Spanish Social Security overcharge thousands of self-employed

Thousands of self-employed people in Spain (autónomos) had a nasty surprise to start 2023.

Checking their bank balances this week, many will have realised that Spain's Social Security accidentally overcharged them, along with thousands of other people.

For some, they have been left hundreds of euros out of pocket. 

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Spain's Ministerio de Inclusión, Seguridad Social y Migraciones, which charges self-employed people every month, mistakenly charged the normal minimum fee to the newly self-employed, who are offered a special €80 flat rate. The error, which has been described as an "incident in the system" in the Spanish press, affected self-employed people who had registered between January 1st and 9th.

According to the Asociación de Trabajadores Autónomos (ATA), newly-registered self-employed people were charged the normal minimum monthly fee, which is €299, instead of the reduced €80 flat rate those who are self-employed start out by paying. 

The mistake, which meant this new cohort of autónomos paid €220 more than expected, affected around 8,000 people. Sources from the Ministry of Inclusion, Social Security and Migrations say those workers accidentally overcharged will be contacted in the coming weeks by email, and it is thought that refunds will be sent by March if not before, according to Europa Press.

Contributory bases

In addition to the system error, many self-employed people (and their accountants) were surprised to see that their contribution base had been automatically updated by Social Security and they were also overcharged as a result.

From the start of 2023, self-employed can decide whether or not to update their so-called 'contribution base' - their estimated net income from which social security contributions are calculated - based on their changing income.

But at the end of January, many who had neither updated their base or made more money were charged 8.6 percent more than they should have been.

José Luis Perea, General Secretary of the ATA, insists that both errors had nothing to do with the new contribution system based on real income that entered into force in 2023, the Special Regime for Self-Employed Workers (RETA).

Freelance changes

In fact, Perea claims that with the new system, "practically 70 percent of the self-employed will benefit". 

From 2023, Spain’s autónomos will pay monthly social security fees based on how much they earn, instead of a fixed rate. Previously, freelancers have had 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 earnt.

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With this new system, self-employed people in Spain have the ability to change their income bracket every two months, with a maximum total of six changes throughout the year, in order to be to adapt their social security contributions to their projected income as it changes.

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.

Refunds

Though those new self-employed workers accidentally overcharged by €220 should be refunded in the coming weeks, those who had their contribution base increased will have to wait until the end of the 2023 fiscal year to get their money back.

The new self-employed contribution system will have a transition period of nine years, until 2032, and came into force on January 1st, 2023, with 15 different levels of contributions ranging from €230 to €590 depending on the net income of self-employed workers.