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WORKING IN SPAIN

CONFIRMED: Spain to raise minimum wage to €1,000

Despite opposition from companies and business associations, Spain’s left-wing coalition government has confirmed that the country's minimum wage will be increased up to €1,000 gross over 14 payments, applicable from January 2022. 

Published: 9 February 2022 16:17 CET
spain minimum wage
It's the second minimum wage increase in the last six months in Spain. Photo: Jaime Reina/AFP

Spain’s Labour Minister Yolanda Díaz on Wednesday announced that the Spanish Cabinet will approve an increase of the country’s minimum wage up to €1,000 at their next meeting on February 22nd.

This represents a €35 increase from the current minimum wage of €965. On Tuesday, trade union UGT disclosed the suggested rise would be €31, but Díaz has decided it should be €4 higher to reach a round number of €1,000.

This is a gross figure (pre-tax) which minimum wage full-time workers will receive over 14 payments as is standard in Spain, with an extra payments during the summer and another at Christmas (pagas extras) rather than 12 (one for every month).

 It will also apply retroactively from January 2022, meaning minimum wagers will be paid an extra €35 for work carried out last month as well as this one.

Spain’s government has pushed through the 3.6 percent minimum wage rise thanks to the support of trade unions CCOO and UGT, and despite not receiving the green light during negotiations from business associations CEIE and Cepyme, which have said the move responds more to “political aspirations than financial common sense”. 

Last September, the Spanish government already approved a €15 rise in el salario mínimo from €950 to €965, a bill which was also spearheaded by Yolanda Díaz and which business associations rejected as unfeasible and detrimental to job creation.

“This government fulfils its promises,” Díaz said during a press conference on Wednesday. 

“Despite everything that’s been said, raising the minimum wage has been very positive for our country and our economy.”

According to the Unidas Podemos politician and second Deputy Prime Minister, it’s “science fiction” to argue otherwise because it’s been “empirically” proven that raising wages encourages people to spend more and this in turn helps the economy.

“We are committed to having a work model that’s not based on low wages, competing like this equates to defending a bad economy, precarious businesses and a social model that is profoundly unfair”.

The government’s objective is that by the end of 2023, Spain’s minimum wage will represent around 60 percent of the average salary in the country.

This latest increase will benefits more than 1.8 million workers in Spain, according to the labour ministry, both full-time and part-time workers.

However, the previous rise in minimum wages resulted in the increase of €8 in social security contributions for the country’s self-employed workers up to €294 a month, a figure that could increase further still for many under new plans to raise rates based on real earnings.  

Even though job insecurity and unemployment remain relatively high in Spain, the country already has the seventh highest minimum wage rate in the EU.

Last Thursday, the Spanish government managed to pass a long-awaited labour reform aimed at ending rampant job insecurity with a majority of just one, but it quickly emerged that a PP deputy accidentally voted for the legislation and in doing so tipped the balance in favour of the government.

This will also lead to a salary increase for some 73,000 workers in Spain who belong to multi-service companies that offer cleaning, gardening, maintenance and other services.

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TAXES

Self-employed in Spain: What are the tax rules if you do two or more jobs?

When you sign up to be self-employed or autónomo in Spain you have to state what sector or industry you’ll be working in, depending on your career or business. But what happens when you cross over industries and want to work in more than one?

Published: 30 May 2023 12:31 CEST
Updated: 30 May 2023 13:43 CEST
Self-employed in Spain: What are the tax rules if you do two or more jobs?

It is increasingly common to carry out several self-employed activities at the same time to be able to make ends meet and adapt to the demands of the market. It could supplement your income and open up new opportunities.

When you sign up to be an autónomo (self-employed) you will need to be registered for IAE (Tax on Economic Activities) also called registration epígrafe. Essentially it’s a numerical code that identifies the activity you carry out.

READ ALSO – Do I have to register and pay tax if I earn below minimum wage?

Take for example an autónomo who works in marketing. They will have registered for one IAE, but if they want to supplement their marketing income and work as a tour guide or a language teacher at the same (also in a self-employed capacity), they will have to register for another IAE.

Your epígrafe or IAE will determine several factors:

  • If your activity is business or professional – If you are going to carry out a professional activity, you must apply withholding tax to your invoices within Spain. The general rate is 15 percent, but if you are a newly self-employed person, the rate is reduced to seven percent during the first year of registration and the following two.
  • The Value Added Tax (VAT) regime: The type of VAT you pay, whether it’s general, simplified or equivalent surcharge (mandatory for retailers).
  • Personal Income Tax (IRPF) – This can be an objective estimation or a direct estimation. 

If you want to sign up for more than one, you must inform both the Treasury and Social Security, since it can affect the way you pay your taxes as seen above.

To do this, you must make a declaration of census modification and fill out forms (modelos) 036 or 037. This means you will avoid having to present form 840 on the Tax on Economic Activities.

The good news though is that you can sign up for two different activities at the same time without having to pay two lots of social security fees.

READ ALSO: How self-employed workers in Spain should invoice clients abroad 

It’s important to remember that when it comes to accounting, you have to manage income and expenses separately for each of the two or more activities.  

When you present your income statements each trimester, you will have to fill in your income and expenses for each different activity. If the two activities belong to different sectors, you must also apply the VAT deduction regime separately for each sector.

It’s useful to keep in mind that as of January 2023, self-employed people have had to pay social security based on their net income, rather than a flat fee.  

READ ALSO: Will you pay more under Spain’s new social security rates for self-employed?

What to do about IVA or VAT?

The most important thing to remember is that method used to settle personal income tax and VAT must be the same for both activities. The simplified VAT regime is exclusively for taxpayers who declare personal income tax by modules.

Sometimes it may happen that you will have to charge VAT for one activity and not for the other. For example, selling bread in a bakery (with VAT) and giving cooking classes (without VAT). 

Taking this example, the VAT incurred in the acquisition of goods and services that are related to the cooking classes cannot be deducted.

However, the VAT paid on the acquisition of goods and services related to the activity in the bakery is fully deductible. 

The VAT paid for expenses common to both activities is partially deductible by applying the percentage related to the general pro rata.

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