Top Tips for Self-employed Workers in European Countries

August 1, 2023

Tips for Self-employed Workers in European Countries

Freelancing in Europe is becoming a regular lifestyle anybody can choose to live. Instead of being connected to a work schedule or going to the office daily and working 9-5, many workers choose to be independent. 

There are roughly 27 million freelancers in Europe, and the number keeps rising. Moreover, many European countries are promoting remote visas to attract more freelancers, so this sector has a bright future. 

Let’s not wait any further because in this article, we will talk more about freelancing in European countries.

Key Takeaways on Self-Employment in European Countries

  1. Tax obligations: Understand the tax laws of the European country you plan to freelance in, as each country has different tax requirements for freelancers.
  2. Freelancing in Spain: Spain is a popular destination for freelancers due to its favorable weather, hospitality, and lower cost of living compared to western countries.
  3. Pros and cons of freelancing in Spain: Consider the advantages of easy start-up, social security benefits, and perks like free bus and train travel, while being aware of potential downsides like high social security costs and a small state pension scheme.
  4. Digital nomad visa in Spain: Spain offers a digital nomad visa that makes it easier for freelancers to relocate, granting residency rights to the freelancer's partner and children, and potentially leading to permanent residency.
  5. Writing invoices in Europe: Follow best practices for writing and managing invoices in Europe, including providing essential details and offering commonly used payment methods.
  6. E-invoicing for EU clients: Embrace e-invoicing as a faster and more efficient alternative to traditional paper invoices, which is becoming increasingly popular in several European countries.
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Everything you need to know about freelancing in Europe

Freelancing in Europe
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Freelancing is a growing trend and even though Europe has 50 countries, the most popular areas where freelancers choose to conduct their professional services are Germany, France and Spain. Only in these three countries, there are roughly three million registered freelancers

Overall, freelancers are on a competitive run of having to learn new techniques and applications to remain competitive and provide their clients with more advanced options and expertise. 

1. Tax obligations 

Tax Obligations
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Freelancers spending time in a particular destination will oblige them to comprehend tax obligations. The taxes you’ll pay will depend on your business model, country of origin and the type of work you’re doing. Each European country has a different tax law, so you must read more about them before relocating. 

Europe doesn’t have a direct role in settling or collecting taxes, but depends on each national government. This is a positive outcome because if you were to live in the United States, or China, they’d require you to pay taxes even if you’re out of the country. In Europe, however, this isn’t the case. 

2. Freelancing in Spain 

Freelancing in Spain
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As we mentioned before, Spain is a popular destination where many freelancers relocate. To become a freelancer in Spain isn’t difficult because many foreigners choose this place because of its weather and hospitality. 

Some freelancers consider it a dream lifestyle, especially for freelancers who love to travel and explore new areas. Spain is chosen as a main destination for freelancing because of the following reasons: 

  • A young population 
  • Much cheaper alternative compared to western countries 
  • Excellent transportation system 

We mentioned this before, so to make it easier for you, we are going to mention which kinds of taxes are common in the Spanish landscape: 

  • Income tax (IRPF): You pay taxes based on your income. We all know that taxes aren’t fun to pay, but almost all your business-related costs are tax deductible, reducing your tax income. Never forget to keep a digital copy of all the taxes you pay to ensure you’re safe. 
  • VAT (IVA): When you consider becoming a freelancer, the VAT process seems challenging, but your clients are paying the VAT in this case. Remember to hold it until the end of every quarter, when you deduct any VAT from your business purchases over a certain period and pay the remainder to the tax agencies. 

The rules are different for other countries, so carefully read about them before proceeding any further. 

Pros and cons of freelancing in Spain 

Every job has its pros and cons and in this case, but to help you make up your mind, we will list out the pros and cons of being one: 

The pros of being a freelancer in Spain are: 

  • It’s easy to start and easy to invest in social security costs 
  • Easy invoicing and accounting, or even pay an accountant to take care of it 
  • Paying social security will allow you to obtain certain coverages through the state, which are health insurance coverage for your children, husband or wife, unemployment type coverage 
  • Low inflation rates 
  • Many free bus and train travel 

On the other hand, we have the cons of being a freelancer in Spain, which are: 

  • The high minimum cost of social security 
  • A small state pension scheme for freelancers 
  • Highly dependent on your income 

To overcome the disadvantages, we recommend you do the following:

  • Get good health insurance
  • Don’t be too dependent on your pension scheme given by the government 
  • Get correct information regarding liability issues and contracts 
  • Have fun! 

If you follow these rules, you can overcome these disadvantages, so have fun while freelancing in Spain and check up on health insurance. 

The new digital nomad visa in Spain 

Only late last year, Spain introduced the digital nomad visa that opened doors to thousands of freelancers wishing to move to Spain. This was to enlighten the difficulties many freelancers go through to acquire other visas in Spain. Also, to increase the acceptance rates of freelancers. 

Another advantage of the digital nomad visa is that the freelancer’s partner and children can be granted residency rights under this category. Furthermore, the visa can be renewed annually for up to five years, allowing the holder and their family members to apply for permanent residency!  

This is great news because it makes many people’s dreams come true. The digital nomad visa not only makes it easier to acquire permanent residency, but it might also be more cost-effective and beneficial for you as a freelancer in the long term. 

3. Writing invoices in Europe 

Writing Invoices in Europe
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Getting paid is one of the best feelings ever, but writing and managing your invoices might seem less fun. It might become even more difficult when you have international invoices you need to write, so you are lucky it’s only for Europe. 

To make invoicing much easier for you, here are some of the best practices you should follow: 

  • Basic details: This includes all necessary information such as the company’s business address, name, your VAT number, your client’s EU TIN, VAT number, your EU tax identification number (TIN), total amount, total VAT due, total due payment, the payment methods you accept, issue date of invoice. 
  • Invoice format: There are no strict rules for European invoice format, but it’s best to create a format that clients can easily and quickly read. Only include important information that clients need for paying you to complete their accounting records. Anything else will make it more challenging for the client to find the necessary details. As a basic rule, include your brand’s logo at the top of the left corner, and align your information to the left. Your client’s details, along with your personal ones should be at the top, mentioning the payment total and methods at the bottom. However, always check up on the European invoicing rules since every country might have its own rules for invoices. 
  • Offer top payment methods based on EU preferences: Offering the most commonly used payment methods in Europe is an excellent way of allowing clients to trust you and be familiar with payment methods. Additionally, avoid adding any additional costs to payment methods. Clients won’t positively tolerate this and ensure that there’s a high level of security. Also, provide flexibility and keep the transfer speed at a high rate. 
  • Manage the VAT: We already mentioned this above, but each European country might have a different VAT rule. The standard VAT is 19%, which covers most products and services. For basic equipment and food, it’s 7%. You don’t have any VAT percentage for items exported outside the EU. 

To make it easier, you can search for EU invoice templates on Google to not start everything from scratch. Follow the rules and everything should go smoothly. 

E-invoicing for EU clients 

E-invoicing is a new approach that EU clients are approaching. Instead of sending paper invoices, a PDF invoice is attached to an email and you can electronically send out invoices or e-invoices, which are sent as a data file in EDI or XML format. 

Digital invoicing systems can process and scan an e-invoice much faster than a human would scan a traditional invoice. Whenever you send e-invoices, your clients can send information and authorise payments to the correct departments. Also, let’s not forget that e-invoicing systems can automatically complete invoices faster than humans. 

E-invoicing is becoming increasingly popular in Europe. Some countries like Italy, France and Poland are making e-invoicing obligatory 

The advantage of freelancing in Europe 

There are plenty of countries you can visit in Europe and considering how simple its law on taxes and writing invoices are, who wouldn’t want to join the adventure of being part of it?

Moreover, there are many European countries that are encouraging freelancers to relocate. With the introduction of digital nomad visas, it’s becoming easier than ever to become a resident of a European country. 

Before you relocate, we encourage you to read all important information we stated in this article carefully and even read more about local laws in the country you plan to continue your freelancing career. We used Spain as an example and let’s face it, when you have your information, everything becomes easier. 

The Author:  Tony Ademi is a freelance SEO content and copywriter. For roughly four years, Tony has managed to write more than 500 SEO-optimised articles and most of them have ranked #1 on Google. When writing, Tony’s main focus is to carefully do research and make sure that his content is high-quality.

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