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How Spain’s autónomos could pay triple social security of UK’s self-employed

The Spanish government has proposed new changes to the amounts of social security contributions that the self-employed will pay, which could see them paying double the amount of freelancers in France and Germany and triple that of those in the UK.  

Autonomos tax in Spain compared to Europe
Spain's freelancers could pay triple the amount of those in the UK. Photo: STEPHANIE PILICK/DPA/AFP

If approved, the proposed changes will benefit low earners but are bad news for mid to high-income earners, many of who will see their social security contributions rise to double or more, over the next nine years until 2031.  

Self-employed people in Spain already pay the highest monthly social security fees in the EU and for many years have been claiming the system is unfair.

If the new proposed changes come into force, it could see many Spanish freelancers paying even more.

READ MORE- Spain’s proposed new tax rates for the self-employed from 2023 onwards

The current social security fee for autónomos (self-employed workers in Spanish) in 2022 is €294 a month, regardless of how much you earn.

However, if you are a first-time freelancer, there are some reductions – €60 per month for the first year, €143.10 per month from months 13 to 18, €200.30 per month from 19 months to 2 years, and the same amount up until 3 years.

For this, autónomos do get access to the national health services, sick leave, parental leave, among other welfare benefits.

Self-employed workers also have to pay VAT (IVA) plus income tax of 21 percent on earnings.

How does Spain’s system compare to other European countries? 

In France, freelancers do not pay anything the first year and from the second, the fees vary depending on how much you earn and the sector you work in. These are between 12 percent and 18.3 percent of your income. Freelancers in France also do not pay VAT, and while they have to pay private health insurance, the government will pay them back 60 percent and, in some cases, 100 percent.

In Germany, a self-employed worker with a monthly income of less than €1,700 pays nothing. Anyone earning over this amount pays a fee of €170. They do however have to take out private health insurance, which costs between €150 and €250 per month, although it may be higher.

In the UK, national insurance contributions start at £3.05 a week, or £158.60 a year. Those earning over £9,568 will pay 9 percent on profits up to £50,270 and 2 percent more on profits after that.

And in other countries like Italy, there is no fixed monthly fee. Self-employed workers only pay income tax based on their income; while in Portugal it is paid on annual income, which can range from the contribution rate of 25.4 percent to 32 percent.

Despite having the most expensive social security payments in Europe, it should be noted that Spanish freelancers do get more for what they pay. For example, autónomos also get benefits such as sick pay and maternity and paternity pay, unlike in countries such as the UK. 

“In this country, you pay a lot, but you receive a lot: the benefits that a self-employed person receives today are those that an employee can receive, Oscar Benito,manager of the labour affairs at legal firm Key Iberboard told Business Insider.

“Unemployment, paternity and maternity leave or cessation of activity have been incorporated in recent years”.

How much would Spain’s self-employed pay under the new proposal?

Social Security Minister José Luis Escrivá has suggested a system consisting of 13 different tax contribution brackets based on earnings, from those who earn less than €600 a month to those who make more than €4,050 a month.

The new model would introduce a minimum monthly contribution of €184 for low-earning autónomos and up to €1,267 for the top earners.

According to the Spanish government, the proposed changes would mean increased savings for two out of every three self-employed people in Spain.

The Social Security Ministry forecasts that the new system would generate savings of €1,300 per year for autónomos earning less than €600 a month.

However, anyone earning €1,125 or over per month would end up paying more in social security payments, starting at €351.90 per month. 

This means that a freelancer earning the equivalent amount in the UK (£942 per month at the time of writing) would pay £1017.36 a year in national insurance contributions, while in Spain they would pay €4222.80 (£3,540.67), more than triple the amount.  

A self-employed person earning €2,000 per month in Spain, however would end up paying €535.50 per month from 2026 onwards, which would see them paying €6,426 a year on social security payments alone.  

chart proposed self employed tax contributions in Spain from 2023

Table: The Local. Source: Spain’s Social Security Ministry
 

Negotiations

The new proposed tax reforms are still undergoing negotiations as many are against the new proposal, including, the President of the Asociación de Autónomos (ATA) Lorenzo Amor.

“This system presented in this way impoverishes the self-employed, promotes the underground economy and discourages activity from certain billing sections,” he said. 

“We left an unfair system to enter a much more unfair one,” Amor added.

On Monday, the government held their third meeting after the new proposal presented by José Luís Escrivá’s team, with few results. Associations of self-employed workers still demand that the government be more precise when defining what exactly they mean by “real income”, which the calculations will be based on. 

Member comments

  1. I have seen this topic before about SS in Spain.
    You got healthcare, and other benefits like a social pension, maternity etc for this amount.
    People who move to Spain and just sign up as self employed to get free healthcare don’t like to pay 300 a month of course. But go figure if you are a certain age or have a health condition… 300 is a bargain you can keep without getting kicked out from.
    I bet in the UK the cost of healthcare and other benefits are not falling from the sky to supply the people with free benefits and a salary as tax free pocket filling.

    In the Netherlands it is more expensive, way more expensive. In an earlier article it claimed you only pay 50 a month in Holland. Well, maybe when you actually don’t make any money?.. I never had that problem.

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WOMEN'S RIGHTS

Spanish government divided over proposed menstruation leave bill

Talk of abortion policy reform and proposed menstrual leave has dominated Spanish discourse this week, but it’s also dividing Spain’s coalition government.

Spanish government divided over proposed menstruation leave bill

Spain’s PSOE-fronted coalition government recently outlined proposals that have dominated public discourse in the country.

But the legislation, which would allow women over the age of 16 to get abortions without the permission of their parents and introduce ‘menstruation leave’ for those suffering serious period pains, has not only divided Spanish society but the government itself.

The proposals would make Spain a leader in the Western world, and the first European Union member state to introduce menstrual leave, and changes to abortion law would overturn a 2015 law passed by the conservative People’s Party that forced women aged 16 and 17 to obtain parental consent.

The wide-ranging bill would also end VAT on menstrual products, increase the free distribution of them in schools, and allow between three and five days of leave each month for women who experience particularly painful periods.

READ MORE: What are Spain’s abortion laws for foreign residents and visitors?

Menstrual leave

Ángela Rodríguez, the Secretary of State for Equality, told Spanish newspaper El Periódico in March that “it’s important to be clear about what a painful period is – we’re not talking about slight discomfort, but about serious symptoms such as diarrhoea, fever and bad headaches.”

“When there’s a problem that can’t be solved medically, we think it’s very sensible to have temporary sick leave,” she added.

Cabinet politics

The proposals are slated for approval in cabinet next week, and judging by reports in the Spanish media this week, it is far from reaching a consensus. It is believed the intra-cabinet tensions stem not from the changes to abortion and contraception accessibility, but rather the proposed menstrual leave.

The junior coalition partner in government, Podemos, largely supports the bill, but it is believed some in the PSOE ranks are more sceptical about the symbolism and employment effects of the proposed period pain policy.

Vice President and Minister of Economic Affairs, Nadia Calviño, said this week: “Let me repeat it very clearly: this government believes and is absolutely committed to gender equality and we will never adopt measures that may result in a stigmatisation of women.”

Yet Second Vice President and Minister of Labour, Yolanda Díaz, who is viewed as further to the left than President Pedro Sánchez and other PSOE cabinet ministers, is reportedly “absolutely in favour” of the measure to reform Spain’s “deeply masculinised” labour market.

Sources in the Spanish media have this week also reported that some PSOE cabinet ministers feel the proposed paid leave not only plays up to stereotypes of women, or stigmatises them, like Calviño says, but also places them at a disadvantage in the world of work.

Minister of Inclusion, Social Security and Migration, José Luis Escrivá, stated that while the government should seek to improve women’s employment protections, it should also seek to boost their participation in the labour market under “better conditions.”

In that vein, some feel menstrual leave could be used a form of of employment discrimination similarly to how pregnancy has been historically, and the policy would, in that sense, actually be more regressive than progressive in enshrining women’s workplace rights. 

READ MORE: Spain eyes free contraception for under-25’s

Trade unions

Trade unions are also sceptical of the menstrual leave legislation. Cristina Antoñanzas, deputy secretary of UGT, one of Spain’s largest trade unions, has echoed those in the cabinet who feel the proposals could “stigmatise women.” She added that “it does women a disservice.”

Public opinion

A survey run by INTIMINA found that 67 percent of Spanish women are in favour of regulating menstrual leave, but also that 75 percent fear it is “a double-edged sword” that could generate labor discrimination.

The survey also found that 88 percent of women who suffer from disabling and frequent period pain have gone to work despite it. Seventy-one percent admitted that they have normalised working with pain.

Cabinet showdown

The proposed menstrual leave policy will be debated in cabinet next week when the Council of Ministers debates and approves the broader abortion and contraception reforms. According to sources in the Spanish media, and many cabinet ministers themselves, it seems a consensus on menstruation leave is a long way off.




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