Modules vs direct assessment for the self-employed: which suits me?

Freelancers in Spain can pay personal income tax under two different regimes: Direct Assessment (normal or simplified) and Objective Assessment (modules).

What are modules?

Under modules, you are not taxed on your real profit but on fixed parameters (square metres, employees, kW of power, etc.). If your margin is high, you pay proportionally less.

When does each regime suit you?

• Modules: if you have high margins and few justifiable expenses. The Tax Agency is progressively restricting the eligible activities.
• Simplified Direct: if you have significant real expenses or losses. You are taxed on real profit (income minus expenses).

Can I switch?

Yes, by express waiver in December of the previous year (Form 036/037). The waiver binds you for 3 years. At DPL Asesores we simulate both scenarios to recommend the best one.