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How Spain’s autónomos could pay triple social security of UK’s self-employed

The Spanish government has proposed new changes to the amounts of social security contributions that the self-employed will pay, which could see them paying double the amount of freelancers in France and Germany and triple that of those in the UK.  

Autonomos tax in Spain compared to Europe
Spain's freelancers could pay triple the amount of those in the UK. Photo: STEPHANIE PILICK/DPA/AFP

If approved, the proposed changes will benefit low earners but are bad news for mid to high-income earners, many of who will see their social security contributions rise to double or more, over the next nine years until 2031.  

Self-employed people in Spain already pay the highest monthly social security fees in the EU and for many years have been claiming the system is unfair.

If the new proposed changes come into force, it could see many Spanish freelancers paying even more.

READ MORE- Spain’s proposed new tax rates for the self-employed from 2023 onwards

The current social security fee for autónomos (self-employed workers in Spanish) in 2022 is €294 a month, regardless of how much you earn.

However, if you are a first-time freelancer, there are some reductions – €60 per month for the first year, €143.10 per month from months 13 to 18, €200.30 per month from 19 months to 2 years, and the same amount up until 3 years.

For this, autónomos do get access to the national health services, sick leave, parental leave, among other welfare benefits.

Self-employed workers also have to pay VAT (IVA) plus income tax of 21 percent on earnings.

How does Spain’s system compare to other European countries? 

In France, freelancers do not pay anything the first year and from the second, the fees vary depending on how much you earn and the sector you work in. These are between 12 percent and 18.3 percent of your income. Freelancers in France also do not pay VAT, and while they have to pay private health insurance, the government will pay them back 60 percent and, in some cases, 100 percent.

In Germany, a self-employed worker with a monthly income of less than €1,700 pays nothing. Anyone earning over this amount pays a fee of €170. They do however have to take out private health insurance, which costs between €150 and €250 per month, although it may be higher.

In the UK, national insurance contributions start at £3.05 a week, or £158.60 a year. Those earning over £9,568 will pay 9 percent on profits up to £50,270 and 2 percent more on profits after that.

And in other countries like Italy, there is no fixed monthly fee. Self-employed workers only pay income tax based on their income; while in Portugal it is paid on annual income, which can range from the contribution rate of 25.4 percent to 32 percent.

Despite having the most expensive social security payments in Europe, it should be noted that Spanish freelancers do get more for what they pay. For example, autónomos also get benefits such as sick pay and maternity and paternity pay, unlike in countries such as the UK. 

“In this country, you pay a lot, but you receive a lot: the benefits that a self-employed person receives today are those that an employee can receive, Oscar Benito,manager of the labour affairs at legal firm Key Iberboard told Business Insider.

“Unemployment, paternity and maternity leave or cessation of activity have been incorporated in recent years”.

How much would Spain’s self-employed pay under the new proposal?

Social Security Minister José Luis Escrivá has suggested a system consisting of 13 different tax contribution brackets based on earnings, from those who earn less than €600 a month to those who make more than €4,050 a month.

The new model would introduce a minimum monthly contribution of €184 for low-earning autónomos and up to €1,267 for the top earners.

According to the Spanish government, the proposed changes would mean increased savings for two out of every three self-employed people in Spain.

The Social Security Ministry forecasts that the new system would generate savings of €1,300 per year for autónomos earning less than €600 a month.

However, anyone earning €1,125 or over per month would end up paying more in social security payments, starting at €351.90 per month. 

This means that a freelancer earning the equivalent amount in the UK (£942 per month at the time of writing) would pay £1017.36 a year in national insurance contributions, while in Spain they would pay €4222.80 (£3,540.67), more than triple the amount.  

A self-employed person earning €2,000 per month in Spain, however would end up paying €535.50 per month from 2026 onwards, which would see them paying €6,426 a year on social security payments alone.  

chart proposed self employed tax contributions in Spain from 2023

Table: The Local. Source: Spain’s Social Security Ministry
 

Negotiations

The new proposed tax reforms are still undergoing negotiations as many are against the new proposal, including, the President of the Asociación de Autónomos (ATA) Lorenzo Amor.

“This system presented in this way impoverishes the self-employed, promotes the underground economy and discourages activity from certain billing sections,” he said. 

“We left an unfair system to enter a much more unfair one,” Amor added.

On Monday, the government held their third meeting after the new proposal presented by José Luís Escrivá’s team, with few results. Associations of self-employed workers still demand that the government be more precise when defining what exactly they mean by “real income”, which the calculations will be based on. 

Member comments

  1. I have seen this topic before about SS in Spain.
    You got healthcare, and other benefits like a social pension, maternity etc for this amount.
    People who move to Spain and just sign up as self employed to get free healthcare don’t like to pay 300 a month of course. But go figure if you are a certain age or have a health condition… 300 is a bargain you can keep without getting kicked out from.
    I bet in the UK the cost of healthcare and other benefits are not falling from the sky to supply the people with free benefits and a salary as tax free pocket filling.

    In the Netherlands it is more expensive, way more expensive. In an earlier article it claimed you only pay 50 a month in Holland. Well, maybe when you actually don’t make any money?.. I never had that problem.

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SPAIN AND THE US

Spain and the US to exchange more language assistants in bilingualism push    

The governments of Spain and the United States have agreed to recruit more English and Spanish-language assistants from each other’s countries as a means of bolstering bilingual education in the two nations.

Spain and the US to exchange more language assistants in bilingualism push    

Spain’s Education Minister Pilar Alegría and US ambassador to Spain Julissa Reynoso met on Wednesday to sign a memorandum of understanding which will reinforce educational cooperation between the two countries. 

The agreement had been previously signed by Miguel Cardona, the United States Secretary of Education, who tweeted: “This week, alongside [Spanish] Ambassador [Santiago] Cabañas, I signed a memorandum supporting the study of Spanish language & culture in the US, and the study of English in Spain”.

It is in fact a renewal of a memorandum between the United States and Spain which has facilitated mobility of both conversation assistants and students between the two countries in recent years.

The aim of this newest memorandum of understanding is to further strengthen student and teacher exchange programmes and promote bilingual and multicultural teaching in both educational systems.

No exact details have yet been given about how many extra language assistants will be given grants to join the programme. 

Several teacher recruitment sources suggest the current number of North American language assistants (including Canadians) heading to Spain every year is between 2,000 and 2,500. 

The Spanish government has stated that in 2023, this figure will be around 4,500, which represents a considerable increase in the number of US and Canadian citizens who can apply through the NALCAP programme, which stands for North American Language and Culture Assistants in Spain. 

According to Spain’s Foreign Ministry, the following requirements must be met by US candidates in order to participate in the programme:

  • Be a U.S. citizen and have a valid passport
  • Have earned a bachelor’s degree or be currently enrolled as a sophomore, junior or a senior in a bachelor’s programme. Applicants may also have an associate degree or be a community college student in their last semester.
  • Have a native-like level of English
  • Be in good physical and mental health
  • Have a clean background check
  • Be aged 18 – 60.
  • Have at least basic knowledge of Spanish (recommended)

NALCAP recipients receive a monthly stipend of €700 to €1,000 as well as Spanish medical insurance.

Application dates for 2023 are usually announced in late November. See more information on the NALPAC programme for US nationals here

According to The Fulbright Program, one of several US cultural exchange programmes that organises the recruitment of US nationals for Spain: “English Teaching Assistants assist teaching staff at the early childhood, elementary, middle school, high school, vocational and/or university level for up to 16 hours per week, with an additional two hours for planning & coordination meetings. Responsibilities include assistant-teaching, in English, subjects such as social studies, science and technology, art, physical education, and English language.”

READ MORE: The pros and cons of being an English language assistant in Spain

There are also currently more than 1,000 Spanish teachers working as visiting teachers in the United States, Spain’s Moncloa government has said, without adding yet how many more will be recruited in 2023.

Additionally, more than 1,000 North American students now take part in the Spanish Language and Culture Groups managed by the Spanish Education Ministry’s Overseas Education Action (or Acción Educativa Exterior, AEE).  

Canadian applicants can find out more about working as language assistants in Spain by visiting the NALCAP Canada website.

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