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EXPLAINED: Why Spain’s self-employed may soon pay a lot more in monthly fees

Spain’s government has proposed a controversial change to the "autónomo" system which would see self-employed workers in Spain pay between €90 and €1,220 per month in social security contributions, apart from paying income tax as well. Here’s what you need to know.

Jose Luis Escriva
Photo: PIERRE-PHILIPPE MARCOU / AFP

The Spanish government first announced its plan to overhaul the autónomo system back in October 2020, saying that they would propose a way in which social security payments would be linked to yearly earnings, rather than just one flat fee.

Currently, most autónomos pay around €283 a month (lower in first two years) in social security fees, meaning that you contribute the same, whether you earn €20,000 a year or €200,000.

In theory, an overhaul the autónomo system is a good thing and something that self-employed people have been demanding for years.

However,  the new proposal by Spain’s Minister of Inclusion, Social Security and Migrations José Luis Escrivá could see some autónomos paying up to €1,220 per month, just in social security contributions.

Self-employment unions in Spain have already decreed the new payment proposals to be “outrageous”.

Both the president of the National Federation of Self-Employed (ATA), Lorenzo Amor, and that of the Union of Professionals and Self-Employed Workers (UPTA), Eduardo Abad, have expressed anger at the new proposal. 

Speaking to Europa Press, Amor criticised the move and has rejected the proposal. “Tomorrow the CEOE Social Security commission will meet, and there is no way we will agree with this draft that the Government has sent,” he said, after noting that “there hasn’t been any dialogue or negotiations in place”.

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How would the scheme work under the new proposal?

Under the new proposal, the minimum quota for the self-employed would be €90 per month and would rise from there, up to €1,220 per month, depending on how much you earn.

However, the €90 per month would only be applicable to those earning up to €3,000 net per year, which is not even enough to live on in Spain.

This would mean that those earning just €3,000 per year or less would be expected to pay €1,080 in social security fees. 

And it doesn’t seem to get any better from there upwards. Those earning between €12,600 and €17,000 net per year would pay €275 per month and those earning between €17,000 and €22,000 would pay €305 per month.

According to Statista, the average annual wage in Spain in 2019 (not taking into account the Covid-19 years) was €27,500. Spain’s National Statistics Institute reported in June 2020 a lower average gross annual figure of €24,000, but this applied to 2018.

Under the new proposal, it means that anyone earning the average amount or above would be paying €425 to €545 or more per month in social security payments. The top amount rises to €1,220 per month for those earning above €48,841 per year.

Self-employed in Spain already pay the highest monthly social security fees in Europe, far higher than the UK’s €14/month (minimum fee), the Netherlands’s €50 a year, and Germany’s €140 for those earning more than €1,700 a month.

Many already consider the flat fee of €283 a month to be crippling, and if the new thresholds come into play, it could mean that thousands could struggle to even stay self-employed.

When would the new rules come into force?

If Escrivá gets the go-ahead, the new changes to social security payments will start to come into force next year, but the effects wouldn’t be seen until 2023.

However, the changes would not happen all at once and the social security payments would gradually rise or fall over a period of nine years, during which the reform would be progressively implemented.

How would the process work?

Because of the nature of being self-employed, most freelancers who work for a variety of different clients don’t know how much they will earn in a year. Therefore, you will have to estimate your annual earnings in advance to know how much social security you will have to pay. You will be able to change your forecasted earnings up to six times per year. 

If at the end of the year, your estimate is different from the amount you actually earned you will have to pay extra social security or will receive a refund, depending on whether you earned more or less. 

READ ALSO: Self-employed in Spain: What you should know about being ‘autónomo’

Member comments

  1. As an autonomo at the lower end of the scale, this is unlikely to impact on me, but this story misses a very important point.

    Autonomo fees are tax deductible – thus, these new payments will reduce the automono’s income tax liability.

    Looking at the way the proposed fees are structured, they appear to increase from about 23% at 22,000 euros to 29% at 48,841 euros – I’m sure it’s no coincidence this rightly tracks the rising income tax rates from 30% to 37% paid by people on profits at that level.

    Some autonomos may indeed pay more tax overall, but it’s definitely not going to be insane!

    This really needs an accountant’s eye to give an indication of the real-world effect.

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Do I have to take most of my annual leave in August in Spain?

Many Spanish companies still expect their workers to take their holidays at specific times of the year, primarily in August, right in the height of summer when many hotels are fully booked. So what are your rights, are you obliged to take your vacation in one particular month?

Do I have to take most of my annual leave in August in Spain?

While it’s your right as an employee to be able to take holiday days, do you have to take them when your company wants you to take them, or are you able to choose and have more flexibility?

Despite August being one of the hottest months in Spain and the one month of the year when many official companies and offices shut up shop, not everyone necessarily wants to take their break at the same time as everyone else.

Taking your holidays in August means less availability in hotels, overcrowding and more expensive transport and accommodation. If you don’t have children who are off from school during the summer months, then you may wish to take your vacation days at another time of the year, when it’s less busy and cheaper.

To answer the question it’s important to know the details about what the law says about how paid time off is taken, requested, imposed, or granted.

What laws or regulations dictate the rules about paid holiday time?

There are three different sets of rules and regulations, which are responsible for regulating the laws on vacation time in Spain. 

Firstly, you need to look at the Spanish Workers’ Statute, which includes rights, duties and obligations applicable to all salaried workers in Spain.

Secondly, you need to be aware of the collective sector and/or company agreements, which may dictate the rules for a particular industry for example.

Thirdly, you need to look at the contract, which you signed with your employer when you started working for them. This sets out your individual circumstances and the rules you must abide by.   

Workers Statute

As a general rule, all employees are subject to the Workers’ Statute. Holidays are part of this and are the subject of article 38. These conditions can never be contradicted by individual companies and are set as a guaranteed minimum. 

The minimum number of holidays in Spain is 30 calendar days per year. This equals two and a half days per month worked, in the case of temporary contracts. The statute states that vacations must be taken between January 1st and December 31st in separate periods, but one of them must be for at least two weeks. They are always paid and cannot be exchanged for financial compensation.

The period when you can take them is set by a common agreement between the employer and the worker, in accordance with what is established in the collective agreements on annual vacation planning. If there is disagreement, the social jurisdiction is resorted to.

At a minimum, the company must offer vacation days at least two months before the beginning of the holiday period, so that the employee has time to organise and book.   

When the planned time to take vacations coincides with a temporary disability, pregnancy, or childbirth, you have the right to enjoy the vacations at another time, even after the calendar year is over.

Collective agreements on vacations  

Your sector’s collective agreements may also help to answer this question. These aim to improve upon the basic and general rights that are included in the Workers’ Statute. They seek to adapt the rules to each type of industry or company. They could, for example, set out extra vacation days, which are greater than the standard 30 calendar days. 

You will need to find out what your specific sector or company’s collective agreement is. There is a possibility that your sector or company has mandatory summer vacations for the month of August and in that case, you can choose vacation dates, but only within this month.

Your work contract 

Lastly, you will need to consult your individual contract which you signed with the company when you were hired.  As well as the minimum conditions set out in the Workers’ Statute, your contract sets out your particular agreement with your employer in terms of holiday duration, the work calendar and other details.

Therefore, you should state in your contract whether you have to take your holidays during August, or if you’re free to take them at other times of the year.

If after consulting these three sets of regulations and there are still in doubt or in disagreement with your company about vacations, such as having to take them during the month of August, you should consult a lawyer specialising in labor law. They should be able to give you an answer specific to your situation.  

Can I appeal or disagree and what are the consequences? 

To appeal or express disagreement with what is proposed by the company, there is a period of 20 business days from when the vacation schedule is sent out, after which time you don’t have the right to show that you disagree.  

Companies can proceed to disciplinary dismissals due to abandonment of the job if you decide to take vacations that have not been granted or agreed upon with your employer. To avoid this type of problem, always make sure you have a record in writing of your request for vacation time and subsequent approval by the company.

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