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New self-employed workers in Madrid to pay no social security tax

The Local Spain
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New self-employed workers in Madrid to pay no social security tax
Madrid has long been considered to have the most lenient tax system in Spain, and the region's president Isabel Díaz Ayuso wants to continue promoting this image. (Photo by ANDER GILLENEA / AFP)

Madrid’s president on Monday announced that her government will cover the monthly social security fees of ‘autónomos’ that register in Spain’s capital, a decision which will save new self-employed workers hundreds of euros.

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Madrid’s right-wing regional president Isabel Díaz Ayuso on Monday promised Madrileños a number of fiscal benefits and other improvements, with the standout announcement aimed at attracting new self-employed workers to the Spanish capital.

From Q1 2023, new autónomos in Madrid will have their social security fees paid for by her government for their first year of self-employed work in the region.

If their monthly earnings are below minimum wage in the second year (€1,166 gross a month), they will also have their social security fees covered by the regional government.

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Self-employed mothers who have the right to a tax reduction after returning to work less than two years after the birth or adoption of their child will also not be charged social security tax during the first two years back in self-employed work.

The standard fixed fee for newly registered self-employed workers across Spain is currently just under €70 a month for the first year of work, rising progressively to €294 a month by the end of the second year of autónomo work.

Madrid already had more beneficial fixed social security fees for self-employed workers than the rest of Spain - €50 a month for the first two years – but this new ‘zero fee’ (tarifa cero) is even more alluring as the country’s social security ministry will next year start charging autónomos based on real earnings.

Therefore, new autonómos (self-employed workers) in Madrid stand to save hundreds or potentially several thousand euros during their first year or two years of work.

FIND OUT: Will you pay more under Spain’s new social security rates for self-employed?

There are currently 419,000 self-employed workers in the Madrid Community, although it is estimated that 30,000 new autónomos will benefit from the ‘zero fee’ offering.

Monthly social security tax payments give self-employed workers in Spain access to sick pay, maternity/paternity leave, the public healthcare system and other welfare benefits. This tax is separate from IRPF, which is income tax paid on earnings.

The general consensus is that Madrid is among, if not the top region, with the most lenient tax system in the country.

READ ALSO: Why you should move to Madrid if you want to pay less tax

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