Contractor vs Employee: Madrid 2026 — Net Income Calculator
See whether going independent actually pays more after tax, social security, and business overheads.
As an Employee
As a Contractor / Freelancer
Enter your rate as if you worked 52 weeks — we'll adjust for time off below.
e.g. 4 weeks off = 4
Going contractor in Madrid puts 6304 € more in your pocket per year.
| Metric | Employee | Contractor |
|---|---|---|
| Annual Revenue / Gross Salary | 40.000 € | 60.000 € |
| Unbilled Weeks Adjustment | — | 4615 € |
| Actual Gross Income | 40.000 € | 55.385 € |
| Business Overheads | — | 4700 € |
| Taxable Income | 40.000 € | 50.685 € |
| Social Security | 2540 € | 3218 € |
| Income Tax | 8822 € | 12.524 € |
| Effective Tax Rate | 28.4% | 31.1% |
| Net Annual Income | 28.638 € | 34.942 € |
| Net Monthly Income | 2387 € | 2912 € |
To match your employee take-home of 28.638 €/year, you need to invoice at least 36.116 €/year as a contractor in Madrid.
That's roughly 695 €/week or 139 €/day.
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Frequently Asked Questions
Is it worth going contractor in Madrid?
Yes — at a revenue of 60.000 €/year, a contractor in Madrid takes home 34.942 €/year (effective rate: 31.1%), compared to 28.638 €/year as an employee (effective rate: 28.4%).
What contractor rate do I need to match my employee salary in Madrid?
To match an employee take-home of 28.638 €/year in Madrid, you need to invoice at least 36.116 €/year as a contractor — roughly 695 €/week or 139 €/day.
How this calculator works
This calculator compares the net income of a contractor (B2B / freelance) against an employee earning the same gross amount. It applies each country's corporate and personal tax rules, social security, and estimates the break-even invoicing rate a contractor needs to match an employee's take-home pay.
What's included
- Employee income tax and social security
- Contractor / B2B corporate tax and distributions
- Break-even contractor day rate
- Effective tax rate comparison
What's not included
- IR35 / deemed employment rules (UK-specific)
- VAT registration and reclaim
- Business expenses or deductions
- Employer pension contributions
Data sources: Official tax authority publications for each jurisdiction: HMRC (UK), IRS (US), Autoridade Tributária (PT), KVK/Belastingdienst (NL), IRAS (SG). Updated for 2025/26.