The new contribution rates for the self-employed in 2023

As we announced in August, the new contribution system for self-employed people in Spain will come into force on 1 January 2023. It is therefore advisable that self-employed people inform themselves about the new obligations and the changes to be taken into account in order to start the new year right.

The new system will consist of a progressive model running from 2023 to 2025, with fifteen contribution levels. What is new and required from now on is to make a forecast of the annual income at the beginning of each year, as the contribution to be paid will be based on this estimate.
It is very important to plan everything before starting to pay contributions under this new system. The key point here is to estimate/know in advance what the expected net income will be for the year 2023. Depending on the amount of the reported income, the self-employed person must choose between the minimum and maximum assessment basis for the individual contribution classes according to the social security contribution table.

However, if during the year the income actually earned and reported to the tax authorities does not match the projections, it is possible to change the classification every two months. In these circumstances, contributions must be adjusted at the end of the year, i.e. if earnings are higher or lower than declared, the individual must adjust these contributions. For self-employed persons, this means they must either pay in arrears or can claim amounts back.

The contribution is paid on the last working day of the current month according to the current system (debit from the bank account). Failure to pay by the specified date will result in a surcharge of 10% together with interest accruing from the day after the due date, provided payment is made in the following month. If payment is more than one month late, a surcharge of 20% plus interest will be levied.

Self-employed companies also have to pay contributions for the income generated, but they have a special feature compared to self-employed persons: A minimum assessment base of 1000 euros per month applies to them. In addition, the reduction of deductible expenses, which are difficult to justify, is set at 3% instead of 7% as for the normal self-employed.
Another innovation is that new self-employed persons setting up a business in 2023 will be able to apply the flat-rate system, where a fixed amount of 80 euros will have to be paid in the first year of activity and the same fee can continue to be paid in the second year if the net income is below the industry minimum wage. All workers who have registered as self-employed in 2022 will keep their fixed amount of 60 euros. After this period, the self-employed will be included in the contribution system described above.

It is important to be aware of these new changes, as they raise doubts when applied, and to avoid misapplication of the system, it is advisable to seek prior advice on the amounts to be reported.

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