Changes to Self-Employed Tax Rates Could Save Low Earners Money

New changes are in progress for Spain’s self-employed community (known as autonomos). Spain’s Social Security Ministry is introducing new fees and tax rates, changing the tax bracket rates that autonomos in the country must abide by.

The good news is that these new tax brackets are set to benefit Spain’s lowest self-employed earners, but these proposed amendments are incredibly unpopular in the country because they will result in higher self-employed earners paying more.

Here’s everything you need to know about the Social Security Ministry’s latest proposal, and how it might effect you:

An Increased Base Rate for All Autonomos

The monthly minimum contribution rate that all autonomos in Spain must pay in their first year of self-employment, regardless of how much they earn, is 60 euros. (in 2022 the ‘real’ figure for this is 69 euros, although this increase is not widely publicised). Under the new proposals, this figure will rise to 80 euros.

This 60-euro flat rate currently rises progressively over the second year of self-employment until it reaches 294 euros. All self-employed workers pay this fee, on top of their income tax. However under the new plan, this figure would be adapted to better reflect the ‘real earnings’ rate of each autonomos.

According to the ministry, new autónomos will be able to save €916 on their social security payments during their first two years of self-employment. But this assessment is only true if their net income is below Spain’s Interprofessional Minimum Wage (SMI) during their second year of work, which in 2022 is €1,166.67 a month over 12 months.

New self-employed workers who meet those criteria would pay a flat fee of €80 over a 24-month period, rather than seeing their rate increase progressively over the second year up to €294 as is currently the case. This means that if your business is a quick success and you earn above the base rate in your second year, you would pay €1,920 in social security payments over two years rather than the current €2,836 it adds up to now, representing €916 of savings.

How Will This Impact Higher Earners?

This measure has been hailed as a positive one for self-employed workers who are just starting out in their new business ventures and who have been put off from trying to work independently because of the huge fees involved. But it is not good news for those higher earners who have already established their own self-employed businesses. For these individuals the changes will cost them more money, when many already feel they are burdened with unfair taxes and higher than is reasonable social security contributions.

This is not the first time social security contribution expectations have been raised for this group. In 2019, the initial flat rate was raised from 50 euros to 60 euros, and in 2022 the minimum contribution base for autonomos with more than two years experience was also increased from €286 a month to €294.

Spanish Has the Highest Social Security Fees in Europe

If you’re self-employed in Spain, then you need to know that you will pay the highest social security rates of any other country. However, you will also receive more bang for your buck: Spanish autonomos are entitled to benefits such as sick pay, and maternity and paternity pay. These benefits are not offered to self employed workers in other countries. But you will pay more for these services. As a point of comparison:

  • In France, self-employed workers pay nothing for the first year and in the second the amount you pay will be determined by your employment sector and your income.
  • In the UK, national insurance contributions for the lowest earners are just £3.05 per week.
  • In Germany, you won’t pay any social security if you are a self-employed worker earning less than 1,700 euros per month.

Would you like to start your own business in Spain? Or perhaps you’re thinking of relocating to Spain, and turning your dream of Spanish home ownership into a reality? Why not get in touch with our local property experts, who are perfectly positioned to help you find the right Spanish home for you.



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