How Does The New Self-Employed Contribution System Affect?

How Does The New Self-Employed Contribution System Affect?

New Self-Employed Contribution System : The reform will come into force on January 1, 2023, and that is when the self-employed must begin to contribute based on the new system that will try to adapt to the net income they acquire from their businesses. One of the most important objectives of the new contribution system is to equate and guarantee benefits between the General Scheme and RETA since the average pension of self-employed workers is 43% less than the general pension of wage earners, that is, about 600 euros difference.

Freelancers’ new contribution system for the self-employed based on real income establishes a total of 15 contribution brackets and, although it will begin to be applied from January 2023, it will have a transition period of nine years until 2032. During this time, the new system It will be reviewed every three years and the contribution tables that establish the minimum fees to be paid by each self-employed person according to the returns obtained in their business will be updated.

At the end of each transitional period of three years, the Government will analyze together with the dialogue table how the system has worked and will proceed to apply the appropriate corrections if necessary. If, on the contrary, it is seen that it has worked, a definitive system will be established by which each self-employed person will pay a fee directly related to their income, taking into account the real-time data available to Social Security.

In this sense, during the first three years, from 2023 to 2025, it is established that in said progressive quota system, self-employed workers with less income will have a reduction in their quota with respect to the minimum base, while those with more win will see their quota increased, being like this:

  • In 2023, which is when it comes into force: the minimum fee will be 230 euros and the maximum 500 euros.
  • In 2024: the contributions will be between 225 and 530 euros.
  • In 2025: the quotas for the self-employed will be between 200 and 590 euros.

Each self-employed person will have to present an annual forecast of real income, better called net income, to Social Security through the Important portal. This will be the one that establishes the contribution base that corresponds to it and the one that assigns the fee that the self-employed person must pay depending on the section where it is located and on those reported returns.

Self-employed workers who had previously been contributing for higher bases will be able to choose between contributing the minimum quota offered by the new system based on their section, or the maximum quota indicated by the new system.

Do You Know The Different Insurances For The Self-Employed?

For this to be possible, entrepreneurs will have to follow a series of steps that still need to be detailed. What is known is that it will begin, as Minister Escribá warned, with the presentation of an annual performance forecast that all self-employed workers must present at the beginning of each year or when they register with the RETA (Special Regime of Self-employed).

However, this reform has created many doubts among the group made up of 3.4 million self-employed workers and which constitutes one of the most heterogeneous in the labor market. All self-employed companies, self-employed workers in objective or direct estimation, collaborators, multiple activities, etc. have doubts about when, how much, when, and in what form they will contribute to their real income. 

And it is that,  how are the net returns of the self-employed calculated? From the Government they refer to the concept of net income in the following way: “The net income will be calculated by deducting from the income all the expenses produced in the exercise of the activity and necessary to obtain income for the self-employed person. On that amount, a deduction for generic expenses of 7% (3% for self-employed companies) is additionally applied. The result will be the net returns and that will be the figure that will determine the contribution base and the corresponding quota”.

Let’s see what’s new to understand it better!

Novelties Of The New Self-Employed Contribution System Treasury Inspection Paper

One of the main novelties that the new contribution system incorporates is that the Treasury will control the income figures and deductions of the self-employed to set the contribution bases and rates. Therefore, the Tax Agency will have an important auditing role.

The regularization that corresponds to each financial year will be carried out in the following year and always take into account the data communicated by both the Tax Agency and the Provincial Administrations.

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