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In this article, I try to solve and explain easily all the issues related to the new system of Social Security contributions that has been in effect since January 2023.

The topic is quite complex and has many “loose ends,” even for us tax advisors. I hope you find it easy to find the answers you need. Let’s get started…

What will you do with the new Social Security contributions system?

Usually, at the beginning of the year, we set new goals and objectives to work towards. Among other things, many of us make an estimate of income and expenses to know where we stand.

That estimate can help you update the contribution bracket that corresponds to you in 2024, at least initially. For that reason, I will try to simplify it for you to the maximum by following these 4 phases.

(*) Our clients have an assistant that will indicate, based on the monthly average of their net returns, to which tranche they should contribute.

What obligations do I have during the year if my forecast of income and expenses changes?

If your forecast of income and expenses varies, and therefore, your net return, you will have to change your contribution base. That is, carry out these 4 phases again and communicate your new contribution base to Social Security (you will have to make these communications through the Importass platform).

You can make up to 6 changes each year. Here are the dates on which you can make the 6 changes.

And if my forecasts fail me and I have been paying more instalments than I should have…

Don’t worry, once you file the income tax return for the year, that is, when you do the 2024 tax return in 2025, the Tax Agency will communicate to Social Security the declared earnings, and the contribution tranche in which you should have contributed will be determined.

At this point, 2 things can happen:

1. You have paid less than what you had to (undercontributed). In this case, you will have a little over a month to pay the difference between both amounts from when you receive the notification.
2. Suppose you have paid more contribution than what corresponds to you (overcontributed). Here Social Security will automatically refund the difference between the two amounts before May 31 of the following year. That is to say, if we talk about the Annual income for 2024 and the regularization of the fees for that year, the term you have to receive the return of the difference would be until May 31, 2026.

Looking at the dates of entry and return, it is more interesting to err on down than up. That is, you’d better make a mistake estimating a lower yield. If it turns out that you make a mistake on the rise, they may take 2 years to return to you the excess fee you paid.

The Flat Rate of the Social Security contributions

Let’s remind you what requirements you must meet to be entitled to the flat rate.

1. Register for the first time as self-employed.
2. Not being registered as self-employed in the last two years (three, in case you previously enjoyed a bonus).
3. Not being a self-employed collaborator (special regime for relatives of the self-employed).

If you meet these requirements, in 2024, you will pay €80/month fee during the first 12 months of subscription.

And is that all there is to the flat-rate fee? Well, I’m afraid that in most cases, yes. Only if your annual net income is less than the annual minimum wage (€15,876 for 2024), will you continue paying a monthly fee of €80 for the next 12 months.

VERY IMPORTANT

To be eligible for the reduction for the next 12 months (and pay only €80/month), it is essential to request an extension of the flat-rate before the start of the 2nd year. You can apply for this extension by accessing this link on the Importass portal.

Madrid and Andalusia

In the Madrid and Andalusia regions, new self-employed individuals will generally have a zero fee during the first year. And those self-employed whose annual net income is less than the minimum interprofessional salary during the second year will also pay a zero fee for the following 12 months.

Find out how the 15 tranches are distributed

The 15 Social Security contributions tranches in 2024 vary slightly compared to the 2023 tranches. Essentially, the first 9 tranches pay lower fees (around €10 less), and from tranche 7 to 12, they pay higher fees (between €10 and €33 more, depending on the tranche).

What is meant by annual net income?

In the drafting of the Royal Decree-Law, this concept is used frequently. Therefore, I have considered it essential to explain how to obtain it.

Formula= ⅀ returns over/IRPF + ⅀ SS contrib. – deduct. 7%*

*deduct. 7% = (⅀ returns over/IRPF + ⅀ SS fees) x7% 

(according to statements by the Vice President of ATA, Celia Ferrero, this deduction is a corrective index that corrects the inequalities between the different types of self-employed)

I will explain what you have to do to calculate the performance and give you an example.

First, you must add all the income of all your activities and subtract all the expenses of all the activities, computed according to what the Personal Income Tax Law establishes, so that you will get the  ⅀ returns on personal income tax. To that figure, you must add the sum of all self-employed fees paid during the year (⅀ SS fees).

Next, you calculate 7% of that amount (⅀ returns over/IRPF + ⅀ SS fees) and subtract it.

EXAMPLE

A computer professional who registers on 01/01/2024 and is entitled to the flat-rate fee pays a monthly self-employed fee of €80 throughout 2024. To continue paying this €80 for the next 12 months, his net annual income during 2025 must be less than €15,120 (assuming no change in the minimum wage over the next 2 years). Let’s take a look at the figures and verify this.

Total income 2024:  €18,000

Total expenses 2024: €4,500

Total self-employed fees: 80 x 12 = €960

deduct. 7%: (€18,000 – €4,500) x 7% = €945

Net yield 2025:  (€18,000 – €4,500) + €960 – €945 = €13,515

In this case and with these figures, our computer technician will continue to benefit from the flat rate for another 12 months.

What is meant by monthly net return?

This figure will be what you will have to estimate to choose the section and the monthly contribution base. I will give you the formula and its explanation:

Formula = (⅀ forecast income without SS fees – 7% deduction) / 12

First, you must add all the annual income from all your activities and subtract all the annual expenses from all activities, computed as established in the Personal Income Tax Law, but without computing the self-employed fees. You subtract 7% from this amount and divide it by 12.

EXAMPLE

Total estimated annual income: €18,000

Total estimated annual expenses without self-employment fees: €4,500

deduct. 7%: (€18,000 – €4,500) x 7% = €945

Estimated monthly net return: [(€18.000 – €4.500) – €945]/12 = €1.046,25

Know the dates to change your contribution base up to 6 times a year

As of 2023, the self-employed will be able to change their contribution payments up to 6 times a year to adapt their contributions and fees to their business situation. So when they start, they can be in lower sections, and when the situation improves, they can contribute more and have rights to higher benefits. Being able to go down again to low sections in transitory situations of difficulty.

You can carry out this procedure through the tool Importass.

Below we list the effective date of the change based on the date on which you made the request:

1. March 1 if you request between January 1 and February 28/29.
2. May 1 if you request between March 1 and April 30.
3. July 1, if you request between May 1 and June 30.
4. September 1 if you request between July 1 and August 31.
5. November 1 if you request between September 1 and October 31.
6. January 1 of the following year if you request between November 1 and December 31.

Importass, the new Social Security portal

What does this portal offer?

It is not a simple web page or another HQ of the administration. Importass is designed for you to search for information and carry out procedures from any device in a simple, personalized and guided way. With a natural language, the portal guides you and anticipates your needs.

In addition, you have a personal area where you can check your Social Security Number, view your work life digitally or check your situation instantly.

What procedures of interest can you carry out through Importass?

These are some of the most common procedures that you can carry out through this portal:

• Consult and obtain reports, among others, about your employment situation. You can see your work life digitally.
• Modify your personal contact and address data.
• Consult and pay debts to be up to date with payments.
• Communicate a change in the contribution base according to the new tranche system (still to be implemented).
• Consult the monthly self-employment receipt corresponding to the current month.

You can find much more information at this Social Security link and in this Practical guide to self-employment.

Explanatory video on how to change your Social Security contributions base if you are self-employed

We have recorded an explanatory video on how to change your Social Security contributions base if you are self-employed. You can access the video through this link.

Related articles

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Changes in Self-Employed Contributions and Their Link to the Personal Income Tax (IRPF) In Spain