Spain is considering reforms to the social security contribution system paid by the self-employed.
The social security contributions paid by Spain’s self-employed workers (Autonomo) could be changing with the possible introduction of a multi-tiered system which would see more than one million workers paying more each month.
The move would see self-employed workers paying a monthly amount of contributions based on their anticipated level of income. This is opposed to the current system where a flat fee is paid regardless of how much they earn.
Under the new rules, there would be a total of 13 contribution brackets which would range from a monthly payment of €90 for those earning less than €3,000 per year to an eye-watering €1,220 per month for those on €48,841 or more.
Under the current system, even the lowest earners have to pay a minimum fixed amount of around €275 per month.
The payment of social security contributions based on a fixed monthly amount regardless of income has been a longstanding and contentious issue for the self-employed with freelancer associations and unions have been pushing for a fairer system.
Spain’s Minister for Social Security José Luis Escrivá made the proposals to the country’s main labour unions UGT and CCOO along with employer groups CEOE and Cepyme in a 14-page document.
The new system would see self-employed workers choosing their contribution base according to their estimated level of income. This amount could then be adjusted up to six times a year depending on how well their business was performing.
At the end of the year, the contributor could either request a refund if they had paid too much or be asked to make an additional payment to make up any shortfall.
The new system could be introduced as early as next year, although it is not expected to be fully up and running until 2023 with a transition period of nine years.
From 2023 until 2031, the following yearly income thresholds and quotas are being proposed.
Once the 9-year reform period ends, the following thresholds are being proposed from 2032.
Source - Libremercado.com
Under the new quotas, self-employed workers earning 17,000 euros or more would have to pay around 19 euros more than they do now, or 228 euros per year.
Those earning between 22,000 and 27,000 euros, will have to pay 139 euros more per month, a whopping 1,668 euros more each year.
Workers with an income of between 27,000 and 32,000 euros a year, will pay 259 euros more per month, almost double what they pay now.
It would mean around 280,000 freelancers who earn more than 48,841 euros per year will pay 934 euros more than if they paid the minimum fee, that is, almost five times more than what would correspond to them today and €11,208 per year.
Although a deal is thought to be “imminent”, ministry sources stress that other options are still on the negotiating table and that this may not be the definitive text.