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 Major changes to freelancers’ social security contributions

Major changes to freelancers’ social security contributions

Freelancers and the self-employed in Spain will be paying different social security rates from next year. Some will pay less than at present while others could pay a lot more.

The change in the law is designed to be fairer to Spain’s 3.2 million self-employed people – autonomos – who will make contributions based on actual earnings rather than a flat rate of social security paid by everyone, regardless of their actual income.

Until now autonomos had the option to choose the base of the social security contributions. The base means the amount you think you will earn each month. As a result of this, most autonomos paid their contributions at the minimum base independently of how much income they had. This had an impact on the future pensions and sick payments for autonomos as every benefit paid by the Government is calculated on this base. From next year it won’t be possible to choose anymore.

The new system allows you to change your income bracket up to six times a year. This takes into account the fact that freelance work can vary from month to month. You can, therefore, adapt your social security contributions to be in a higher tier when you earn more and drop to a lower category when you earn less money. If you don’t take any action the regulation will be done automatically.

The tax office and the social security office have signed an agreement to exchange details automatically. That means if you pay the rate of a lower bracket than your earnings, social security will ask you to pay the difference. The good news is it will happen the other way around, if you pay more than you should, you will receive a refund.

Details of your income will be communicated automatically to social security by the tax office. This system will delay any extra charges and refund of overpayments.

Imagine you have paid less than you should in 2023; the Income tax for the year 2023 will be submitted in 2024 and the social security office will ask you for the extra payment of 2023 in 2025. Keep in mind that the extra payment will come two years later.

In order to avoid extra payments two years later or that social security keeps your money for two years, the system allows you to choose the base six times per year. The figure base  is based on your net income, which is income – expenses + social security amount plus a reduction of 7% or 3% if you are a part of a company.

There are 15 income categories and how much you pay depends on which group you fall into. If your net income is low, you could pay less or the same as now. The groups and the whole system are temporary until 2025. The system and the income brackets will be reviewed in 2026.

Less or equal to €670 230 225 200
€670 – €900 260 250 220
€900 – €1,125.90 275 267 260
€1,125.90 – €1,300 291 291 290
 €1,300 – €1,500 294 294 294
 €1,500 – €1,700 294 294 294

Higher earners will pay more. 

€1,700 – €1,850 310 320 350
€1,850 – €2,030 315 325 370
€2,030 – €2,330 320 330 390
€2,330 – €2,760 330 340 415
€2,760 – €3,190 350 360 440
€3,190 – €3,620 370 380 465
€3,620 – €4,050 390 400 490
€4,050 – €6,000 420 445 530
More than €6,000 500 530 590

Get in touch with Impley if you would like further information about the new law regarding social security for autonomos in Spain or want to discuss how we to comply with the new regulations. We are also happy to help if you wish to set up as a freelancer or autonomo.