Whether someone is self-employed or an employee, a payment is required. A new tax was introduced in 2023, aimed at funding pensions. Known as the Intergenerational Equality Mechanism (MEI), this levy applies to all registered workers and affects Social Security contributions. It represents a salary-based percentage that increases the overall tax burden, impacting more than 20 million Spanish residents.
What is MEI? A new tax starting in 2023
The Intergenerational Equality Mechanism replaces the old Sustainability Factor and is structured as a contingent, temporary measure. Its purpose is to replenish the retirement fund by balancing the financial burden across generations and ensuring a fairer distribution of the costs involved in financing pensions.
Pensions: When will the extra Christmas payout be received in 2022?
With rapidly aging populations, ongoing unemployment, the retirement of baby boomers, and a nearly depleted pension reserve fund, the government faces challenging times for retirement funding. The MEI is part of a broader set of reforms aimed at securing pension finances under these pressures.
Pensioners left without a pension paguilla in January 2023
Alongside other reform measures, the MEI was published in the official bulletin last December. This mechanism targets income through contributions rather than benefits, unlike the previous factor, which linked benefits to increasing lifespans. The Intergenerational Equality Mechanism will be activated only as necessary and for a limited period, avoiding permanent changes to benefit calculations.
Attention: Retirees who will not receive an extra Christmas paycheck this month
There are ongoing adjustments across pension policies as reforms unfold, with certain retirees not receiving additional Christmas payments during this cycle as the MEI governance continues to be implemented.
What will the new MEI tax look like?
For future MEI pensions in January 2023, the amount will remain unaffected, unlike the abolished Sustainability Factor. The MEI represents a new payroll deduction to be borne by all workers, irrespective of income. The percent of salary withheld is uniform across earners, creating a predictable contribution.
What taxes do I currently owe in the Alicante region?
This new tax is introduced as a new contribution concept. People registered with Social Security will see a 0.6% decrease in their net pay due to this additional charge. The extra amount in the payroll applies to both the self-employed and employees, increasing the overall payroll burden and affecting both sides of the labor market.
The amount you can claim to delay retirement age
The government seeks to raise sufficient funds to cover future pension costs. Specifically, the plan targets raising around 22 billion euros by 2032, at which point the new tax regime is expected to conclude. The MEI is framed as a temporary mechanism designed to stabilize pension funding during a period of demographic and economic pressure.
Freelancers: Important dates regarding the new contribution system
These notes outline key milestones in the rollout of the MEI. Businesses and independent workers should stay informed about regulatory steps and deadlines as the new contribution framework becomes fully operative.
How will the new tax affect individuals?
Starting January 1, 2023, a 0.6% deduction is applied to workers’ salaries to fund the MEI. Employers contribute 0.5%, while employees bear the remaining 0.1%. For self-employed groups, the average expected deduction is estimated at around 5 euros per month, depending on the specific contribution base and sector.
The numbers illustrate how the MEI changes take effect on monthly earnings; for example, someone earning a gross 2,000 euros would see about 12 euros deducted each month, with the employer covering most of the amount and the employee contributing a smaller portion.
Citations: Official government notices and pension reform analyses attributed to the MEI framework provide the regulatory context and anticipated fiscal impact.