Royal Decree-Law 13/2022, of 26 July, which establishes a new contribution system for self-employed workers and improves protection in the event of termination of activity, introduces, among other new features, a reduced contribution for starting up a business, which will replace the current flat-rate system. New contribution brackets applicable on the basis of annual net income will also be implemented.
The following is a summary of the most important changes in this new regulation, which has come into force as of 01 January 2023.
1.- What is this new contribution system?
It is a reform of the Special Regime for Self-Employed Workers (RETA), which introduces contribution brackets to adapt both the contribution bases and the contribution that self-employed workers must pay to the difference between income and expenses, i.e. the expected net income.
Therefore, the possibility that self-employed workers had until now to choose their contribution is eliminated and is replaced by a system of brackets based on the income that these same workers expect to obtain during the year.
2.- When will the system of contributions by brackets come into force?
The new system, which will apply from 1 January 2023, will be deployed over an initial period of nine years, with periodic reviews every three years, although the government may consider, within the framework of social dialogue, accelerating the timetable.
3.- What do the brackets consist of and what are the contributions to be paid in each of them?
The new contribution system for the period from 2023 to 2025 consists of 15 brackets that will be applied successively from net income of less than 670 euros to income of more than 6,000 euros per month.
For each of these brackets, you will be able to choose between a minimum and maximum contribution base and, based on this, a self-employed contribution will be calculated for each bracket.
NEW CONTRIBUTION BRACKETS AND QUOTAS FOR THE SELF-EMPLOYED FOR 2023
| Net income/month | Minimum monthly contribution base 2023 | Monthly instalment 2023 |
| Up to EUR 670 | 751,63 | 230 |
| From 671 to 900 euros | 849,67 | 260 |
| From 901 to 1125.90 euros | 898,69 | 275 |
| From 1125,91 to 1.300 euros | 950,98 | 291 |
| From 1,301 to 1,500 euros | 960,78 | 294 |
| From 1,501 to 1,700 euros | 960,78 | 294 |
| From 1,701 to 1,850 euros | 1.013,07 | 310 |
| From 1,851 to 2,030 euros | 1.029,41 | 315 |
| From 2,031 to 2,330 euros | 1.045,75 | 320 |
| From 2,331 to 2,760 euros | 1.078,43 | 330 |
| From 2,761 to 3,190 euros | 1.143,79 | 350 |
| From 3,191 to 3,620 euros | 1.209,15 | 370 |
| From 3,621 to 4,050 euros | 1.274,51 | 390 |
| From 4,051 to 6,000 euros | 1.372,55 | 420 |
| More than 6,000 euros | 1.633,99 | 500 |
4.- How does the contribution that a self-employed worker will have to pay from 2023 change with the new system by brackets with respect to the system in force for 2022?
Self-employed workers during the first 12 months of activity.
The wording of Royal Decree-Law 13/2022 removes the references to the flat rate for workers during the start of activity but maintains an initial quota that increases from 60 to 80 euros per month for the period 2023-2025, while another is set by LPGE from 2026 for workers who register as self-employed workers during the first 12 months of activity, extendable for a further 12 months as long as their net income does not exceed the current Minimum Interprofessional Wage -SMI-.
5.- How can I adapt to the new system of brackets?
The reform will require self-employed workers, at the start of the year or when they register with the RETA, to provide a forecast of their annual income so that the General Treasury of the Social Security (TGSS) is aware of their situation.
The self-employed will provide this forecast of net income or earnings through the portal made available by the Ministry of Inclusion, Social Security and Migration.
With the data provided throughout the financial year, the TGSS itself will calculate the net annual income of the self-employed worker with the difference between annual income and expenditure.
6.- How many times can I change my contribution base per year? What procedures do I have to follow?
One of the new features of Royal Decree-Law 13/2022 is the increase in the number of times that the self-employed can change their contribution base to 6 times per year, with effect from 1 March, 1 May, 1 July, 1 September, 1 November and 1 January of the following year.
In this way, every two months, depending on the worker’s net income, the base and consequently the contribution due can be modified.
7.- With the new system, am I obliged to file an income tax return?
The 2023 income tax return will be COMPULSORY for all self-employed workers. The system of brackets will allow the Tax Authorities to control the income data that the self-employed worker intends to obtain in order to know if the estimate made is in line with reality.
8.- Is it convenient for me to opt for the system of brackets in 2023?
Royal Decree-Law 13/2022 provides for a transitional application of the option of the contribution based on real income for self-employed workers, so that, until they exercise the option, they will continue to pay contributions during 2023 on the basis that would correspond to them in January of that year. Here we are going to analyse whether it would be advisable to opt for the system of brackets in 2023.
9.- When do I have to pay what I have underpaid or be paid what I have overpaid?
The regularisation will take place once the calendar year in which the estimated net income has been received and reported to the Tax Agency and Social Security has elapsed. To make a comparison with the personal income tax return, the following deadlines apply depending on whether you “pay or return”:
If the provisional contribution made is lower than the contribution corresponding to the minimum contribution base of the bracket in which their income is included, the self-employed worker must pay the difference between the two contributions by the last day of the month following the month in which they are notified of the result of the adjustment, without the application of interest for late payment or any surcharge if paid within this period.
However, if the provisional contribution made is higher than the contribution corresponding to the maximum base of the bracket in which your income is included, the Social Security General Treasury will automatically refund the difference between the two contributions, without interest, before 31 May of the year following that in which the corresponding tax authorities have notified the Social Security General Treasury of the income that can be taken into account.
10.- How will the corporate self-employed and the collaborating self-employed pay contributions from 2023 onwards?
One of the issues that has changed with the reform of the self-employment contribution system is how the self-employed collaborators and the corporate self-employed will pay contributions from 1 January 2023 in the new contribution system. Among other things, it is regulated that the minimum contribution base for corporate and collaborating self-employed in 2023 will not be less than 1,000 euros/month.
11.- What happens to the contribution ceiling for workers over 47 years of age?
From 1 January 2023, self-employed workers over 47 years of age will have to contribute their real net income, like any other worker. This will mean that the ceilings on the contribution base for workers aged 48 and over, which in 2022 will be between 1,035.90 and 2,113.20 euros/month, will disappear.
Therefore, the reform means that workers over the age of 47 will be able to pay the maximum contribution base allowed (4,139.40 euros per month), which could be a way for those who in their final years of professional activity foresee greater economic returns and want to pay the maximum contribution base allowed in order to increase the amount of their retirement pension.
12.- What do I do if I have already paid contributions for a higher contribution base than the one I am entitled to?
Although the most common practice to date for most self-employed workers has been to contribute at the minimum allowed (contribution of 294 euros per month, except for self-employed workers on the flat rate), some have contributed at a higher rate than their income.
We cannot guarantee what treatment will be given in these cases until further regulatory development, but it has been announced that self-employed workers who have made the effort to contribute more than what was strictly required by law will be allowed to maintain their acquired rights and, consequently, the base at which they were contributing will be maintained, if they so wish.
You can contact our office for any questions or clarification you may have in this regard.
