Spain eyes €80 flat fee for self-employed which will save low earners €900
The Spanish government has proposed raising the monthly flat fee new ‘autónomos’ initially pay from €60 to €80, a rise which will purportedly mean lower earners end up saving more than €900 in social security payments over two years.
Spain’s Social Security Ministry is in the process of negotiating its new fees and tax rates for the country’s 3.3 million self-employed workers (known as autónomos), changes which are likely to come into force in 2023.
The proposed amendments have been tweaked on several occasions over the course of 2022 but are still generally unpopular, as the new tax bracket rates are likely to be beneficial for lower earners but bad news for higher earners.
Their latest proposal relating to autónomos' social security payments is heading in the same direction.
It would see the monthly €60 minimum contribution base (in reality it's €69 in 2022 although not widely publicised) that autonónomos currently pay in the first year after they register with the RETA system increase up to €80.
As things stand, this €60 flat fee that gives self-employed workers access to Spain’s social security system (including public health) rises progressively over the second year until reaching a monthly fee of €294. This is on top of the tax paid on income.
The new tarifa plana would be adapted to so-called real earnings (ingresos reales), however.
According to the ministry, new autónomos will be able to save €916 on their social security payments during their first two years of self-employment.
But this is only if over the course of their second year of work their net income is below Spain’s Interprofessional Minimum Wage (SMI), which in 2022 is €1,166.67 a month over 12 months.
New self-employed workers who meet that criteria would pay a flat fee of €80 over a 24-month period, rather than seeing their rate increase progressively over the second year up to €294 as is currently the case.
In other words, they would pay €1,920 in social security payments over two years rather than the current €2,836 it adds up to now, representing €916 of savings.
For autonónomos whose earnings are above the minimum wage during the second year, the new €80 flat fee will apply for the first year but during the second year they will have to pay more.
According to several Spanish sources specialising in self-employed work in the country, unions and social agents representing autónomos have all but agreed with the ministry headed by José Luis Escrivá that these changes will go ahead.
So it appears that this will be a positive measure for self-starters who are struggling to get their businesses in Spain off the ground over the first two years, but nothing to write home about for those who have found relative success.
Many self-employed workers in Spain have long felt they are burdened with unfair tax and social security contributions.
The initial flat fee was already raised by €50 to €60 in 2019, and in 2022 the minimum contribution base for the more seasoned self-employed was also increased from €286 a month to €294.
How does Spain’s social security payment system for self-employed workers compare to other European countries?
Self-employed people in Spain pay the highest monthly social security fees in the EU.
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.
In Germany, a self-employed worker with a monthly income of less than €1,700 pays nothing.
In the UK, national insurance contributions start at £3.05 a week, or £158.60 a year.
In Italy, there is no fixed monthly fee. Self-employed workers only pay income tax based on their income.
Despite having the most expensive social security payments in Europe, it should be noted that autónomos in Spain do get more for what they pay. For example, they receive benefits such as sick pay and maternity and paternity pay, unlike in countries such as the UK.
READ ALSO - Self-employed in Spain: What you should know about being ‘autónomo’
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Spain’s Social Security Ministry is in the process of negotiating its new fees and tax rates for the country’s 3.3 million self-employed workers (known as autónomos), changes which are likely to come into force in 2023.
The proposed amendments have been tweaked on several occasions over the course of 2022 but are still generally unpopular, as the new tax bracket rates are likely to be beneficial for lower earners but bad news for higher earners.
Their latest proposal relating to autónomos' social security payments is heading in the same direction.
It would see the monthly €60 minimum contribution base (in reality it's €69 in 2022 although not widely publicised) that autonónomos currently pay in the first year after they register with the RETA system increase up to €80.
As things stand, this €60 flat fee that gives self-employed workers access to Spain’s social security system (including public health) rises progressively over the second year until reaching a monthly fee of €294. This is on top of the tax paid on income.
The new tarifa plana would be adapted to so-called real earnings (ingresos reales), however.
According to the ministry, new autónomos will be able to save €916 on their social security payments during their first two years of self-employment.
But this is only if over the course of their second year of work their net income is below Spain’s Interprofessional Minimum Wage (SMI), which in 2022 is €1,166.67 a month over 12 months.
New self-employed workers who meet that criteria would pay a flat fee of €80 over a 24-month period, rather than seeing their rate increase progressively over the second year up to €294 as is currently the case.
In other words, they would pay €1,920 in social security payments over two years rather than the current €2,836 it adds up to now, representing €916 of savings.
For autonónomos whose earnings are above the minimum wage during the second year, the new €80 flat fee will apply for the first year but during the second year they will have to pay more.
According to several Spanish sources specialising in self-employed work in the country, unions and social agents representing autónomos have all but agreed with the ministry headed by José Luis Escrivá that these changes will go ahead.
So it appears that this will be a positive measure for self-starters who are struggling to get their businesses in Spain off the ground over the first two years, but nothing to write home about for those who have found relative success.
Many self-employed workers in Spain have long felt they are burdened with unfair tax and social security contributions.
The initial flat fee was already raised by €50 to €60 in 2019, and in 2022 the minimum contribution base for the more seasoned self-employed was also increased from €286 a month to €294.
How does Spain’s social security payment system for self-employed workers compare to other European countries?
Self-employed people in Spain pay the highest monthly social security fees in the EU.
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.
In Germany, a self-employed worker with a monthly income of less than €1,700 pays nothing.
In the UK, national insurance contributions start at £3.05 a week, or £158.60 a year.
In Italy, there is no fixed monthly fee. Self-employed workers only pay income tax based on their income.
Despite having the most expensive social security payments in Europe, it should be noted that autónomos in Spain do get more for what they pay. For example, they receive benefits such as sick pay and maternity and paternity pay, unlike in countries such as the UK.
READ ALSO - Self-employed in Spain: What you should know about being ‘autónomo’
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