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SELF-EMPLOYED

CONFIRMED: Spain’s new tax rates for the self-employed from 2023 onwards

Spain’s autónomos will soon pay monthly social security fees based on “real earnings” in a similar way to how it works for income tax, the Spanish government confirmed on Wednesday. Here’s a breakdown of the new rates and other key information.

spain new social security fees 2023
Self-employed people in Spain already pay the highest monthly social security fees in the EU. (Photo by JOSEPH EID / AFP)

After months of negotiations, Spain’s Social Security Ministry on Wednesday 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.

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. 

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.

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For members

TAXES

How does Spain know if I’m a tax resident?

Taxation in Spain can be quite a tricky subject and many people are often confused as to whether they are liable to pay tax here or not. How does Spain actually know if you’re a tax resident and how can you prove one way or another?

How does Spain know if I'm a tax resident?

Sometimes taxation is not very straightforward. You may work in one country but live in another, or you may live in a different country to your family. In these cases, how does Spain know if you’re a tax resident or not?

According to the law 35/2006, the Spanish Tax Agency considers anyone to be a tax resident if they:

  • They live in Spain for 183 days or more a year
  • Their main economic interests are located in Spain
  • Their spouse and children live in Spain

Living in Spain for more than 183 days

You may own a property in Spain, but actually only live in it for part of the year. If the amount of time you live in the property is less than 183 days in one year, then it’s likely that Spain won’t consider you to be a tax resident, provided you don’t meet one of the other two criteria above.

Similarly, you may only be basing yourself temporarily in Spain to learn Spanish or to enjoy the weather. In these scenarios, as long as you’re not in the country for 183 days or more, you probably won’t be classed as a tax resident.

Remember that if you’re not an EU citizen, you can only legally stay in Spain for 90 days out of every 180 days, so it’s unlikely that you will meet the 183-day rule.

Keep in mind that these days don’t have to be consecutive. It could be any of the 183 days or more from January to December in a given year. Be aware, that short weekend trips away do not count as days not spent living in Spain.

There are various ways the Spanish authorities can find out how long you’ve been in the country. The first is obviously at immigration when you enter and leave the country. If you’re from a non-EU country your passport will be stamped upon both entry and exit, showing how much time you’ve spent here.

If you enter Spain via other means, such as by road, it’s not so easy for the authorities to know how long you’ve been in the country as checks are not always carried out at the borders.

However, there are other ways the authorities can tell if you’re in the country and how long you’ve been here. For example, when you stay in a hotel or an Airbnb, your passport details will be registered. If you try to rent a property, again your details will be registered.

In fact in Spain your details will be registered when you try to do many everyday life tasks such here as signing up for internet, buying new furniture or receiving packages bought online.

Some people may claim to be a non-tax resident, but try and live in their second home for longer than 183 days. In this case, the tax authorities may turn to the energy companies and look at your bills to see when the property has been in use.

Yes, you can obviously rent your property out and the bills will show the property has been lived in, but in this case, you will be expected to pay tax on the rental income, whether you’re a resident or a non-resident.

Your main economic interests are located in Spain

What does it mean if your main economic interests are in Spain? For example, if all your assets are located in Spain such as real estate, your main bank account and other investments, you may be considered to be a tax resident.

If you work in different locations around the world, but the headquarters of your business are based in Spain or your employer is in Spain, then it’s likely that you would also be liable to pay tax here. Even if you don’t live in Spain for more than 183 days a year in this case, you could also be considered to be a tax resident.

This is relatively easy for the authorities to find out where your place of work and main assets are located. 

Your spouse and children live in Spain

Even if you don’t live in Spain for more than 183 days a year, but you are not divorced or separated from your spouse and they live in Spain, along with your children, then the Spanish authorities may also consider you to be a tax resident. This will most likely be the case if they depend on you financially.  

For example, you could work abroad in another country, but your husband/wife and kids live in Spain – they’re registered here and your kids go to school here and they depend on your paycheck for household bills. In this case, when finding out if you’re a tax resident or not, the tax authorities may ask questions about your family and you may have to provide documents proving where they live. 

How do I prove I am not a tax resident in Spain?

If you don’t think that any of the above situations apply to you, but are still worried about being considered a tax resident in Spain, then the best way to prove that you’re not is to get a tax residency certificate from your home country stating that you reside and pay tax there. This way, you cannot be taxed in both countries, if they have a double taxation agreement.

Be aware, this certificate only lasts for one year, so you will need to get a new one the following year if the same situation still applies. 

If you do live in Spain for more than 183 days, however, it’s very unlikely that you will be able to get this certificate from your home country. 

  • Keep in mind that we at The Local Spain are not tax experts, we have learned the hard way by asking professionals, reading the laws and getting on the phone to speak to the experts. If your situation is not straightforward then we recommend contacting a lawyer to help you figure out your particular situation. 
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