What are the keys to understanding the new contribution system for the self-employed?

With the entry into operation on January 1, 2023, the new contribution system for self-employed workers was decreed. It is based on actual income, so it is important that you know how it works. In this article we tell you what the new contribution system consists of, its tables and other new features, so don’t get left behind! 

What is the new contribution system for the self-employed about?  

This 2023, the contribution system for self-employed has made changes in the results of the performance of the fiscal year. From now on, as a self-employed person, you will have to take care of the annual forecast of the net income of your activities, and then communicate it to the General Treasury of the Social Security.

What is new in the contribution system for the self-employed is that you will no longer be able to choose between the lower limit and the upper limit of your contribution base, without taking into account the income obtained during the fiscal year. Instead, you will have to adjust it to your actual net income.

Once the calculations have been made, as a self-employed person, you should review the tax agency’s table for the corresponding year to corroborate the turnover forecast.

By 2023, the contribution system for the self-employed will establish a minimum range of net income equal to or less than €670 per month and an average range of €2,030 to €2,330 per month. 

Subsequently, different contribution rates will be assigned to calculate the contributions based on a progression.

In view of this, for the coming year, the Tax Agency will find it easier to correct users who have made calculations that are lower or higher than the yield achieved. All this under the modality of the new contribution system for the self-employed. 

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How will the twelve tranches of the new quotas for the self-employed work in practice?

Many Spaniards have been receiving messages from the Social Security, explaining the changes in payments to members of the Special Regime for Self-Employed Workers (RETA).

The new contribution system for the self-employed will be used in a progressive manner. That is to say, the contributions of those taxpayers who invoice much more will be the highest, as opposed to those who have less income.

In this table you can see both the general and the more specific division: 

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How is the actual revenue calculated?

The contribution system for the self-employed has implemented a new approach to calculating actual income, also known as net income. This raises the question of how to accurately determine net income.

According to Social Security, you must consider all the net income obtained from the different activities you carry out as a self-employed worker. 

In addition, social security contributions paid under the direct estimation system must be added to this amount.

For the calculation of net income, the IRPF (Personal Income Tax) regulations must be followed.

In addition to these steps, you must apply a 7% deduction on the net income for general expenses. However, for business partners and working partners registered as self-employed for 90 days or more during the year, the deduction will be 3%.

Let’s take a look at how the calculation would work depending on each type of freelancer the system classifies: 

What are the deadlines for communication and changes in the quotation? 

The deadline to declare your activities as self-employed in the new contribution system for self-employed is October 31, 2023. This applies to those who start their activity or are registered as of January 1, 2023.

Also, as a self-employed person, you can modify your contribution base up to six times a year, every two months, to adjust it to your actual income. If you do not adjust your estimate to your actual remuneration, you may receive penalties and be obliged to pay back contributions.

The law of the new contribution system for the self-employed contemplates that changes can be communicated through the Import@ss platform or its app. All you have to do is click on the “Affiliation and registration” section and then on “Change of contribution base“. 

In this regard, the deadlines announced by the Tax Agency for communicating these bimonthly changes are as follows:

The new contribution system for the self-employed has been in place since the beginning of January 2023. However, one in five self-employed workers are unaware of how the new system works, according to the September Barometer of the Association of Self-Employed Workers (ATA). 

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In TAS Consulting we are committed to help you and provide you with the best tax advice you can find. It is time to take your finances and the success of your business seriously, contact us through our email tasconsultoria@tas-sl.es and schedule a free consultation with our experts.