Everything that changes about working in Spain in 2023
New labour laws, tax breaks, big changes for the self-employed and lots of promising employment news for foreigners - 2023 will bring many developments for all types of people working in Spain.
New tax for all workers
From 2023, all salaried or self-employed in Spain will have to pay an extra tax to help fill up the country's pension fund. The new tax will be paid by all workers regardless of their income, and the percentage they pay on their salary will be the same for everyone.
In simple terms, if you work in Spain and contribute to social security, the new tax will represent 0.6 percent of your monthly salary. However, of this 0.6 percent your employer will pay 0.5 percent and you will only pay the other 0.1 percent. Autónomos (self-employed) will also have to pay this new tax, and trade unions estimate that the average monthly payment will be around €5 per month.
READ ALSO: The new tax all workers in Spain will pay in 2023
Income tax cut for low and mid-income earners
Back in September 2022, Spain announced that it would reduce the amount of personal income tax on those earning up to €21,000 per year. Previously it was €18,000 per year. For example, a worker who is married, has children, earns €19,000 (gross) a year and does a joint tax declaration will save €331 on their annual income tax return, while a pensioner who is over the age of 65 and has a pension of €16,500 will save €689. The change in tax conditions means that workers on Spain’s minimum wage (€14,000) will not have to pay income tax if they don’t earn above €15,000, which is the new threshold for 2023.
READ ALSO: How much will you save with Spain’s income tax cut?
Regional tax breaks as well
Seven Spanish regions also announced tax breaks which act as an extra benefit to the income tax reductions announced by the national government. This is good news for those living in Madrid, Valencia, the Balearic Islands, Galicia, Andalusia, Murcia and Castilla y León. Click here to find out more on the tax breaks in your region.
New social security contributions for self-employed
From 2023, Spain’s autónomos will pay monthly social security fees based on how much they earn, instead of a fixed rate. Currently, the self-employed have to pay a minimum contribution base of €294 per month after they have been registered as self-employed for two years, regardless of how much they earn.
Instead of there being a fixed rate of €294, the fee will go down progressively to €200 a month for lower earners and progressively higher - up to €590 a month - for higher earners. This means that some self-employed workers will see their social security payments reduced, however, for anyone earning over €1,700 per month, they will increase.
READ ALSO: Q&A: How will Spain’s new social security system for the self-employed work?
New Startups Law and digital nomad visa
Spain’s new Startups law aims to attract international investors, digital nomads and new companies to Spain with visa incentives, tax breaks, fewer bureaucratic hoops and other benefits. One of the main draws of the law is that it offers startups a cut in Corporation tax from 25 percent to 15 percent for a maximum of four years.
It will also include a digital nomad visa, which will be introduced in 2023. Digital nomads will be eligible to pay non-resident income tax (IRNR) rather than regular income tax (IRPF) for the first four years. IRNR is generally 25 percent in Spain but this will be reduced to 15 percent for digital nomads. They will have to demonstrate that at least 80 percent of their income comes from foreign companies for this to apply.
READ ALSO: Spain’s new digital nomad visa: Everything we know so far
No social security tax for new autónomos in Madrid
Back in September 2022, the regional government in Madrid announced that from 2023, new autónomos in Madrid will have their social security fees paid for by the local 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. This means that new self-employed workers in Madrid will save hundreds or potentially several thousands of euros during their first year or two years of work.
READ ALSO: New self-employed workers in Madrid to pay no social security tax
More construction and trade jobs for non-EU workers
In 2022, Spain changed its migration laws to recruit more foreigners from overseas for industries with labour shortages. The primary focus for 2023 is to hire carpenters, plumbers, electricians and other workers involved in construction. Previously, the only way for third-country nationals to be hired from overseas for a contract job was if employers could not find an EU candidate for the position or if the job was on Spain’s shortage occupation list. Since 2008 this has been made up almost entirely of jobs in the maritime and shipping industry.
READ ALSO: EXPLAINED: Spain’s plans to recruit thousands of foreigners for construction and trade jobs
Four-day work week to become more common?
The Spanish government announced this year it will give up to €150,000 to small and medium-sized companies (SMEs) that implement a four-day work week without reducing their employees' salaries. Companies will have to slash employees’ weekly work hours by at least 10 percent - which technically constitutes half a day less of work rather than a full day - and stick to the pilot scheme for at least two years.
The aim of the four-day workweek is to increase productivity as well as to offer a better work-life balance together with improved physical and mental health conditions for workers.
READ ALSO: Spain to pay €150K to SMEs that roll out four-day work week
More tech jobs than ever
Some of the world's biggest tech companies such as Meta, IBM, Google and Amazon are among the those that have announced they will set up billion-euro data centres and other tech infrastructure in Spain in the coming years. For example, Amazon cloud computing unit AWS plans to invest €2.5 billion in Spain over the next 10 years which will create over 1,300 jobs.
READ ALSO: Meta, IBM, Google, Amazon: How thousands of tech jobs are being created in Spain
Fewer temporary jobs
Spain has long been one of the European nations with the highest number of temporary contracts but in early 2022 the country pushed through a labour reform to reduce job insecurity by targeting these types of jobs. In May 2022, it was reported that the legislation had proven successful as around a third of employees hired in the first four months of 2022 were given permanent contracts.
This has also helped unemployment levels during low season drop dramatically. As it stands in December 2022, the average number of temporary contracts has been reduced by eight points, despite the fact that the Spanish rate remains the second highest within the EU. Expect more of the same in 2023.
READ ALSO: How a spike in permanent contracts is improving job security in Spain
Another minimum wage increase?
The Spanish government is considering increasing the minimum wage again in 2023 from the current €1,046 gross a month in 14 annual payments to €1,082, as recommended by their team of analysts.
This €46 rise has the support of Labour Minister Yolanda Díaz as it's in line with her plans to bring the SMI (as the minimum wage is called in Spain) closer to the EU average.
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New tax for all workers
From 2023, all salaried or self-employed in Spain will have to pay an extra tax to help fill up the country's pension fund. The new tax will be paid by all workers regardless of their income, and the percentage they pay on their salary will be the same for everyone.
In simple terms, if you work in Spain and contribute to social security, the new tax will represent 0.6 percent of your monthly salary. However, of this 0.6 percent your employer will pay 0.5 percent and you will only pay the other 0.1 percent. Autónomos (self-employed) will also have to pay this new tax, and trade unions estimate that the average monthly payment will be around €5 per month.
READ ALSO: The new tax all workers in Spain will pay in 2023
Income tax cut for low and mid-income earners
Back in September 2022, Spain announced that it would reduce the amount of personal income tax on those earning up to €21,000 per year. Previously it was €18,000 per year. For example, a worker who is married, has children, earns €19,000 (gross) a year and does a joint tax declaration will save €331 on their annual income tax return, while a pensioner who is over the age of 65 and has a pension of €16,500 will save €689. The change in tax conditions means that workers on Spain’s minimum wage (€14,000) will not have to pay income tax if they don’t earn above €15,000, which is the new threshold for 2023.
READ ALSO: How much will you save with Spain’s income tax cut?
Regional tax breaks as well
Seven Spanish regions also announced tax breaks which act as an extra benefit to the income tax reductions announced by the national government. This is good news for those living in Madrid, Valencia, the Balearic Islands, Galicia, Andalusia, Murcia and Castilla y León. Click here to find out more on the tax breaks in your region.
New social security contributions for self-employed
From 2023, Spain’s autónomos will pay monthly social security fees based on how much they earn, instead of a fixed rate. Currently, the self-employed have to pay a minimum contribution base of €294 per month after they have been registered as self-employed for two years, regardless of how much they earn.
Instead of there being a fixed rate of €294, the fee will go down progressively to €200 a month for lower earners and progressively higher - up to €590 a month - for higher earners. This means that some self-employed workers will see their social security payments reduced, however, for anyone earning over €1,700 per month, they will increase.
READ ALSO: Q&A: How will Spain’s new social security system for the self-employed work?
New Startups Law and digital nomad visa
Spain’s new Startups law aims to attract international investors, digital nomads and new companies to Spain with visa incentives, tax breaks, fewer bureaucratic hoops and other benefits. One of the main draws of the law is that it offers startups a cut in Corporation tax from 25 percent to 15 percent for a maximum of four years.
It will also include a digital nomad visa, which will be introduced in 2023. Digital nomads will be eligible to pay non-resident income tax (IRNR) rather than regular income tax (IRPF) for the first four years. IRNR is generally 25 percent in Spain but this will be reduced to 15 percent for digital nomads. They will have to demonstrate that at least 80 percent of their income comes from foreign companies for this to apply.
READ ALSO: Spain’s new digital nomad visa: Everything we know so far
No social security tax for new autónomos in Madrid
Back in September 2022, the regional government in Madrid announced that from 2023, new autónomos in Madrid will have their social security fees paid for by the local 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. This means that new self-employed workers in Madrid will save hundreds or potentially several thousands of euros during their first year or two years of work.
READ ALSO: New self-employed workers in Madrid to pay no social security tax
More construction and trade jobs for non-EU workers
In 2022, Spain changed its migration laws to recruit more foreigners from overseas for industries with labour shortages. The primary focus for 2023 is to hire carpenters, plumbers, electricians and other workers involved in construction. Previously, the only way for third-country nationals to be hired from overseas for a contract job was if employers could not find an EU candidate for the position or if the job was on Spain’s shortage occupation list. Since 2008 this has been made up almost entirely of jobs in the maritime and shipping industry.
READ ALSO: EXPLAINED: Spain’s plans to recruit thousands of foreigners for construction and trade jobs
Four-day work week to become more common?
The Spanish government announced this year it will give up to €150,000 to small and medium-sized companies (SMEs) that implement a four-day work week without reducing their employees' salaries. Companies will have to slash employees’ weekly work hours by at least 10 percent - which technically constitutes half a day less of work rather than a full day - and stick to the pilot scheme for at least two years.
The aim of the four-day workweek is to increase productivity as well as to offer a better work-life balance together with improved physical and mental health conditions for workers.
READ ALSO: Spain to pay €150K to SMEs that roll out four-day work week
More tech jobs than ever
Some of the world's biggest tech companies such as Meta, IBM, Google and Amazon are among the those that have announced they will set up billion-euro data centres and other tech infrastructure in Spain in the coming years. For example, Amazon cloud computing unit AWS plans to invest €2.5 billion in Spain over the next 10 years which will create over 1,300 jobs.
READ ALSO: Meta, IBM, Google, Amazon: How thousands of tech jobs are being created in Spain
Fewer temporary jobs
Spain has long been one of the European nations with the highest number of temporary contracts but in early 2022 the country pushed through a labour reform to reduce job insecurity by targeting these types of jobs. In May 2022, it was reported that the legislation had proven successful as around a third of employees hired in the first four months of 2022 were given permanent contracts.
This has also helped unemployment levels during low season drop dramatically. As it stands in December 2022, the average number of temporary contracts has been reduced by eight points, despite the fact that the Spanish rate remains the second highest within the EU. Expect more of the same in 2023.
READ ALSO: How a spike in permanent contracts is improving job security in Spain
Another minimum wage increase?
The Spanish government is considering increasing the minimum wage again in 2023 from the current €1,046 gross a month in 14 annual payments to €1,082, as recommended by their team of analysts.
This €46 rise has the support of Labour Minister Yolanda Díaz as it's in line with her plans to bring the SMI (as the minimum wage is called in Spain) closer to the EU average.
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