Can I charge my clients through Bizum? How to use Bizum as a professional or a business.

Who doesn’t know what Bizum is by now? We all use it regularly to transfer money quickly between friends and also to make some small payments. But what, really and officially, is Bizum? It is a simple and agile system for sending and receiving money between individuals via a smartphone and the banking platform used by each user. It is an instant transaction (the money arrives immediately) and, in addition, completely free of charge (with no bank fees for either party). 

For self-employed workers, professionals, and businesses, Bizum is an efficient payment collection tool and a way to modernize their businesses. 

How does professional Bizum work?

As you probably know, Bizum is an instant payment service that allows you to send and receive money. All you need to do is link your phone number to the IBAN of a bank account.

Its main appeal lies in its immediacy: transactions are completed in seconds.

Bizum has expanded its business model to include specific options for self-employed workers and businesses. These options are designed to make collection management easier, allowing customers to pay for services or products directly from their mobile phones.

In addition, professional Bizum can be integrated into online sales platforms, providing a simple payment method for e-commerce.

How to set up Bizum in your business

To activate Bizum in your business, you must follow three steps:

• Check whether your bank offers Bizum as a service for businesses and self-employed workers (all the major banks operating in Spain offer it).

• Contact your bank to request registration for the professional Bizum service.

• Configure the system according to your business’s needs. You will be able to integrate this payment method directly into your website or your point-of-sale system.

Who has to report a Bizum payment: self-employed workers, businesses, or individuals?

The answer to this question is:

• Self-employed workers and businesses that routinely use Bizum services must report the corresponding income, as with any other transfer.

• Bizum transfers of funds between individuals must also be reported if all the Bizum payments sent exceed €10,000/year in total.

Obligations to the Spanish Tax Agency (AEAT)

It is one of the questions some self-employed workers often ask: do I have to report my Bizum payments? Absolutely, yes. All income received by your business through this app must be reported as business and professional income from the activity you carry on. That is why it is highly advisable to have a professional phone line so as to keep it separate from your personal accounts.

Payments made through Bizum are treated similarly to a bank transfer, so it is very easy to track the transactions carried out. If the AEAT wanted to trace a business’s transactions through Bizum, it would only need to contact the financial institutions.

So when someone tells you “I’ll send you a Bizum,” be aware that there must also be an invoice for the payment made.

It is essential to keep a detailed record of all transactions so that they can be included in your quarterly and annual VAT (IVA) and Personal Income Tax (IRPF) returns.

Collecting payment for a business activity through Bizum is not exempt from taxation. 

Some professionals use Bizum to charge for their services. That is why the AEAT has turned its attention to this method. As it is income from an economic activity, it must be taken into account for tax purposes.

The amount a self-employed worker receives through Bizum for the sale of a good or service must be treated by that self-employed worker as business and professional income in their IRPF return.

In addition, if the good or service is subject to VAT, the self-employed worker must report that amount in their quarterly VAT return. They must pay the corresponding tax to the tax authorities on a quarterly basis. If it is a company, it must report the sale in its Corporate Income Tax (IS) return, and the same applies with regard to VAT as for the self-employed worker.

Tips for using Bizum if you are self-employed

To use Bizum in your business as a self-employed worker, here are some guidelines and tips that may save you a headache or two, especially from a tax perspective:

• Do not mix your personal and business accounts: link your business account at a financial institution to the payments you receive or send through Bizum.

If you combine personal and business money transfers, you may run into problems in the event of a tax audit, since all those movements may be analyzed by the AEAT.

• Always report payments received via Bizum: report each and every Bizum payment you receive, however small, as income from your business activity and your work as a self-employed worker.

Financial institutions are required to report to the AEAT, and Bizum payments are treated as transfers, so the AEAT could request the information from any institution if it deemed it necessary.

Fine for failing to report Bizum transactions

Failing to report the movements in the cases mentioned above could lead to penalties from the tax authorities. In this regard, transactions exceeding €10,000 that are not reported will face a fine ranging from €600 to 50% of the amount sent through Bizum. In addition, if the origin of the money is not substantiated, the tax authorities could impose fines ranging from €60,000 to €150,000.