The Government wants to bring the social contribution of the self-employed closer to Europe

The Government finalizes the negotiation with the social agents to move towards a model in which the self-employed listed based on their net returns. The measure, a commitment signed by the self-employed workers’ organizations themselves since the previous legislature, has sparked controversy among part of the group, especially among those reluctant to pay more each month.

The current Spanish model is a ‘rare bird’ in Europe, since among the large economies such as Germany, Italy, Portugal, UK or France it is widespread to adapt quotas to income. The proposal defended by the Minister of Inclusion, Jose Luis Escriva, intends to increase the monthly quotas to similar proportions (in some cases higher) than that of comparable EU states. However, this increase in quotas enables, in most cases, better social protections than those enjoyed by self-employed workers in the Old Continent. But, how do self-employed contribution systems really work in Europe?

Germany: a mix between quotas and income

In Germany the 9% of the working population (about 3.85 million people) is registered as self-employed, according to the latest data from the Labor and Labor Market Research Institute. The contribution system of the German locomotive for the self-employed goes, unlike the Spanish, in layers. On the one hand, it obliges all workers in the country (whether salaried or self-employed) to pay for a health insurance. The difference between the former and the latter is that the insurance for employees is paid by the company and the latter must pay for it themselves.

Then there is the quote for a future pension, which depending on the type of activity is mandatory or voluntary. For profiles such as teachers, artists, authors, journalists, technical trades or fishermen or other liberal professions, this payment is mandatory. And to this is added the monthly fee, which can be of different types. Either a fixed amount, as is the current case in Spain, or a quota modulated by income, which is where the Government wants to go.

The first is known as “Regelbeitrag”, it is independent of income and in 2022 it amounts to 611.94 euros per month or 579.39 euros in the states of the former GDR. The German State contemplates a kind of flat rate like the one that governs in Spain for new self-employed and allows them to contribute half of the “Regelbeitrag & rdquor ; during the first three years of activity.

And the system according to income is calculated based on the income statement and provides for a minimum contribution of 83.70 euros and a maximum of 1,311.30 euros per month. For annual income of 30,000 euros, for example, the contribution would amount to about 490 euros per month. A higher figure than Escrivá intends for 2023, but higher when the system is fully deployed in 2031.

The system also has the Artist social fund (KSK), a special box for artists, authors and journalists. To gain access, workers must prove that they exercise their profession independently and permanently. The contribution is dependent on income and is calculated in a similar way to that of the rest of the self-employed. With an advantage: as in dependent employment, here the contribution of 18.6% is divided equally between the worker and the KSK, which acts as the employer. ANDREA GOLDSZMIDT/ BERLIN

Portugal: contribution based on income

The contribution model for the self-employed in Portugal is very similar to the one that Minister Escrivá wants to move towards. To find out what each worker has to pay, we calculate the 70% of median income of each quarter and a 21.4% tax is applied to this result. According to this calculation, a worker with a total income of 6,000 euros in a quarter (24,000 euros per year), would pay 299,60 euros monthly to Social Security in the following quarter, in concept of what would be the equivalent of the self-employed quota in Spain.

This amount can range from a minimum of 20 euros monthly for people with no income up to a maximum of 1.138,14 euros for those who bill the most. People who are in their first year of activity are exempt from paying, as well as beneficiaries of disability or old-age pensions, provided that their professional activity is legally compatible with the corresponding pension.

In exchange for their contribution to Social Security, self-employed workers are entitled to a sick leave from the eleventh day and for a maximum of 365 days -except for those that require hospital admission-, as well as the maternity leave and to the old-age pension, the amount of which will depend on the contributions to Social Security and the years worked. In the case of unemployment benefit, only workers who obtain more than 50% of their income from a single payer will be eligible for between 150 and 540 days of benefit. Those who do not reach that percentage are not entitled to unemployment.

As for the IRS – the equivalent of IRPF in Spain-, the withholding is applied to 75% of income and is based on the professional sector. Most self-employed workers have to apply 25%, but there are exceptions that allow 20%, 16.5% and 11.5% to be withheld. Professionals with incomes of less than 12,500 euros per year are not required to apply IRS withholdings on their invoices or collect VAT. From that amount they must add a general rate of 23% VAT in continental territory and 16% and 22% in Azores and in Madeira, respectively. LUCAS FONT / LISBON

Italy: flat rate for the low-income

In Italy there are some 3.9 million self-employed, a group that has grown with the pandemic, particularly in the north of the country, followed by central and southern Italy, according to a report from September last year by the Italian Ministry of Economy . Always this source has also pointed out that most of the new freelancers (62%) has turned out to be mens, and in many cases (47%) this decision was made by young people up to 35 years old.

Regarding the price, the Italian system is very complex and, over the years, has changed several times. At present, in general terms, the Italian State gives two main options to the self-employed: adhere to the flat rate regime or to the ordinary regime.

To the first case can be added those who do not have a turnover higher than the 65.000 euros for one year, you are an Italian or European citizen who has generated 75% of your income in Italy. In this case, the tax rate is 5% for the first 5 years after registering as self-employed, and then 15%. In the second case, that of the ordinary regime, everyone can access, and all the expenses incurred by the worker and inherent to their activity can be allocated. Regarding the tax contribution, there is a scale from 23% to 43%. On the other hand, the contribution to Social Security, which is much higher in both cases, is fixed or variable depending on the activity. IRENE SAVIO / ROME

United Kingdom: low fees and no VAT for average income

In the United Kingdom the contribution system for the self-employed is divided into three profiles. On the one hand, there are those who earn up to a maximum of 6,475 pounds a year (7.774 euros) do not have to pay insurance. The so-called ‘Class 2’, cover all those who exceed 6,475 pounds a year and the payment they must pay is 3.05 pounds a week, (3,64 euros). Those of ‘Class 4’, when the benefits are between 9,501 pounds and 50,000 per year (60,000 euros) have to pay 9%. Above that amount, 2% is paid. As an example, whoever earns 5,000 pounds a month (6,000 euros) must pay an average fee of 320 pounds a month (384 euros). A much lower quota than the one proposed in Spain by Minister Escrivá.

If you continue working at retirement age, you will no longer have to contribute to Social Security unless you are self-employed and contribute to ‘Class 4’. In this sense, the self-employed have the right to use the public healthcare, a basic state pension and the new state pension (‘Basic State Pension’ and ‘New State Pension’). The pregnant have a maternity allowance (‘Maternity Allowances’). There is also a disability benefit (‘Employment and Support Allowance’) and benefits for death and survival (‘Bereavement Benefits’). What they are not entitled to is unemployment benefit (‘Job Seekers Allowance’).

In the United Kingdom, only those who earn more than £85,000 per year are required to pay VAT. Unlike Spain, the British fiscal year begins on April 6 and ends on April 5 of the following year. BEGOÑA ARCE/ LONDON

France: monthly or quarterly

French self-employed workers, also called ‘auto-entrepreneurs’, pay social contributions of 22%. In the case of those engaged in the sale of merchandise, the percentage drops to 12.8%. They can do it monthly or quarterly and the amount allocated to Social Security is calculated based on income. In other words, a microentrepreneur, who works as a craftsman or a liberal profession, with a gross monthly income of 2,000 euros, must contribute about 440 euros each month. This remuneration entitles them to receive an unemployment benefit, a retirement pension if they contribute the necessary time or to have time off for maternity (or paternity).

Related news

All those who create their micro-enterprise while registered as unemployed can benefit from a total or partial repeal of these contributions for two years. There is also aid in France to start your activity with a certain accumulated capital, equivalent to a part of the monthly unemployment benefits that you would receive. In addition, the French government announced this week an “exceptional financial aid & rdquor; for those freelancers who work in nightlife.

The precariousness of the labor market in the last decade has led to a dramatic increase in the number of self-employed in France, in the same way as in other European countries. The total number of microentrepreneurs has multiplied by six. They have gone from being 360,000 in 2010 to almost two million today. All a reflection of the ‘uberization’ of the economy. ENRIC BONET / PARIS