One of the most important and permanent items on the expenditure side for self-employed persons is social security contributions.
These contributions ensure medical care on the one hand and entitle the contributor to a pension later on the other.
The following article describes how the contribution is calculated and what options are available.
Given the multitude of influencing factors, the following overview is intended to provide only a rough guide. Depending on the age of the policyholder, their specific occupation and other personal circumstances, deviations from the figures presented here are to be expected. The calculations made here also refer to the year 2016. With the adoption of the annual budget, the legislator often makes adjustments, which is why a new, independent calculation must be made each year.
Who is obliged to pay?
All self-employed persons who do not have the option of joining an alternative, occupation-specific social insurance scheme. These are, in particular, members of the liberal professions.
When do contributions become payable?
As a self-employed person, you are required to pay the relevant social security contributions from the first day of the month in which you start your activity.
This obligation expires on the last day of the month in which your activity ends. However, you must notify the authorities of the termination of your activity. This must be done within six calendar days of the termination of the activity. Arial, sans-serif;”>If applicable, upon reaching the regular retirement age and continuing self-employment, with social insurance contributions having been paid for decades, an exemption from the contribution obligation fulfilled over many years may be granted.
How much are the social security contributions?
The exact amount is calculated using two variables.
The a.) contribution assessment basis (in Spanish, ‘base de cotización’) is multiplied by the b.) contribution rate (in Spanish: ‘tipo de cotización’) is applied to the a.) contribution assessment basis (in Spanish: ‘base de cotización’).
The contribution assessment basis
The contribution assessment basis can be freely chosen by the person liable for social security contributions, as long as the amount is between the minimum and maximum rates.
During 2016, the general minimum rate was 893.10 euros per month. The general maximum rate was £3,642 per month.
Why do we talk about a general minimum and maximum rate?
Depending on the age of the self-employed person subject to social security contributions, the existence of certain personal requirements and the field of activity of the self-employed person, the minimum and maximum rates may be subject to restrictions.
The following table provides information on this:
Self-employed persons who are under 47 years of age on 1 January 2016 can choose their contribution assessment basis freely, as long as the amount chosen falls between the minimum of €893.10 and the maximum of €3,642. |
Self-employed persons who are 47 years old on 1 January 2016 and whose contribution assessment basis in December 2015 was €1,945.80 per month or more, can choose their contribution assessment basis freely, as long as the amount chosen is between the minimum of €893.10 and the maximum of €3,642. |
Self-employed persons who are 47 years old on 1 January 2016 and have just registered with social security as such may also, at their discretion, choose a basis for assessment between the minimum rate of 893.10 euros per month and the maximum rate of 3,642 euros per month. |
Self-employed persons who are 47 years old on 1 January 2016 and whose contribution assessment basis is less than £1,964.70 per month cannot choose a contribution assessment basis above £1,964.70 per month unless they exercise this right before 30 June 2016. The effects will then take effect on 1 July 2016. The surviving spouse of the deceased business owner who, due to the latter’s death, had to take over the deceased’s position and register with social security has the same option. Provided that the surviving spouse is 47 years old. Here, too, the assessment basis can be freely chosen, as long as it is somewhere between the minimum rate of 893.10 euros per month and the maximum rate of 3,642 euros per month. |
Self-employed persons who are 48 years of age or older as of 1 January 2016 are free to choose between the minimum rate of €963.30 per month and the maximum rate of €1,964.70 per month. This does not apply to the surviving spouse of a deceased business owner who, due to the death of their spouse, had to take over the deceased’s position and register with social security, and who is 45 years of age or older. In this case, they are free to choose between the minimum rate of €963.30 per month and the maximum rate of €1,964.70 per month. |
Self-employed persons who were 48 or 49 years old on 1 January 2011 and who, before 30 June 2011 and with effect from 1 July 2011, chose a contribution assessment basis of more than €1,945.80 per month can choose to pay no more than the minimum rate of €893.10 per month up to the maximum rate actually chosen, increased by 1%, whereby in any case there is the option of choosing a contribution assessment basis of up to €1,964.70 per month if this contribution assessment basis is not reached through the 1% increase described above. |
Self-employed persons who were insured with social security for five or more years before reaching the age of 50, regardless of their social security status, can choose a contribution assessment basis of between €893.10/month and €1,964.70/month if their last contribution assessment basis was equal to or less than €1,945.80/month. |
Self-employed persons who were insured with social security for five or more years before reaching the age of 50, regardless of their social security status, can, if their last contribution assessment basis was above £1,945.80 per month, a contribution assessment basis of £893.10 per month until the actual contribution assessment basis increased by 1%, whereby if this results in a contribution assessment basis of less than £1,964.70 per month, a contribution assessment basis up to this amount can be used. |
Self-employed persons who employed ten or more employees at any time during 2015 must use a minimum contribution assessment basis of 1,067.40 euros. |
| Special rules apply to part-time self-employed persons. |
Please also note: Despite these general rules, there are a number of benefits !!!
Self-employed persons who have not been registered with social security for the previous five years are entitled to a 50% reduction for the first six months, followed by a 30% reduction for a further three months, and after the expiry of the eight months described above, a further 30% credit for a further three months.
Self-employed women under the age of 35 and men under the age of 30 who meet the requirements described in the previous paragraph can claim a 30% discount for a period of 12 months after the expiry of the deadlines specified there.
Self-employed persons who are classified as victims of terrorism or domestic violence, or who have a degree of disability of more than 33%, or are family members of the operator of an agricultural business in which they work, and self-employed persons in the cities of Melilla or Ceuta, as well as self-employed persons who care for children under the age of seven or family members in need of care, may also claim benefits.
In addition, there are a number of special cases in which benefits and deductions can also be claimed, so it is worth making detailed enquiries. It would go beyond the scope of this general introduction to go into all the specific cases.
The contribution rate is then applied to the contribution assessment basis.
The general contribution rate for 2016 is 26.50% of the contribution assessment basis.
In addition to this general contribution rate, there is also a compulsory insurance to cover short-term incapacity to work (exceptions include self-employed persons who are only self-employed on a part-time basis or self-employed persons in the agricultural sector).
This compulsory insurance results in an additional payment of 3.30% of the contribution assessment basis.
In addition to the usually compulsory insurance to cover short-term incapacity to work, voluntary insurance can be taken out to cover the risks of accidents at work or occupational diseases (however, certain groups of people, such as economically dependent self-employed persons or members of particularly dangerous occupational groups, etc., are obliged to take out this insurance).
The amount of the additional contribution rate is determined by the hazardous nature of the work performed.
However, as this supplementary insurance provides benefits not only in the event of occupational disability and death, but also in the event of temporary incapacity to work, there is a certain overlap between insurance for short-term incapacity to work and the latter insurance.
Anyone who pays for this second supplementary insurance can therefore reduce the supplementary payment for the compulsory first insurance by 0.50% of the contribution assessment basis, which means that if both types of insurance are paid, only 2.80% of the contribution assessment basis is payable instead of 3.30%.
Let’s take a look at the figures for five professions to give you an overview:
| CNAE Code | Occupation | Short-term incapacity for work | Occupational disability,Death | Total |
| 411 | Real estate development | 0.85 | 0.8 | 1.65 |
| 79 | Travel agency, tour operator | 0.8 | 0.7 | 1.5 |
| U | Bullfighting | 2.85 | 3.35 | 6.2 |
| B | Sales representative | 1 | 1 | 2 |
| G | Cleaning staff | 2.1 | 1.5 | 3.6 |
In addition to the 0.50% reduction in the additional payment for protection in the event of short-term incapacity to work, if protection in the event of occupational disability is also paid, it should be noted that anyone who does not pay for the latter protection will be required to pay an additional 0.1% to cover the risks and losses associated with pregnancy.
Coverage for cessation of business activities
2.20% of the contribution assessment basis must be paid to cover this risk.
Here is an example:
A sales representative who chooses €1,000 as the basis for calculating contributions and only pays the statutory protection for short-term incapacity to work, i.e. does not want any additional benefits, will pay the following contributions:
26.50% of £1,000 as the general contribution rate
3.30% of £1,000 for short-term incapacity to work
0.10% of £1,000 for maternity protection
Total: 29.90% (26.50% + 3.30% + 0.10%) of £1,000 = £299.00
If the same commercial agent also opts for voluntary protection in the event of occupational disability, he pays:
26.50% of £1,000 as a general contribution rate
3.30% – 0.50% = 2.80% of £1,000 for short-term incapacity to work, as protection also exists in the event of occupational disability
2.00% for additional protection due to occupational disability
Total: 31.30% (26.50% + 2.80% + 2.00%) of £1,000 = £313.00
If the sales representative in question wishes to insure against the risk of business closure in addition to the additional, voluntary protection in the event of occupational disability, the calculation would be as follows:
26.50% of £1,000 as a general contribution rate
3.30% – 0.50% = 2.80% of £1,000 for short-term incapacity to work, as protection also exists in the event of occupational disability
2.00% for additional cover for occupational disability
2.20% for protection in the event of business closure
Total: 33.50% (26.50% + 2.80% + 2.00% + 2.20%) of £1,000 = £335.00
What benefits are payable in the different scenarios?
In the case of general insurance for temporary incapacity to work (i.e. general illness or an accident that is not a work-related accident) [in Spanish: incapacidad temporal por contingencia común, enfermedad común o accidente no laboral], you are entitled to sick pay. This is normally calculated on the basis of the contribution assessment basis for the previous month, divided by 30 (average number of days per month). This results in the daily rate to be used (in Spanish: base reguladora diaria, or B.R.D. for short).
From the 4th to the 20th day of illness, you receive 60% of the applicable daily rate (B.R.D.).
From the 21st day of illness, you will receive 75% of the applicable daily rate (B.R.D.).
If additional cover against occupational disability exists:
From the first day following the sick note, you will receive 75% of the applicable daily rate (B.R.D.).
In case of danger during pregnancy:
From the first day of sick leave, you will receive 100% of the applicable daily rate (B.R.D.).
If you give up your job:
From the first month until the end of the support period, 70% of the contribution assessment basis is paid. However, this may not exceed 175% (1,087.21 euros/month) of the Public Income Index (in Spanish: Indicador Público de Rentas de Efectos Múltiples, abbreviated to IPREM). For one child, the maximum amount is 200% of the IPREM (1,242.52 euros/month). For two children, it is 225% of the IPREM (€1,397.84 per month).
In addition to benefits in the event of illness, the expected pension entitlement is also interesting. Read the relevant article for more information on this aspect.
