Reform of the Autónomos system for self-employed workers in Spain.

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Posted and filed under Taxes in Spain.

There are 3.2 million self-employed people in Spain, around 16 per cent of the country’s working population, including many foreigners. All the information about the new Reform of the Autónomos System

  • Mechanics.
  • Hairdressers.
  • Freelancers.
  • Estate agents.
  • Builders and trasdesmen… 
  • Many more. 

According to leaked reports this week, the Spanish government is ready to change the controversial way social security contributions are paid. There is no official word on when we can expect the changes but we know it’s badly needed. 

The reforms mean the tax authorities will take into account self-employed. People’s actual earnings rather than charge a fixed monthly amount regardless of the true income.  

Current system

Currently, the system of paying into social security involves a flat fee that stands at around €283 a month at the minimum rate.

This fee gives self-employed workers access to Spain’s public health system. They also benefit from contributions towards a state pension. The problem is that the fee has to be paid regardless of whether an autónomo has any monthly earnings or not. This is not ideal in a Pandemic. 

Self-employed workers in Spain currently pay the highest monthly social security fees in the EU. Our fees are far higher than the UK’s €14/m, the Netherlands’s €50 a year or even Germany’s €140 for workers who earn more than €1,700 a month.

I think we’ll see more and more freelancers moving to Spain to blog, take photos, proofread, create content and more. Under the current system, these freelancers get to choose the contribution base that they want to pay a rate on. Most of them opt for the minimum contribution base, yet it is still expensive.

Workers object because their contribution is the same whether they earn €20,000 a year or €200,000.

Unofficially, the new plans consist of establishing income brackets. This will set the level of contributions meaning the more you earn then the more social security contribution you pay. 

Problems with the Reform of the Autónomos System

When self-employed workers see a reduced income, (like right now due to COVID) their social security contributions will drop and when their earnings increase again, they will pay more.  The story was released by Cadena Ser this week who also said that the Spanish government was looking at a system that would set €12,000 as a minimum base. There would be discounts of up to 50 per cent on contributions from those who don’t reach that threshold.  The next bracket for those earning between 12,000 and 25,000 a year is more or less as it is now for everyone and there will be a further FIVE brackets above this amount. 

An overhaul in the system would be welcomed by the many ex-pats in the region and across the country who see it as deeply unfair.

We will keep you informed about the new Reform of the Autónomos System.

Ian

14 Comments

  • Zak

    Im.glad this is changing. Please keep us updated

  • Molly

    It’s a crazy system for sure that just encourages more of a black economy. Sounds like no discounts are planned for €12-25k bracket – what about part time workers? So basically they will hike taxes for higher earners but no lower rate for the €12-25k bracket – those most in need!

  • Erika

    Molly the text specifically says discounts of up to 50% for those who don’t reach that base.

    • Jane

      .

  • Aaron

    Any more information on this?? What time frame is being speculated on the introduction of these changes?

    • Jane

      Hi Aaron

      Nothing else has been released and we do not have a timeframe, but please keep an eye on our site for further announcements.

      Kind Regards

      Jane

  • Richard Tarran

    It is stated the minimum bracket might be 12,000, is that gross or net as we all know that can make a huge difference and no one on 12,000 gross ends up with anything near that ,after tax/fees/expenses

    • Jane

      Hi Richard

      Nott sure what you are referring to here, minimum bracket for what?

      Kind Regards

      Jane

  • Richard Tarran

    The minimum earnings bracket ! the figure that has been mentioned in numerous questions/answers. Also this is still unfair to the AVAERAGE earner

    • Jane

      Hi Richard

      We are simply quoting what has been said, hopefully we will have more to publish soon.

      Kind Regards

      Jane

  • Claire

    Hello, this was interesting reading, thank you.
    I’d be interested to hear the answer to Richard’s question. The base of 12,000 refers to gross or net earnings?
    Also, do you know if there is any help with the monthly fee for people working autonomo during the pandemic who haven’t lost more than 75% of their earnings? I read somewhere that January’s monthly payment wont be taken out of your bank but have just noticed that mine has already has been deducted….? THANK YOU in advance for any help, Claire

  • John gibson

    Do you have to make social security payments if you have no income at all? I often hear if you earn less than the minimum wage you don’t have to pay. Is this correct?

    • Nicola Ryan

      Good Morning John,

      Thank you for your enquiry.

      If you are autonomo, you have to pay your social security payments if your company remains open. If you do not want to pay the social security payments, your company would need to be closed. It would be best to discuss this with your Fiscal advisor or if you would like a second opinion, we would be delighted to refer you to our Fiscal Advisor. We hope this helps.

      Kind regards
      Nicola

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