January Heralds New Self Employed Rates And New Changes In Offing

This month sees the general rate for self-employed professionals increased to 30.6%. This means that self-employed persons paying on the lowest base (€289 per month) will see a €3 monthly increase and the maximum (€1,233.20) will pay €12 more each month.

The increase comes as this week the government proposed yet more changes to self-employed workers’ tax contributions, with the new measures suggested for 2023 which could be beneficial for lower income freelancers.

Freelance or self-employed workers in Spain – known as autónomos – have long felt they are face heavy fiscal burdens – particularly fixed quota social security contributions.

Throughout the last year the central government has been discussing a reform of the system with self employed association representatives in an attempt to level the playing field for low earners and increase flexibility in the system.

This month the Ministry of Inclusion and Social Security, José Luis Escrivá, resumed talks which led to last week´s announcement of a draft proposal  to reform the way self-employed tax and social security contributions are claculated.

The Minister a new layered system based on earning to all for 13 different tax contribution brackets. 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 top

This would be introduced over a period of up to eight years, so from
2023 to 2031 minimum earners would see their monthly tax
contributions drop year after year, whereas high earners would
seem them rise year on year.

The proposed changes also include a new reduced flat rate of €70 for  freelancers who registered for the first time.

According to a poll from Spain’s National Federation of Self Employed Workers Association (ATA) some 47% of the country´s 3 million autónomos believe that they won’t recover to pre-pandemic financial levels until at least 2023.

The same poll showed that 66.1% have a lower income than prior to the pandemic starting in March 2020.

According to government claims, the proposed changes would mean increased savings for two out of every three self-employed workers.

The plan, still in the negotiation phase and dependent on self employed unions approva would be rolled out over an eight year period from 2023.

The new scheme would allow each worker to increase or decrease their contributions throughout the year – up to six times – which for the first time allows freelancers to allow their social security contributions to be a reflection of their income.

According to forecasts from the Ministry, the new system would generate savings of €1,300 per year for autónomos earning less than €600 a month; while for those who earn between €600 and
€900 ( the largest category) – would save around a €1,000 a year in fiscal contributions.

However, for the higher earners being taxed on real earnings could result in considerably higher taxes over the next decade.

The contributions systems for autónomos in Spain has long been decried as unfair as it forced low earning self-employed workers to make contributions similar to higher earners with multiple
income streams.

Self-employed groups broadly welcomed the proposals with Eduardo Abad, President of the Union of Professionals and Self-Employed Workers (UPTA), saying: “The objective for our organization, without a doubt, has been achieved, which is for this new system to return tax justice to a system such as the Social Security contribution.”

However, President of the National Federation of Associations of Self-Employed Workers (ATA), Lorenzo Amor, panned the government proposals, dismissing them saying that  “they have no idea
what it means to be self-employed.”

The latest round of negotiations between self-employed groups and government is set to continue next week.

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