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TAXES

Q&A: How will Spain’s new social security system for the self-employed work?

The Spanish government announced new tax rates for the self-employed from 2023, but many "autónomos" are confused as to exactly how it will work in practice. Here's what you need to know to understand the new system better.

Published: 9 August 2022 16:41 CEST
Updated: 13 August 2022 09:16 CEST
self employed in Spain
Spain's Minister of Social Security Jose Luis Escrivá. Photo: PIERRE-PHILIPPE MARCOU / AFP

From 2023 Spain’s autónomos will pay monthly social security fees based on “real earnings” in a similar way to how it works for income tax. The Spanish government revealed the new rates at the end of July 2022. 

The changes mean that rather than there being a fixed minimum contribution base of €294, self-employed workers will pay different monthly amounts based on how much they earn. It will go from €200 a month for lower earners to €590 a month for higher earners.

READ ALSO – CONFIRMED: Spain’s new tax rates for the self-employed from 2023 onwards

However, many of those who are self-employed are confused by the new rules and have many questions regarding exactly how much they’ll be paying from next year. 

Here are some of the most common questions asked and the answers, which are based on an interview with Social Security Minister José Luis Escrivá on radio station Cadena Ser. 

Q: When will the new system come into effect?

A: Autónomos will start paying the new social security quotas from January 1st 2023.

Q: How will I know what income bracket I will be put into?

A: At the beginning of the year, each autónomo will have to state their expected income level using a special tool called ‘importas’ or imports. This will help you calculate how much you might potentially earn during the year. You will be able to modify and change your income bracket six times per year, based on your real earnings. At the end of the year, you will find out what your final real earnings are and your fee will be adjusted accordingly.

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

Q: Does that mean I will get my social security back if it turns out I’ve paid too much?

A: Yes, essentially like the income tax, you will be paid part of your social security fee back again if it turns out you’ve paid too much. On the other hand, it also means that you will also have to pay more social security if you have paid too little.

Q: How will the new system work if I only work sporadically?

A: As mentioned above, you will be able to change your expected income every two months. This means those with seasonal work will end up paying less in social security fees than they do now, during the months when they get less work. When you begin to earn more, you can change your expected income level again and will be charged more.

Q: What will happen to the tarifa plana or flat rate scheme whereby new autónomos start out paying only €60 per month in social security fees?

A: The tarifa plana as it stands currently will end and those on it will not continue paying the same amount. Instead, new autónomos will pay a flat fee of €80 per month for the first year and will continue at this rate in year two, only if they earn below minimum wage. Low earners, those who earn less than €670 per month will see their rate reduced to €230 in 2023, €225 in 2024 and €200 in 2025.

Q: What will happen if I have to close my business for some reason, do I have to de-register completely?

A: The new law now states that if you are forced close your business partially or temporarily, such as in the case of the volcano eruption in La Palma, you now don’t have to deregister completely from the autónomo system. Those who have to partially close their business will be able to apply for financial help, even if they do not close completely.

Q: Why is there such a big difference between the social security rate in Spain and other European countries?

A: According to Escrivá, Spain is one of the countries with the highest level of protection for self-employed people in Europe. In other countries, you may pay less in social security fees, but will not get pensions, sick pay, maternity or paternity benefits, he explained. It also means you have aid benefits during a crisis such as the Covid-19 pandemic or if you own a shop on a street that has to be closed for construction, for example.

Q: How will we know if the new changes will be successful or not?

A: These reforms essentially mean higher pensions for the self-employed, as well as higher and better benefits. When autónomos start benefitting from these, then we know that it is successful, said Escrivá. 

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For members

WORKING IN SPAIN

Can you work outside of Spain on the non-lucrative visa?

The non-lucrative visa is a popular choice for non-EU citizens who want to come and live in Spain, but there’s long been confusion over whether or not you can work outside of the country or not while you’re on it.

Published: 19 September 2024 10:24 CEST
Can you work outside of Spain on the non-lucrative visa?

The non-lucrative visa or NLV as it is often referred to, is a residency authorisation that allows non-EU foreigners to live in Spain.

As the name suggests, however, it’s non-lucrative, so it doesn’t give you the right to work here, instead you have to demonstrate that you have sufficient savings for yourself, as well as any family members you’re bringing with you. 

Many people claim that if you’re not actually working in Spain while on the visa, and if you’re work comes from abroad then it’s fine, but is it actually legal?

Online searches reveal many conflicting results with several sources saying you absolutely cannot work on the visa at all under any circumstances and others saying that you can and authorities simply turn a blind eye.

It used to be a big grey area because Spanish law didn’t specifically mention remote working. Spain’s General Immigration Regime stated that, while staying on the NLV:

  • You mustn’t work for a Spanish company
  • You mustn’t work for a Spanish employer
  • You can’t open your own business in Spain
  • Nor can you open a branch office in Spain

In terms of remote working specifically, the law did’t actually address it.

READ ALSO: Does Spain check if you’re working on the non-lucrative visa?

But, authorities seemed to suggest that you couldn’t work on it at all, under any capacity, due to their rulings and decision making.

According to Barcelona-based law firm Balcells: “During the pandemic (from 2020 onward), the vast majority of consulates started to reject applications from foreigners who clearly stated they wanted to start working remotely”.

“Or if the consulate sees that remote work is what you have been doing for the past months/years, your application may even get rejected too”.

In 2023, a Madrid court denied a Venezuelan national’s application for the non-lucrative visa because they continued to advertise their professional services on sites like LinkedIn.

These all support the fact that working, even remotely for another country is not allowed.

The amount of savings you have to prove for the non-lucrative visa in 2024 is €2,400 per month, which must come from passive income such as return on investments and rental income, rather than physically working.

READ ALSO: Non-lucrative vs digital nomad visa: Which one should you choose to move to Spain?

There is now even stronger legal evidence to support the theory that you can’t work remotely while on the NLV, with the introduction of Spain’s Digital Nomad Visa or DNV in early 2023.

The whole point of the DNV is to allow non-EU remote workers and freelancers to be able to live and work in Spain, so it would defeat the entire purpose of this visa if you were allowed to work remotely on the NLV.

The DNV in fact has many requisites to ensure the way in which remote workers can legally work here. For example, they have to have worked for the same employer for three months or more and any company they work for has to have been in existence for more than one year.

To apply for the DNV in 2024 you have to prove a monthly income of at least €2,646. While this is slightly more than the NLV, it does mean that you can continue working. 

READ ALSO: Does Spain accept savings for the digital nomad visa if earnings aren’t enough?

Many remote workers may have used the NLV option in the past, but today there is no excuse, you may as well just apply for the DNV instead.

As authorities are cracking down on NLV applications, it’s simply not worth the risk having your application denied if you plan to continuing working. If you’re found out and are not declaring your income properly too, you could end up with a hefty fine and be unable to renew your visa in the future. 

Therefore, if you want to work remotely for company outside of Spain, it’s best to forget the NLV and go straight for the DNV, which will ensure what you’re doing is truly legal.

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