The Minister of Inclusion, Social Security and Migration, José Luis Escrivá, stated this Tuesday that the objective of the new self-employed contribution system for real income “is not in any case collection.”
“In principle, our impression is that the balance of Social Security income and expenses will remain unchanged as a result of this new regime for the self-employed,” he indicated at the press conference after the Council of Ministers.
Escrivá has pointed out that the new self-employed contribution system will allow one in two self-employed workers to have the possibility of contributing “significantly less” than until now for the minimum contribution they had and three out of four can do so for an equal or lesser contribution than the current one.
Likewise, the head of Inclusion, Social Security and Migration has indicated that this new contribution system for the self-employed has a “very considerable” gender component and in favor of young people, because 70% of self-employed women have net returns below of the minimum wage and in the case of young people under 30 years of age it reaches 80%.
The minister highlighted the protective action of Social Security towards the self-employed, who, as he pointed out, know to what extent the Government has committed itself to them “to unprecedented limits”, taking into account that in this crisis there are 80,000 self-employed more than before the pandemic thanks to measures that have protected their income in the field of Social Security and liquidity.
“The Government’s commitment to the self-employed has always been maximum, taking protective action very far. In the field of social protection we have gone extraordinarily far and have configured a much more powerful system so that the self-employed feel the protective action of the Executive to all Social Security contributors”, he highlighted.
The new contribution system for the self-employed based on real income, which will have a transition period of nine years, until 2032, and will begin to be applied from January 2023, with 15 installment tranches that will range from 230 euros to 500 euros and will vary until 2025, depending on the net income of self-employed workers.
Escrivá has highlighted that this new contribution system for the self-employed emerges from the consensus with all the social agents and the three most representative organizations of the self-employed.
“This is a lengthy agreement in many areas, it is a reform that is gradual, that we will be rolling out progressively, and very flexible, since it will make it very easy for the self-employed to move from one section to another, and will allow them at any time of their working life to adapt their contributions to their situation”, explained the minister, who also highlighted the agility and administrative processing with respect to the current situation, with an application via mobile.
15 TRANCHES AND EXCHANGE FLEXIBILITY
The Ministry, the Association of Self-Employed Workers (ATA), the Union of Professionals and Self-Employed Workers (UPTA) and the Union of Associations of Self-Employed Workers and Entrepreneurs (Uatae) have agreed on a system of 15 sections for 2023, 2024 and 2025.
The self-employed will have the possibility of changing sections every two months, with a total of six changes per year, to adapt their contribution to the income forecasts at each time of the year and their professional activity.
In 2023, the quota for a self-employed person with net income (income minus expenses) equal to or less than the Minimum Interprofessional Salary will be 230 euros. In 2024, it will be reduced to 225 and in 2025, it will pay 200 euros.
For those with net returns of more than 1,300 euros and less than or equal to 1,500 euros, and more than 1,500 euros and less than or equal to 1,700 euros, the fee will remain at 294 euros for the three years.
While in the lower yield brackets the fee also decreases between 2023 and 2025, from net yields above 1,700 euros, the fee increases throughout those three years.
Thus, a self-employed person who presents net returns above 3,620 euros and up to 4,050 euros, or equal to that amount, (tranche 13) will pay 100 euros more in installment between 2023 and 2025. In 2023, he will begin to pay 390 euros, will rise at 400 euros in 2024 and 490 in 2025.
In the last section, the fifteenth, are all the self-employed with net income of more than 6,000 euros. His quota for 2023 will be 500 euros, it will rise to 530 euros the following year and will reach 590 euros in 2025.
The additional provisions of the royal decree-law that is approved on Tuesday specify that, after those three years, the partners will have to agree on the sections for the coming years, until 2032.
The new system also attends to another of the requests of the self-employed, the deduction of expenses that are difficult to justify, among which Social Security gives the example of computers, the rental of premises or the purchase of supplies. This deduction will be 7% for the self-employed and 3% for self-employed companies.
In this way, a self-employed person who presents an average income of 900 euros and expenses for the exercise of his activity of 185 euros will have net income of 715 euros, the result of the subtraction of income and expenses. From that amount, 7%, equivalent to 50.05 euros, may be deducted. The final net returns would be 664.95 euros (715-50.05), so the self-employed would pay a fee of 230 euros per month, being within the first tranche, with returns equal to or less than 670 euros.
REDUCED FEE FOR START OF ACTIVITY
The flat rate of the current RETA is also integrated into the new model, although it will be called a reduced rate for the self-employed who start their activity and will be 80 euros per month for twelve months for all new self-employed.
After that period, this reduced quota will only be extended for the self-employed who have not managed to get their income off the ground and remain below the Minimum Interprofessional Salary (SMI). For the rest, the fee corresponding to their contribution bracket will be applied according to their net income.
