At what profit does a limited company start to beat self-employment?

Terms used

• SL — The SL (sociedad limitada) is the usual Spanish limited company, where your personal liability is limited to the capital you put in.
• Autónomo — An autónomo is a self-employed person registered with Spanish Social Security and the tax agency.
• IRPF — IRPF is Spain's personal income tax, charged on a rising scale as income grows.
• Impuesto sobre Sociedades — Impuesto sobre Sociedades is Spain's corporate tax, paid by companies on their profit.
• RETA — RETA is the Social Security scheme for self-employed people, which company directors who control their SL must also join.
• Agencia Tributaria — The Agencia Tributaria is Spain's national tax agency.

Key rules

• Tipping point: There is no single profit figure; it depends on your profit, region and how much you withdraw.
• Dividends: Money you take out of the company as dividends is taxed again, at the savings scale.
• Social Security: If you work in and hold at least 25% of your SL, you usually still pay autónomo contributions.
• 15% rate: The 15% new-company rate applies only to the first two profitable years.

The short answer

A limited company (SL) starts to beat self-employment when your profit is high enough that the tax you save outweighs the extra costs of running a company. There is no single magic number. The point moves with your profit, your region and how much money you take out of the company. The calculator below lets you test your own figures.

What pushes the tipping point

Four things decide it. Two work for the company, two against it.

1. Income tax for the self-employed rises in steps

As an autónomo, your whole profit is taxed as personal income under IRPF. The rate climbs with each bracket. For the state part in 2025, it runs from 9.5% up to 24.5% on income above €300,000. Regions add their own scale on top, so the combined top rate is 47% (45% in some regions). Basque Country and Navarra have their own systems.

At low profit you are in the low brackets, so there is little to save. At higher profit, more of your income falls in the expensive brackets. That is where a company starts to look attractive.

2. Company tax is flatter, and often lower

An SL pays corporate tax (Impuesto sobre Sociedades) on its profit instead of you paying IRPF on it. The general rate is 25%. Some cases are lower:

• A newly created company that carries on an activity pays 15% on its first profitable year and the year after. This does not last. After that, the normal rates apply.
• Since 2025, small companies have a reduced scale that is being phased down to 2029. Micro-companies (turnover under €1 million) pay 21% on the first €50,000 of profit and 22% on the rest in 2025, falling to 19% and 21% by 2029.

Rates change each year during the phase-in, so check the current ones with the tax agency (Agencia Tributaria).

3. Dividends are taxed again when you take money out

Profit left inside the company has only paid corporate tax. When you pay yourself a dividend, you pay IRPF again on it, at the savings scale. For 2025 that is 19% up to €6,000, 21% to €50,000, 23% to €200,000, 27% to €300,000 and 28% above. The company withholds 19% when it pays you, and this counts towards your final bill. There is no dividend exemption for individuals.

So the company saves tax mainly on profit you leave inside it. If you need to withdraw nearly everything to live on, the saving shrinks. Corporate tax plus dividend tax can end up close to, or above, what you would have paid as an autónomo.

4. Fixed costs and your own Social Security

A company costs money whatever your profit. Expect adviser fees for bookkeeping and tax returns (usually the biggest item), registry fees for filing accounts, digital certificate renewal and bank fees. Excluding your own Social Security, these are commonly in the low thousands of euros a year. Get quotes from advisers, because prices vary with the number of transactions and the city.

You also usually still pay autónomo Social Security. If you work in your SL and hold at least 25% of it, or control it, you must register in the autónomo scheme (RETA). Contributions follow your real net income, using income brackets. Company directors have a minimum base that is higher than the general autónomo minimum. In 2025 the total rate was roughly 31.5% to 32%. Check the current minimum base and rate with Social Security (Seguridad Social).

How to read the result

• Low profit: fixed costs and the higher minimum Social Security base usually outweigh the tax saving. Staying self-employed tends to win.
• Higher profit you can leave in the company: the gap between IRPF and corporate tax grows, and the SL starts to win.
• Higher profit you need to spend personally: the double layer of corporate and dividend tax cuts the benefit.
• New company: the 15% rate for the first two profitable years makes the early years look better than later ones. Do not judge the SL only on those years.

If you are unsure, review the numbers each year before deciding. Ask an adviser to run your actual figures, including your region's scale.

Choosing between options

Should you stay self-employed or run your business through a limited company (SL)?

• Stay self-employed (autónomo): Your profit is modest, so personal income tax stays in the lower brackets and the SL's fixed yearly costs would eat up any saving.

• Form a limited company (SL): Your profit is high enough that personal income tax would reach the upper brackets, and you can leave part of the profit in the company, where it is taxed at 25% or less.

• Wait and review each year: Your profit is close to the tipping point and you are not sure it will last, so you can compare both options on your real numbers before paying for a company.

Compare two totals. As self-employed, you pay progressive personal income tax on all profit, with a combined top rate of 47%, plus your Social Security. In an SL, you pay corporate tax first (25% in general, 15% for a new company in its first two profitable years, a lower scale for micro-companies), then savings-scale tax from 19% to 28% on any dividends you take, plus the SL's fixed costs and your own Social Security. The SL wins when the tax saved on profit you leave in the company, or the lower combined rate on dividends, is bigger than those extra fixed costs.

Autónomo versus limited company: estimate your yearly take-home

Work it out

What you enter

• Yearly profit before your own pay and Social Security (EUR): Your bookkeeping or last year's income minus business expenses.
• Yearly gross salary you would pay yourself from the company (EUR): The amount you plan to set in the bylaws and general meeting decision.
• Yearly dividends you would take from the company (EUR): Your own plan; it cannot be more than the profit left after tax and reserves.
• Yearly adviser and other company running costs (EUR): Quotes from advisers for bookkeeping, tax returns, registry filing and bank fees.
• Monthly Social Security quota as an autónomo (EUR): The current quota table for your income band on the Seguridad Social website.
• Monthly Social Security quota as a working shareholder-administrator (EUR): The current table for your income band on the Seguridad Social website, or your adviser.

Figures used

• Months in a year: 12 months
• General scale: first bracket upper limit: 12,450 EUR (as of 2025)
• General scale: second bracket upper limit: 20,200 EUR (as of 2025)
• General scale: third bracket upper limit: 35,200 EUR (as of 2025)
• General scale: fourth bracket upper limit: 60,000 EUR (as of 2025)
• General scale: fifth bracket upper limit: 300,000 EUR (as of 2025)
• General scale combined rate, first bracket: 0.19 ratio (as of 2025)
• General scale combined rate, second bracket: 0.24 ratio (as of 2025)
• General scale combined rate, third bracket: 0.3 ratio (as of 2025)
• General scale combined rate, fourth bracket: 0.37 ratio (as of 2025)
• General scale combined rate, fifth bracket: 0.45 ratio (as of 2025)
• General scale combined rate, top bracket: 0.47 ratio (as of 2025)
• Savings scale: first bracket upper limit: 6,000 EUR (as of 2025)
• Savings scale: second bracket upper limit: 50,000 EUR (as of 2025)
• Savings scale: third bracket upper limit: 200,000 EUR (as of 2025)
• Savings scale: fourth bracket upper limit: 300,000 EUR (as of 2025)
• Savings rate, second bracket: 0.21 ratio (as of 2025)
• Savings rate, third bracket: 0.23 ratio (as of 2025)
• Savings rate, fourth bracket: 0.27 ratio (as of 2025)
• Savings rate, top bracket: 0.28 ratio (as of 2025)
• Micro-company first rate band limit: 50,000 EUR (as of 2025)
• Micro-company corporate tax rate on the first 50,000 EUR: 0.21 ratio (as of 2025)
• Micro-company corporate tax rate on the rest: 0.22 ratio (as of 2025)

Worked example (with Yearly profit before your own pay and Social Security 60,000 EUR, Yearly gross salary you would pay yourself from the company 30,000 EUR, Yearly dividends you would take from the company 15,000 EUR, Yearly adviser and other company running costs 3,000 EUR, Monthly Social Security quota as an autónomo 400 EUR, Monthly Social Security quota as a working shareholder-administrator 500 EUR)

When the sum misleads

• The result is indicative: it ignores personal allowances, deductions and your region's own tax scale, which can differ from the default one used here.
• Profit left inside the company is not counted as take-home; taking it out later as dividends is taxed at the savings rates.
• Your salary needs a paid-office provision in the company bylaws, or it is not deductible for corporate tax.
• Dividends can only come from distributable profit, after the legal reserve is covered. Until capital reaches 3,000 EUR, pay and dividends are restricted.
• Low profit usually favours staying autónomo, because the company adds fixed adviser costs. Test your own figure and ask an adviser for a quote.
• The corporate tax rates are 2025 figures and the scale falls in later years.

Frequently asked questions

Does the 15% new-company tax rate last forever?

No, the 15% rate for a new company applies only to the first profitable tax year and the one after it. It also needs the company to carry on a real activity, so holding or group companies do not get it. After that the normal rate applies, which is 25% for most companies and a lower scale for micro-companies.

Are dividends from my SL taxed twice?

Yes, profit is taxed once in the company and again when you take it out as dividends. The company pays corporate tax first. Then you pay the savings scale on the dividend, which starts at 19% up to €6,000 and reaches 28% above €300,000.

Do I have to pay autónomo Social Security if I run my own SL?

Yes, if you work in the company and own at least 25% of the capital, or you control it, you must register as an autónomo. Your contributions depend on your real net income, within a minimum base that is higher than the general autónomo minimum. This cost is on top of the SL's other fixed costs.

How much does a small SL cost to run each year before my own Social Security?

Expect fixed costs in the low thousands of euros per year, not counting your own Social Security. The adviser who does your bookkeeping and tax returns is usually the biggest item. Other costs are registry fees for filing accounts, digital certificate renewal and bank fees. Ask several advisers for quotes.