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WORKING IN SPAIN

In Numbers: Where are Spain’s self-employed foreign workers from?

The number of foreigners registered as autónomo in Spain continued to grow in 2022, but how many are there, which countries do they come from and what industries do they work in?

Published: 20 January 2023 13:14 CET
In Numbers: Where are Spain’s self-employed foreign workers from?
A woman works on a computer (Photo: Daniel Thomas / Unsplash)

Spain is not an easy country to be self-employed in with high social security fees, high tax rates, lots of bureaucracy forcing you to hire an accountant and the need to submit tax returns five times a year. 

Despite this, the latest government stats show that Spain has around 3.3 million registered freelancers and many foreigners choose to set up businesses and become self-employed here too. 

READ ALSO – Self-employed in Spain: What you should know about being ‘autónomo’

The number of foreign professionals who chose Spain to set up their own businesses and become self-employed in 2022 continued to grow. 

The latest data from the affiliation to the Special Regime for Self-Employed Workers (RETA) published by Social Security, reveals an increase of 20,293 foreign self-employed workers last year, reaching a total of 406,382 self-employed workers from other countries.

Out of these, 162,066 are from the EU. According to the stats, the majority of EU self-employed workers in Spain hail from Romania, Italy and Germany. Romania takes the lead with 45,061 self-employed workers in Spain, followed by Italy with 35,879 and then Germany with 17,266. 

The remaining 244,316 foreign freelance workers were from non-EU countries. The majority of these were from China with a total of 62,045. Morocco came in second place with 27,313, then the UK with 26,589. In fourth place was Venezuela with 17,056 and then Colombia, which, at the end of last year, had 11,759 registered freelancers in Spain. 

“This is a record figure, which has never been seen before, and it is good news that shows that foreigners want to contribute and continue working,” Guillermo Guerrero, director of the Emprender Siendo Extranjero association, told the newspaper Autónomos y Emprendedor.

Guerrero believes the main cause of the record number of self-employed foreigners in Spain was due to the change to the Immigration Law, which came into force in August 2022, and means that immigrants can now obtain a residence permit or gain access to temporary residence due to labour ties. The reform also now allows foreign students to start contributing as self-employed.

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

The growth in the number of foreigners registered as freelancers in 2022 lies in stark contrast to the figures for the total number of self-employed workers in Spain in 2022, which was the lowest number seen in a decade. 

Lorenzo Amor, president of the National Federation of Self-Employed Workers Associations (ATA), described last year’s closure as “terrible”, and said that this could be “an early indicator of how the situation will evolve in the coming months.”

Who are the self-employed foreigners in Spain?

At the end of 2022, 252,412 foreign freelancers were men, compared to 153,970 women. This means that 62 percent of self-employed workers from outside Spain are men, a proportion that is similar to the autónomos in Spain as a whole, where women represent only around 36 percent. 

The majority of these work in the commerce sector, with 99,273 registered at the end of 2022. This is followed by those in the hospitality industry, with 69,920, construction with 56,550, and other services with 30,774.

The stats also show the majority of self-employed foreigners live in Catalonia and Madrid followed by Valencia, Andalusia, the Canary Islands, and the Balearic Islands. 

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AMERICANS IN SPAIN

EXCLUSIVE: What the new Spain-US social security deal means for Americans

The Local speaks to the Spanish government and tax experts to understand what the new social security and pensions agreement between the United States and Spain means for American workers, digital nomads and pensioners in Spain.

Published: 15 May 2024 11:10 CEST
Updated: 19 May 2024 08:20 CEST
EXCLUSIVE: What the new Spain-US social security deal means for Americans

In early April, the United States and Spain announced a new social security and pension agreement.

The first update to the bilateral agreement between the two countries since 1986 was announced by US Ambassador to Spain, Julissa Reynoso, and Spain’s Minister of Inclusion, Social Security, and Migration, Elma Saiz.

The official agreement is unpublished so The Local spoke with a representative from Spain’s Ministry of Inclusion, Social Security, and Migration as well as international tax experts to understand the agreement in more detail.

Key aspects of the agreement

The Ministry told The Local Spain that the agreement is a step towards, bolstering mobility between Spain and the United States by improving pension calculations and social security protections.

The agreement has to do with the accumulation of benefits and affects working Americans living in Spain. There are two main components; the first affects which system people pay into (Spanish or American) and the second maximises the amount people can collect from social security.
 
Regarding paying into social security, the new agreement extends the “posting period” from three years to five years, with the possibility of extending it to seven years.

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This is meaningful for US employees who are working in Spain and means that they can now pay into the US social security system, rather than the Spanish social security system for longer.

Whereas the employee contributions in Spain and the United States are similar, 6.4 percent in Spain and 6.2 percent in the United States, the rate that employers pay differs greatly. In the United States the employer pays 6.2 percent into social security, whereas in Spain they pay 31 percent.
 
Why does this matter? “Previously when Americans moved to Spain, US employers were cutting the amount that they paid in salary because the cost of employment went up so much”, Louis Williams, Co-Founder and CEO of Entre Trámites, told The Local Spain.

It’s also made employers hesitant to grant digital nomads an Employer of Record (EOR) which would allow American workers to be on a Spanish contract.

READ ALSO:

In terms of collecting benefits, the representative from Spain’s Ministry of Inclusion, Social Security, and Migration says, “In the calculation of the Spanish pension there have been technical modifications that will benefit especially those people who developed their last working life in the United States, without this harming those who have worked in Spain immediately before requesting the benefit.”

In other words, under the new agreement, after calculating a person’s benefits under each country’s system, the recipient will be awarded the most beneficial of those two calculations.

Impacts for self-employed workers and digital nomads

According to the Ministry, “The agreement allows self-employed workers to temporarily move to the other State while maintaining their legislation, a possibility that was previously restricted only to employed workers.”
 
This has big implications for people who avoid moving to Spain because of the complicated social security contributions scheme, as they’ll now be able to continue paying US social security taxes (rather than Spanish) for up to seven years.
 
“The interesting thing is if this is extended to digital nomads because it would make the digital nomad visa more attractive,” says Williams.

“Why? Because if you’re posted by an employer (who can now avoid high Spanish social security taxes) you’re eligible for Beckham’s Law.” The law, which does not extend to autonomous works, can cap tax liabilities at 24 percent.
 
Being posted could make life much simpler, according to Elliott Locke, ACSI, co-founder of abroaden, a financial wellbeing and education start-up for people living abroad headquartered in Barcelona.

“The calculus is harder for freelancers given the different legal structures and methods for freelancing between the two countries. In many ways, if an American moves here to work remotely, it could be beneficial for them to have their US-based employer hire them on a local contract through an employer-of-record,” Locke told The Local.
 
In short, the new agreement could make it more attractive for U.S. companies to post employees in Spain, making them eligible for Beckham’s law and allowing autonomous workers to pay into the U.S. social security system, making it more beneficial and easier to be a digital nomad in Spain.

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Who benefits from the new agreement?
 
The people who will feel this new agreement the most are employers, digital nomads, retirees who have paid into both systems over the years, and finally, civil servants. “Spain has incorporated as possible beneficiaries of the Agreement those people who have contributed to the civil servant’s regime (passive class regime), who were excluded in the previous Agreement,” says the Ministry.
 
When can we expect the new agreement to come into force?

Don’t hold your breath; this is Spain after all, but we can expect the agreement to come into force within the next two years.

The deal has to pass through Congress before approval, which is likely why it has not yet been published. If things move quickly, people could expect to benefit within a year.

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