APPROVED: Spain's new tax rates for the self-employed from 2023 onwards
Spain’s autónomos will pay monthly social security fees based on “real earnings” in a similar way to how it works for income tax, as approved by the Spanish Parliament on Thursday August 25th. Here’s a breakdown of the new rates and other key information.
After months of negotiations, Spain’s Social Security Ministry on July 20th was given the green light by self-employment groups ATA, UPTA and Uatae to change the way the country's 3.3 million autónomos (self-employed workers) pay for social security coverage.
On August 25th, the Spanish Parliament approved the changes, thus confirming they will come into force in 2023.
Up until now, autónomos had a minimum contribution base of €294 a month after they’d been registered as self-employed for two years (for the first year it is €60 a month, and during the second year it rises progressively to reach €294, but this is also changing).
The changes mean that rather than there being a fixed minimum contribution base of €294, self-employed workers will pay different monthly amounts based on how much they earn.
This is on top of IRPF, income tax, which they are also taxed on based on how much they earn in the form of tax brackets.
What this means in practice is that some seasoned autónomos will pay more for social security every month, whilst others pay less.
Instead of it being a fixed rate of €294, it will go from €200 a month for lower earners to €590 a month for higher earners.
The Social Security Ministry will also change these rates for each group of earners every year.
So far they have disclosed what these rates will be for the years 2023, 2024 and 2025.
The term “real earnings” (ingresos reales) refers to net income, the difference between computable earnings and deductible expenses.
There will now be 13 social security contribution brackets rather than just the one, from those earning under €670 a month to those earning above €6,000.
Below is a breakdown of these new minimum monthy contributions to the social security system based on real earnings for Spain’s autónomos.
If there’s a brief conclusion to be drawn from this new system it is that self-employed workers in Spain who are low earners (anyone earning under €1,166 net a month) will benefit, especially those who are making under €900 a month as they stand to save up to €94 a month in social security fees by 2025.
FIND OUT: Will you pay more under Spain’s new social security rates for self-employed?
Very high earners, anyone getting more than €4,000 net a month to give an example, will not be so happy as they could end up having to pay up to €300 more a month in social security fees.
But it’s perhaps the middle classes, the medium to high-medium earners that this legislation is particularly damaging for. For example, an autónomo who is starting to find success and earning €2,030 will end up paying €76 more a month by 2025.
Many self-employed workers in Spain have long felt they are burdened with unfair tax and social security contributions in what’s already a difficult work market.
This legislation will help autónomos who are struggling to get to the end of the month, but at first glance it appears that it will stump growth for startups and autónomos who are starting to get their businesses off the ground, financially speaking.
Self-employed people in Spain already pay the highest monthly social security fees in the EU.
They do however generally get more for what they pay, with benefits such as sick pay and maternity/paternity pay on top of access to Spain’s public healthcare system, benefits not always available to self-employed workers in other European countries.
Still having doubts about the new system? The link below should clear up any possible doubts.
Q&A: How will Spain’s new social security system for the self employed work?
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After months of negotiations, Spain’s Social Security Ministry on July 20th was given the green light by self-employment groups ATA, UPTA and Uatae to change the way the country's 3.3 million autónomos (self-employed workers) pay for social security coverage.
On August 25th, the Spanish Parliament approved the changes, thus confirming they will come into force in 2023.
Up until now, autónomos had a minimum contribution base of €294 a month after they’d been registered as self-employed for two years (for the first year it is €60 a month, and during the second year it rises progressively to reach €294, but this is also changing).
The changes mean that rather than there being a fixed minimum contribution base of €294, self-employed workers will pay different monthly amounts based on how much they earn.
This is on top of IRPF, income tax, which they are also taxed on based on how much they earn in the form of tax brackets.
What this means in practice is that some seasoned autónomos will pay more for social security every month, whilst others pay less.
Instead of it being a fixed rate of €294, it will go from €200 a month for lower earners to €590 a month for higher earners.
The Social Security Ministry will also change these rates for each group of earners every year.
So far they have disclosed what these rates will be for the years 2023, 2024 and 2025.
The term “real earnings” (ingresos reales) refers to net income, the difference between computable earnings and deductible expenses.
There will now be 13 social security contribution brackets rather than just the one, from those earning under €670 a month to those earning above €6,000.
Below is a breakdown of these new minimum monthy contributions to the social security system based on real earnings for Spain’s autónomos.
If there’s a brief conclusion to be drawn from this new system it is that self-employed workers in Spain who are low earners (anyone earning under €1,166 net a month) will benefit, especially those who are making under €900 a month as they stand to save up to €94 a month in social security fees by 2025.
FIND OUT: Will you pay more under Spain’s new social security rates for self-employed?
Very high earners, anyone getting more than €4,000 net a month to give an example, will not be so happy as they could end up having to pay up to €300 more a month in social security fees.
But it’s perhaps the middle classes, the medium to high-medium earners that this legislation is particularly damaging for. For example, an autónomo who is starting to find success and earning €2,030 will end up paying €76 more a month by 2025.
Many self-employed workers in Spain have long felt they are burdened with unfair tax and social security contributions in what’s already a difficult work market.
This legislation will help autónomos who are struggling to get to the end of the month, but at first glance it appears that it will stump growth for startups and autónomos who are starting to get their businesses off the ground, financially speaking.
Self-employed people in Spain already pay the highest monthly social security fees in the EU.
They do however generally get more for what they pay, with benefits such as sick pay and maternity/paternity pay on top of access to Spain’s public healthcare system, benefits not always available to self-employed workers in other European countries.
Still having doubts about the new system? The link below should clear up any possible doubts.
Q&A: How will Spain’s new social security system for the self employed work?
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