The assignment of an intelectual property right or a license of use (license of works contract), normally defined as royalty, is an economic activity. As a Freepik Company partner, income derived from your sales in Spain is subject to spanish withholding tax. In compliance with the Royal Legislative Decree 5/2004, dated 5th of March, by which the consolidated text of the Non-Resident Income Tax Act was approved (BOE, 12th March 2004) and the Royal Decree 1776/2004, dated 30th of July, by which the Non-Resident Income Tax Regulations were approved (BOE, 5th August 2004), and aiming to adjust the withholding applicable to the perceived quantities, Freepik Company must keep an up-to-date record of the billing information of all of its collaborators.
The information below helps you determine which withholding is applicable to your situation. We encourage you to follow the different steps below and to contact a tax/legal advisor for definitive advice:
- Should I pay tax on my earnings?
It depends on your personal tax situation, it’s best to check with your local tax office if you’re not sure.
- What do I need to know about tax witholding?
If you are not a Spanish citizen or resident, you may be subject to tax withholding at a rate of up to 24% for all generated earnings.
However, this withholding rate may be lower or zero if you are resident in a country that has an income tax treaty with Spain and you can prove it with a valid certificate of tax residence.
- Where can I learn about tax withholding rates for my country? What If my country of residency does not have a double taxation treaty with Spain?
In this list, you can check the countries that have a double taxation treaty with Spain and the withholding rates in each case. If your country is not on the list below, your tax withholding will be rated at 24%.
Check list of countries here.
- What do I have to do in order to get the right tax withholding applied?
We are required to ensure that you have the right documents on file so we can withhold taxes at the appropriate rate and meet our obligations with the Spanish Tax Agency (AEAT).
Because of this, in order to adjust this tax withholding to the minimum possible according to each treaty, we need a certificate of tax residence issued by the tax Agency of your country where it states the double taxation treaty between Spain and your country.
It’s very important to bear in mind that the details in that certificate must match the details you entered in your profile when you signed up as collaborator. For this reason, we advise you make sure these details are the ones in the certificate you send us.
- What is the certificate of tax residence and where do I request it?
You, as a natural or juridical person, will credit your billing address in a certain country through a certificate of tax residence signed by the Tax Agency of your country of residence. This certificate must mention that you or your Company is resident in your tax residence’s country for Income Taxation, within the meaning of the double taxation treaty between your tax residence’s country and Spain. Otherwise it will not be valid to avoid the withholding tax.
- How often do I have to submit this certificate?
Your certificate of tax residence is valid only for one calendar year. For that reason, once a year you will be required to submit a new certificate. We will notify you by email or through your Freepik Company profile panel when you are required to submit a new certificate.
- How do I submit my certificate of tax residence?
You can attach your certificate of tax residence through Freepik Company’s collaborator panel. It will automatically appear as “pending” until our legal department validates it. Once it’s processed you will be notified through email.
- What is the deadline for submitting my certificate of tax residence?
You should submit your certificate of tax residence before the next payout or your earnings are processed. If you do not update your certificate before your next payment is issued, 24% will be withheld from your earnings generated in Spain as its law requires.
While in the process of obtaining your certificate of tax residence, you can refrain from validating your bill so no incorrect withholding of your earnings will be applied.
Your tax status will be ‘pending’ and you may be subject to 24% withholding on your earnings generated in Spain until you supply your documentation.
As long as you don’t validate your bills, your earnings will accumulate month after month for future bills until you decide to validate them with the appropriate withholdings according to your billing information at that moment.
- What if I don't send my certificate of tax residence before my next payment?
Without an approved certificate of tax residence on file, your Spain source earnings will be subject to 24% withholding as per Spain government regulations. If this occurs, Freepik Company cannot issue a refund to you, because the withheld amount goes to the Spanish Tax Agency.
If you were entitled to a lower or zero rate of tax, then to reclaim this amount, you will need to file a Spanish tax return.
- What if the information on my certificate of tax residence has not changed?
If your certificate of tax residence is expired or you make any other change in your billing information (for example your tax residence’s country), you will need to submit a new certificate even if your name, address and other pertinent information has not changed.
- How do I know if my certificate of tax residence was approved?
You can check your current tax status on your Freepik Company profile panel.
- What if I still have questions?
Freepik Company cannot give personal tax or legal advice. If you still have questions about taxes after reading our FAQ, please contact your legal and/or tax advisor.