Read news from:
Austria
SHARE
COPY LINK
For members

TAXES

Spain eyes €80 flat fee for self-employed which will save low earners €900

The Spanish government has proposed raising the monthly flat fee new ‘autónomos’ initially pay from €60 to €80, a rise which will purportedly mean lower earners end up saving more than €900 in social security payments over two years.

Published: 8 July 2022 11:08 CEST
spain self employed flat fee
Self-employed people in Spain currently pay the highest monthly social security fees in the EU. (Stock Photo by Prakash MATHEMA / AFP)

Spain’s Social Security Ministry is in the process of negotiating its new fees and tax rates for the country’s 3.3 million self-employed workers (known as autónomos), changes which are likely to come into force in 2023. 

The proposed amendments have been tweaked on several occasions over the course of 2022 but are still generally unpopular, as the new tax bracket rates are likely to be beneficial for lower earners but bad news for higher earners.

Their latest proposal relating to autónomos’ social security payments is heading in the same direction.

It would see the monthly €60 minimum contribution base (in reality it’s €69 in 2022 although not widely publicised) that autonónomos currently pay in the first year after they register with the RETA system increase up to €80. 

As things stand, this €60 flat fee that gives self-employed workers access to Spain’s social security system (including public health) rises progressively over the second year until reaching a monthly fee of €294. This is on top of the tax paid on income. 

The new tarifa plana would be adapted to so-called real earnings (ingresos reales), however.

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 is only if over the course of their second year of work their net income is below Spain’s Interprofessional Minimum Wage (SMI), which in 2022 is €1,166.67 a month over 12 months.

New self-employed workers who meet that 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.

In other words, they 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.

For autonónomos whose earnings are above the minimum wage during the second year, the new €80 flat fee will apply for the first year but during the second year they will have to pay more.

According to several Spanish sources specialising in self-employed work in the country, unions and social agents representing autónomos have all but agreed with the ministry headed by José Luis Escrivá that these changes will go ahead.

So it appears that this will be a positive measure for self-starters who are struggling to get their businesses in Spain off the ground over the first two years, but nothing to write home about for those who have found relative success.

Many self-employed workers in Spain have long felt they are burdened with unfair tax and social security contributions.

The initial flat fee was already raised by €50 to €60 in 2019, and in 2022 the minimum contribution base for the more seasoned self-employed was also increased from €286 a month to €294. 

How does Spain’s social security payment system for self-employed workers compare to other European countries?

Self-employed people in Spain pay the highest monthly social security fees in the EU. 

In France, freelancers do not pay anything the first year and from the second, the fees vary depending on how much you earn and the sector you work in.

In Germany, a self-employed worker with a monthly income of less than €1,700 pays nothing.

In the UK, national insurance contributions start at £3.05 a week, or £158.60 a year.

In Italy, there is no fixed monthly fee. Self-employed workers only pay income tax based on their income.

Despite having the most expensive social security payments in Europe, it should be noted that autónomos in Spain do get more for what they pay. For example, they receive benefits such as sick pay and maternity and paternity pay, unlike in countries such as the UK.

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

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
For members

TAXES

Can you pay taxes in Spain with a foreign bank account?

Many foreigners have tax obligations in Spain but might not have a Spanish bank account to pay them from. Changes by Spain's tax authorities might just make it easier, depending on your circumstances.

Published: 3 May 2024 09:01 CEST
Can you pay taxes in Spain with a foreign bank account?

Navigating the ins and outs of the Spanish tax system can be a little daunting at times. That’s why many people choose to pay for a gestor to handle it all for them.

But for many foreigners in Spain, especially those with property in the country but who aren’t resident, figuring out when and how to pay your taxes can be extra complicated, especially if you don’t speak Spanish.

READ ALSO: What does a ‘gestor’ do in Spain and why you’ll need one

This was compounded by the fact that, for many years, you couldn’t pay Spanish taxes from a foreign bank account. As such, many people were forced to open a Spanish bank account for the sole purpose of paying tax.

Can you pay taxes in Spain with a foreign bank account?

Fortunately, it’s no longer like that. From February 1st 2024, the tax authorities in Spain started allowing tax payments via direct debit from any bank account within the SEPA area, removing the need for a Spanish bank account.

So, in short, yes, you can pay your Spanish taxes with a foreign bank account — depending on the country in which the account is based.

What is SEPA?

SEPA stands for Single Euro Payments Area is a basically an integrated bank transfer system. SEPA includes all the EU members states, plus those in the EFTA (Iceland, Norway, Liechtenstein and Switzerland). The UK is also still member of the SEPA area, despite Brexit.

Before the change, you could only pay your taxes in Spanish via banks approved by the tax authorities.

READ ALSO: Spanish tax returns: A handy guide for foreigners

VAT and tax experts Marosavat explain that under the previous rules, “direct debit [was] only available when the taxpayer’s bank account belongs to a bank entity cooperating with the Spanish tax authorities. This requirement impose[d] an important restriction when using direct debit as a payment method, especially for foreign taxpayers.”

But slowly, the Spanish tax authorities have eased the rules and made it easier for foreign businesses and tax payers to pay their tax from abroad. First, in March 2021, the rules were relaxed for foreign businesses with tax obligations in Spain. 

Then from July 2023 foreign accounts were approved for deferment and split applications of tax debt, and from February 2024 for regular tax payments.

Following the changes, Marosavat says, “the payments will still be processed through a cooperating bank entity, which communicates with the taxpayer’s bank entity. In consequence, all commissions and bank expenses related to the procedure will be passed on by the tax administration to the taxpayer.”

According to Spain’s Agencia Tributaria website, which you can find an English language version of here:

  • Payments are allowed for those who do not have an open account in any collaborating entity in state collection management.　

  • It is especially intended for use by those who pay their debts from abroad.　

  • It can be done by both natural persons and legal entities.　

  • The payment will have releasing effects on the date of receipt and entry of the transfer. 　

Non-resident property owners

This is particularly welcome news for second home owners in Spain, many of whom are non-resident and manage their properties from abroad for most of the year. 

According to IberianTax, by extending tax payments to the wider SEPA area, “property owners can now continue to use their home country’s bank accounts or accounts from other SEPA countries to make tax payments towards their taxes. This change simplifies the process and alleviates the burden of setting up a separate Spanish bank unnecessarily.”

SHOW COMMENTS