In which cases can a self-employed person benefit from the reduced personal income tax rate of 7%?

In general, any self-employed person must apply 15% personal income tax on invoices issued, but those who have registered for the first time have the possibility of benefiting from a 7% reduction, provided that certain conditions are met. 

For how long can this reduction be applied?

It can be applied during the year in which the self-employed person is registered, until 31 December and for the following two full years. 

What are the requirements to benefit from this measure?

Not having been registered in an economic activity during the previous year. 
It only applies to self-employed workers who are registering for the first time in this regime or for those who have not carried out an activity during the last year.

Do they have to reflect this reduction on their invoices?

  • You must inform all clients who are obliged to withhold tax that you are applying this reduced percentage on your invoices. 
  • You must send them your identification details, the date of registration of the activity in order to be able to justify that you are a new self-employed person and the time during which the reduced withholding will be applied.

Is it always advisable to apply this reduction?

Even if you are entitled to this rebate, you are not obliged to apply the reduced IRPF. It all depends on whether or not it is worthwhile to take advantage of it.
If the income forecast is high, it is not recommended to apply the reduced IRPF. Given that it is an amount that is advanced to the Treasury, if you do not pay beforehand for what is collected, you will end up paying it later in accumulated form. 

What other aspects should be taken into account?

  • It should be borne in mind that this reduction is only for self-employed professionals who carry out activities on an individual basis.
  • When an invoice is made to a private client, we should not include the IRPF, as they do not present this type of withholdings in their tax return and, therefore, the only thing that needs to be reflected is the VAT. Consequently, in order to include personal income tax on the invoice, the recipient must be another self-employed person or company.
  • If more than 70% of the total income is subject to withholding, there is no obligation to submit the quarterly payment of the IRPF instalment payment (form 130).


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