplete; the two following years are second and third (with reduced 7% withholding). From the fourth year onward, the default 15% rate applies.

Does the tax authority know what's been withheld from me? Yes. Each client declares the withholdings on quarterly form 111 with your tax ID. Before filing your annual declaration, download the tax data and cross-check with your records: if there are differences, demand client correction before June 30.

How to read IRPF withholdings on the invoice as a stable annual mapping rather than as a recurring debate

IRPF withholdings on the invoice read more usefully when they're treated as a stable annual mapping between the type of activity, the type of payer and the corresponding withholding rate, than as a recurring debate. The mapping doesn't change month to month, and a short note in the client folder that records the chosen rate with a reference to the source makes the position reviewable in a few minutes.

Before going further, put numbers on your case: the Exentax calculator compares, in under 2 minutes, your current tax bill with what you would carry running a US LLC properly declared in your country of residence.

> Free consultation, no strings attached

At Exentax we review your case with real data and tell you whether changing structure pays off. book a free consultation of 30 minutes and you leave with a clear plan.

How we close this with the Exentax method

What we see every week in the files that reach us is the same pattern: the question stays as loose ideas, the decision gets postponed and, by the time the tax year closes, people pay more than needed or take on risks that do not pay off. The problem is rarely the rule itself; it is the lack of a written plan with real numbers, owned by someone who understands the case end to end.

What people get wrong

Copying structures seen on social media without modelling their own case against real income, residency and client mix.
Mixing personal money with business cash flow and losing the documentary trail any audit will ask for.
Leaving execution to generic accountants who only file forms, without thinking through the annual strategy or the total cost.

What actually works

Modelling the situation in the Exentax calculator before moving a single piece, to see the total annual cost and not just today's bill.
Separating personal and business flows from day one, with distinct accounts and a living checklist of evidence.
Working with an advisor who sees the pieces together: structure, banking, compliance and residency, not each one in isolation.

If you want to move from doubt to plan, book 30 minutes with Exentax and we walk out of the call with the numbers closed and an operational calendar.

What if HMRC, the IRS or my local tax authority asks about my LLC?

It's the question every client raises in the first consultation, and the short answer is: your LLC isn't opaque, and a properly declared structure closes any inquiry in standard forms. Your tax authority can request the state Certificate of Formation (Wyoming, Delaware or New Mexico), the EIN issued by the IRS, the signed Operating Agreement, the Mercury or Wise statements for the year, the Form 5472 plus pro-forma 1120 you filed, and the bookkeeping that reconciles income, expenses and movements. If all of that exists and is delivered in order, the inquiry doesn't escalate.

What tax authorities do pursue, and rightly, is sham ownership (nominees, paper residency) and undeclared foreign accounts. A well-structured LLC is the opposite: you appear as beneficial owner in the BOI Report when applicable (verifiable at fincen.gov/boi), you sign the bank accounts and you declare the income where you actually live. The structure is registered with the state Secretary of State, with the IRS and, when European banks are involved, inside the CRS perimeter of the OECD standard.

The mistake that really sinks an inquiry isn't having an LLC; it's not attributing the income correctly in your domestic return, not declaring foreign accounts when the year-end balance exceeds the local threshold (€50,000 in Spain via Modelo 720; the equivalent FBAR / Form 8938 in the US for residents; T1135 in Canada), and not documenting related-party transactions between the member and the LLC. Those three fronts are worth closing before any request arrives, not after.

## What an LLC does NOT do

- It does not exempt you from tax in your country of residence. If you live in Spain, France, Germany or Portugal, you are taxed there on worldwide income. The LLC organises your US side (zero federal tax for non-resident SMLLC pass-through, absent Effectively Connected Income); it does not switch off your domestic taxation. The income tax is computed on the attributed profit, not on the dividends actually paid.

- It is not an offshore vehicle or a BEPS scheme. It is a US entity recognised by the IRS, registered in a specific state with physical address, registered agent and annual informational filings. Classic offshore jurisdictions (BVI, Belize, Seychelles) leave no public trace; an LLC leaves a trace in five different places.

- It does not protect you if you commingle funds. The pierce the corporate veil doctrine kicks in as soon as a judge sees the LLC and the member behaving as the same wallet: mixed accounts, personal expenses paid from the LLC, no signed Operating Agreement, no bookkeeping. Three suspicious transactions are enough.

- It does not save you social security contributions at home. If you are self-employed in Spain, France or Germany, your monthly social contribution remains identical. The LLC handles the trading side with international clients; your personal contribution is independent.

- It does not exempt you from declaring foreign accounts. Spain residents file Modelo 720 / 721; UK residents, the SA106; Portugal residents, the Anexo J of Modelo 3 IRS; Germany residents, the Anlage AUS. Those obligations belong to the individual, not to the LLC.

At Exentax we cover those five fronts every year alongside the US federal calendar (Form 5472, pro-forma 1120, FBAR, state Annual Report and BOI Report when applicable). The goal is that no inquiry finds a loose end and that the structure withstands a 5-to-7-year retroactive review.

Want to discuss it now? Message us on WhatsApp and we'll get back to you today.

If you'd rather discuss it live, book a free session and we'll review your real case in thirty minutes.

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For state-specific details, see our Wyoming LLC service page with closed costs and timelines.

How the 7% reduced rate ends in practice

The 7% rate for new professional autónomos applies during the year of registration and the two following calendar years, and it ends automatically; in our practice the most common operational mistake is not updating the percentage on invoices in January of the third following year, leaving 7% withheld when 15% should already apply. The detection usually comes from the client (who reports a different code in their Form 111) and triggers a corrective invoice for the missed amount. To avoid this we set a calendar reminder for the precise rollover date, agreed in writing with the client at the start of the year, and we keep both invoice templates ready in the billing tool so the change is a single click. We also recommend reconciling the year-to-date Form 130 against issued invoices on a quarterly basis, because a withholding mismatch only becomes a real cash issue when it accumulates four quarters undetected.

Three invoicing patterns we see every quarter

The first pattern is the freelancer invoicing a Spanish company for professional services without including the withholding line, because the client did not request it; this is a procedural mistake that the AEAT will reconcile at year-end through the Form 190 summary, and it usually triggers a request for a corrective invoice. The second pattern is the freelancer invoicing a foreign client and applying withholding by reflex, when withholding does not apply at all (the foreign client cannot file a Spanish Form 111). The third pattern is the freelancer invoicing a mixed portfolio (Spanish companies plus foreign clients) and applying the same template to all, mixing both errors. The clean approach in all three cases is to define the invoice template by client type at the start of the engagement, keep two templates available, and verify the first invoice with the client's accounting team before issuing the rest of the quarter.

Form 130 mechanics for a typical recurring quarter

Form 130 is the quarterly IRPF advance for autónomos in direct estimation, and its arithmetic is straightforward: 20% of net income (revenue minus deductible expenses) for the quarter, minus the IRPF withholding already applied on the quarter's invoices, equals the amount to pay. In a quarter where most invoices have been issued to Spanish companies (with 15% withheld at source) and the autónomo has run their normal expense profile, the Form 130 result is typically modest, sometimes zero. In a quarter where most invoices have been issued to foreign clients (no withholding), the Form 130 result is more substantial because the full 20% advance falls on this quarterly filing. The most common operational mistake we see is autónomos who skip Form 130 in modest quarters because "there's nothing to pay", forgetting that the form must be filed even with a zero result; the AEAT processes the absence of filing as non-compliance. The clean approach is to file Form 130 every quarter on time, always, even at zero, and to keep the receipt in the year-end documentation kit.

Why the right withholding from day one prevents year-end stress

When the freelancer applies the right IRPF withholding rate on every invoice from January, the year-end reconciliation is essentially neutral: the withheld amounts plus the quarterly Form 130 advances are very close to the annual IRPF due, and the IRPF return either pays a small balance or refunds a small amount. When the freelancer has applied the wrong rate (commonly 7% kept past its expiry, or 0% for a Spanish client that should have had 15%), the annual return reveals the gap as a real cash payment in May or June, sometimes substantial enough to disturb mid-year planning. We have a simple rule we share with clients in the first month of each year: verify the applicable rate against the entry date in the autónomo register, agree the rate in writing with each Spanish client at the start of the year, and keep both invoice templates available so the rate switch (when it eventually applies) is not delayed by template work. The professional ease of the IRPF return in May depends almost entirely on what was set up in January.

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