One of the most confusing aspects of being self-employed in Spain is the IRPF retention (retención de IRPF) that appears on invoices. Unlike IVA — which you charge on behalf of the AEAT and later remit — the IRPF retention works in reverse: your client withholds a percentage of your fee and pays it directly to the tax authority on your behalf. You then recover it (or pay any shortfall) when you file your annual income tax return.
Get it wrong and you risk issuing non-compliant invoices, facing penalties, or overpaying tax unnecessarily. Here is everything you need to know.
What Is IRPF Retention?
IRPF (Impuesto sobre la Renta de las Personas Físicas) is Spanish income tax. For autónomos in certain professional activities, the law requires that when you invoice a business client in Spain, that client withholds a set percentage of your fee at source and pays it to the AEAT on your behalf. It works like PAYE for employees, applied to freelance income.
For example: if you invoice €1,000 + 21% IVA with 15% IRPF retention:
| Base imponible | €1,000.00 |
| + IVA 21% | €210.00 |
| − IRPF 15% | −€150.00 |
| Total a cobrar | €1,060.00 |
Your client pays you €1,060 and separately sends €150 to the AEAT. Your gross income is still €1,000 — the €150 is a pre-payment of your annual IRPF bill.
Who Must Apply IRPF Retention?
You must apply IRPF retention on your invoices if all three of the following are true:
- You are registered as an autónomo in Spain (in any economic activity section 1 or 2 of IAE — professional activities)
- Your client is a Spanish business, company, or self-employed professional (not a private individual)
- The service you are providing is a professional service (not a commercial/industrial activity)
Common professions that apply IRPF: consultants, lawyers, architects, engineers, accountants, designers, marketers, writers, photographers, IT professionals, trainers, and most knowledge-work freelancers.
What Rate to Use
The standard IRPF withholding rate is 15%. There are two exceptions:
- 7% — for new autónomos in the year they register and the following two years. To apply the reduced rate, you must include a declaration on the invoice ("El/la retenedor/a declara encontrarse en el primer año de inicio de actividades profesionales" or similar wording).
- 2% — for agricultural, livestock, and forestry activities (module regime).
When NOT to Apply IRPF
You do not apply IRPF retention when:
- Your client is a private individual (not a business) — no IRPF on the invoice
- Your client is based outside Spain — no IRPF for international clients
- You are invoicing from Ceuta or Melilla — different fiscal territory
- You are in the Canary Islands — operates under IGIC system, not IVA/IRPF
- Your IAE section classifies you as a commercial or industrial activity (group 3 activities) — these do not attract professional IRPF retention
- Your income from a single client did not exceed €3,005 in the previous year and represents less than 70% of your total income — the "small business" exception
Declaring IRPF: Modelo 111 and Modelo 130
There are two separate obligations:
Modelo 111 — For Clients (Payers)
If you are a business that pays freelancers with IRPF retention, you must file Modelo 111 quarterly (April, July, October, January) to remit the withheld amounts to the AEAT.
Modelo 130 — For Autónomos (Direct estimation)
If you are an autónomo in the direct estimation regime and your IRPF retentions from clients cover less than 70% of your total professional income, you must also file quarterly payments on account of your own IRPF through Modelo 130. The quarterly payment is 20% of your net quarterly profit (income minus expenses).
If more than 70% of your invoices carry IRPF retention, you are exempt from filing Modelo 130 — the retentions on your invoices are considered sufficient advance payment.
IRPF in Your Annual Return (Modelo 100)
All IRPF retentions paid by your clients throughout the year appear as pre-paid tax in your annual declaración de la renta (Modelo 100). If the retentions exceeded your actual tax liability, you receive a refund (salir a devolver). If they fell short, you pay the difference.
How Facturi Handles IRPF
When you create an invoice in Facturi, you can set your default IRPF retention rate (15% or 7%) in your organisation settings. The system automatically applies the retention, calculates the net amount payable, and displays all figures clearly on the PDF invoice. Your clients receive an invoice that meets all legal requirements without you having to calculate anything manually.