Whether a person is self-employed or an employee, a payment is required. A new tax from 2023, known as the Intergenerational Equality Mechanism (MEI), applies starting today, January 1, 2023. All registered workers, including those in Social Security, will see a salary percentage change. This measure impacts more than 20 million citizens.
What is MEI? A new tax beginning in 2023
The Intergenerational Equality Mechanism replaces the former Sustainability Factor and is characterized as contingent and temporary. This tax is intended to fund pensions by balancing the burden of contributions between generations, reinforcing the retirement reserve.
Pensions: When will the extra Christmas payout be received this 2022?
With aging population pressures, ongoing unemployment, a wave of retirements, and a near-empty pension reserve fund, the government faces challenging times for retirement funding.
Pensioners left without a pension “paguilla” in January 2023
In addition to other reforms, the MEI, published in the Official State Bulletin last December, targets income (contributions) rather than benefits (expenses). Unlike the repealed Sustainability Factor, which based benefits on life expectancy, the Intergenerational Equality Mechanism activates only when necessary and on a temporary basis.
Attention: These retirees will not receive an extra Christmas paycheck this month.
What will the new MEI tax look like?
The MEI does not affect future pensions in January 2023, so the amount remains unchanged, unlike the abolished Sustainability Factor. It represents a new contribution that all workers share, regardless of income. The payroll deduction rate is intended to be uniform.
Which taxes do I currently pay in the province of Alicante?
This new tax will be introduced as a new contribution concept. Workers registered with SGK will observe a payroll decrease of 0.6%. This additional fee will affect both the self-employment quota and general payrolls.
This is the amount you can claim to delay retirement age.
The government aims to raise sufficient funds to cover future pension costs, with a target of approximately 22,000 million euros by 2032, when this tax framework is expected to end.
Freelancers: Important dates regarding the new contribution system.
How will the new tax affect individuals?
From January 1, 2023, a 0.6% deduction will be taken from workers’ salaries to fund this tax. Employers will contribute 0.5%, leaving 0.1% for employees. In the case of self-employed unions, estimates suggest the average monthly impact may be around 5 euros per person.
The viral reaction of the teenager who saw his remaining salary after paying taxes
For example, a worker earning a gross salary of 2,000 euros would see about 12 euros deducted monthly under the MEI, with roughly 10 euros paid by the employer and 2 euros by the employee.