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FREELANCING

Long hours and little pay: What it’s like to be self-employed in Spain

Two new studies have revealed key stats about what it's like to be 'autónomo' in Spain, from the average hours worked to the amount they charge compared to other freelancers in Europe, and their greatest worries.

Published: 28 September 2023 12:03 CEST
Long hours and little pay: What it's like to be self-employed in Spain
Being self-employed in Spain isn't straightforward for most. Photo: Energe Piccom/Pexels

Freelancers in Spain already know how tough it is to be self-employed here, but sometimes official data can really bring it to light. 

The two studies by the IV National Study of the Self-Employed (ENA) with the collaboration and methodology of the University of Granada (UGR) and BCG x Malt report Freelancing in Europe have revealed data on who the average freelancer in Spain is and what they find the most challenging. 

Profile of the Spanish self-employed worker

According to the BCG study, the average freelancer in Spain is 39 years old, while the ENA study found that 45.5 percent of autónomos are between 40 and 54.

It’s important to note that the ‘Freelancing in Europe’ study refers to digital self-employed ‘freelance’ work such as journalism, photography, design or coding, whereas the University of Granada study focused on all self-employed workers in Spain, from digital freelancers to sole traders.

Just under half, 38 percent, of freelancers in Spain are female, while the majority, 62 percent are male. 78 percent have a university degree and 97 percent have had experience working for a company before they went freelance.  

Madrid is the city with the most freelancers in Spain (37 percent) while 22 percent are in Barcelona. The other 41 percent are spread throughout the country.

A large majority (92 percent) said they became self-employed because they wanted more independence. 81 percent work from home, seven percent work from clients’ offices, seven percent go to their own office, and five percent work from co-working spaces.

READ ALSO: The best co-working spaces for digital nomads in Spain

How much time do autónomos in Spain work?

According to the BCG study, freelancers in Spain work 42 hours a week, while 28 percent of their time is actually spent doing administrative tasks instead of working for clients. 

This is just one hour more than the number of hours worked by self-employed people in Germany and five hours more than those in France. 

The ENA study on the other hand revealed that almost half of self-employed workers say they work 10 or more hours a day but do not take more than 20 days of holiday. 

Despite this, autónomos point out that the main advantages of being self-employed are autonomy (84.8 percent) and flexibility (69.6 percent).

How much do self-employed workers in Spain charge?

Autónomos in Spain charge much less than their counterparts in other Western European countries, but how much do they actually get? For tech jobs, the average daily going rate is €311 for art and design it’s €217 per day, and for marketing and communication roles it’s €200 per day. 

Those in Spain may work slightly more hours than their counterparts in Germany and France, but the compensation they receive is a whopping 87 percent less than those in France and 170 percent less than German self-employed workers. 

Those in France for example are charging €546 a day for tech jobs, while in Germany it’s an average of €746 per day. 

What are the main issues autónomos face in Spain today?

According to the ENA report, 9 out of 10 self-employed people say that entrepreneurship in Spain is not easy at all.

Barriers that self-employed people encounter are the taxation system (26.2 percent), the monthly Social Security contributions (25.7 percent), and the bureaucracy (23.2 percent).

The majority believe that they have a higher tax burden than those who are employed with a job contract.

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

Although 65.6 percent agree that Social Security payments should be based on earnings, the majority believe the amounts are still too high.

66.7 percent of freelancers only pay the lowest social security amount and 2.9 percent pay the maximum amount.

This is currently around €200 a month for those earning less than €670 and up to €590 a month for those earning €6,000 or more a month. 

READ ALSO: How much should you pay someone to do your taxes in Spain? 

Even though 75.5 percent know about the new Social Security system based on real earnings, instead of a fixed amount, the number of freelancers actually using it is very low.

53.9 percent of Spanish freelancers say that they have had to get a loan at some point to help their businesses stay afloat and 57.1 percent say they were forced to take government help during the pandemic.

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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
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.

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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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