Social Security in Spain

The Spanish social security is universal and all legal residents in the country are entitled to it’s services, including healthcare, unemployment and retirement. Depending on the way you earn your money, there are two social security regimes in Spain

Introduction

In Spain, understanding the intricacies of social security contributions is crucial for both employees and self-employed individuals. Whether you fall under the “Regimen General” as an employee or the “Regimen Especial de Trabajadores Autónomos” (RETA) as an autonomous professional or corporate administrator, navigating the system requires clarity on obligations, rights, and recent legal rulings. Let’s delve into the complexities and nuances of social security contributions in Spain.


As an employee your contributions fall within the so called “Regimen General”. All of this will be handled by your employer who will pay your contributions to the social security and will deduct the employee part of your contributions in your payslip. The contributions are based on a percentage, so the higher your base salary, the higher your contributions will be.

If, on the other hand, you are an autonomous professional or a main shareholder, administrator or director of a company, you will have to pay your contribution within the “Regimen Especial de Trabajadores Autónomos”, also known as RETA. You will be obliged to pay RETA if you fall in one of three broad categories:

  • If you realize a freelance economic activity with a lucrative objective
  • If you are an independent professional that requires incorporation in a professional union like doctors, lawyers etc.
  • If you effectively control or administrate a mercantile corporation, and exercise executive or managerial functions.

Now, that might seem relatively straightforward, but the remarkable thing is that historically there have been significant differences between the rights and obligations of the first two categories (freelancers and professionals or “Autónomo Persona Física”) as opposed to the ones of the latter category (shareholders and administrators of companies, or “Autónomo Societario”).

The difference of rights between employees, freelancers, professionals, and corporate administrators have been a source of conflict that has largely been rectified over the last 10 years or so, but there are still some significant differences in terms of obligations, basically:

  • Social security costs are fiscally deductible for Autónomos Personas Físicas but not for Autónomos Societarios who must pay it privately.
  • Autónomos Personas Físicas can deduct 7% for non-justified expenses while Autónomos Societarios can only deduct 3% in this concept.

The good news is that the Spanish higher court of justice in cassation has recently sentenced that the Autónomos Societarios should also be entitled to the benefits derived from article 31 of the law LETA 20/2007. In practice, this means that the Autónomos Societarios now have the same rights as Autónomos Personas Físicas regarding the subsidies available for new entrepreneurs. The subsidies currently in place are the following ones:

  • First 12 months: €80 flat fee for new autónomos (or not having been one for the last 24 months)
  • Months 13 to 24: Prolonged benefits if your net income has been below the minimum wage
  • Months 25 to 36: Additional period for disabled individuals or victims of domestic violence or terrorism

The additional 12 months of benefits can also be added for individuals less than 30 years old if you are a man or less than 35 years old in the case of women.

As of 01/01/2023, social security contributions are calculated based on your real net income. This means your gross income from your professional or economic activities minus deductible expenses (not including social security payments) if you are an Autónomo Persona Física or gross salary plus dividends received in the case of Autónomos Societarios.

Depending on the level of net income, an estimated contribution base has to be declared and can be updated 6 times a year. At the end of the period, the amounts will be regulated on the base of the real net income received. Once the contribution base has been established, the monthly quota to pe paid is calculated as 30,6% of the base.

At the same time, unemployment, health and pension benefits will also be calculated based on your contribution base, so the benefits will be proportionally higher as well.

Regarding this last point, it is important that you calculate / estimate your net income for 2023 and update your contribution base accordingly in the social security website.

 

  • As a freelancer (RETA Autónomo Persona Física) you calculate this by adding your expected for 2023 income from your activity plus your social security contributions and then deducting the deductible expenses for the activity and an allowance of 7%.
  • As a resident company administrator (RETA Autónomo Societario) or major shareholder you add expected salaries plus any received amounts through invoices from the company plus dividends received from the company in 2023 and deduct an allowance of 3%.

The result of this calculation divided by 12 months will determine your “tramo” in the below table and then you can choose your base anywhere between the minimum and maximum amounts corresponding to that tramo.

As said, according to how the year progresses, you can update this base at any time in the social security website and the new base will be applied 6 times a year depending on the information in the system at that time. Remember that the higher your base, the higher your benefits for unemployment and pensions will be.

The social security in Spain is complex and subject to frequent changes, so make sure you engage a qualified specialist to avoid mistakes and, possibly, high fines.

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The information contained herein is of a general nature, and subject to changes. Applicability to your specific situation should be determined through consultation with our tax or legal advisors.