This new pricing arrangement for self-employed income will roll out with a nine-year transition through 2032 and takes effect on January 1. It features 15 quota slices that rise from 230 euros to 500 euros, with adjustments in 2025 based on the self-employed net income.
Resulting from an agreement between the Government and self-employed organizations ATA, UPTA, and Uatae, the plan lays out 15 chapters for 2023 through 2025. Self-employed individuals will have the option to move between departments every two months, totaling six changes per year to align their contributions with income estimates and their professional activity for each period of the year.
The model introduces a new net income concept. Net income is calculated by subtracting from gross earnings all expenses necessary to carry out the activity and earn an income.
From that amount, a general deduction of 7 percent will be applied for generic expenses, with 3 percent for self-employed corporations. The resulting figure determines the contribution base and the corresponding quota.
At year end, when annual net income is finalized, contributions will be adjusted, repaid, or installments required if the actual net income deviates from the forecast during the year.
The new contribution system is expected to reduce the burden for many self-employed workers, with roughly half paying less than before, about a quarter paying more, and another quarter paying less than that for an overall shift in distribution.
Quotas and slices
In 2023, self-employed earners with net income at or below the Inter-Professional Minimum Salary will face a quota of 230 euros. In 2024 this drops to 225 euros, and in 2025 to 200 euros.
For net incomes above certain thresholds, such as more than 1,300 euros and up to 1,500 euros or more than 1,500 euros up to 1,700 euros, the quota remains at 294 euros for three years. In lower brackets the quota decreases from 2023 to 2025, while higher net returns above 1,700 euros cause the quota to rise across those years.
Thus, a self-employed person with a net income between 3,620 and 4,050 euros (section 13) will pay an incremental 100-euro quota between 2023 and 2025. The schedule starts at 390 euros in 2023, rising to 400 euros in 2024 and 490 euros in 2025.
In the final segment, the fifteenth group comprises self-employed individuals with net income above 6,000 euros. Their quota for 2023 is 500 euros, increasing to 530 euros in 2024 and 590 euros in 2025. After these three years, the government and social partners will negotiate further divisions through 2032.
Discounted fee for starting the business
The fixed RETA rate remains part of the new model, now referred to as the reduced fee for self-employed startups, set at 80 euros per month for twelve months for all new self-employed entrants.
After this initial period, the reduced fee applies only to those whose earnings stay below the Interprofessional Minimum Wage. Others will pay the contribution tranche corresponding to their net income.
The new additive system also covers pensions for self-employed workers, who currently receive about 43 percent less than wage earners while still accessing social benefits. The gap, roughly 600 euros monthly, stems from many RETA members contributing at the minimum floor of about 300 euros, which affects pension levels.
Given that the existing system does not meet its stated goals, a partial suspension has been created for self-employed workers without other workers or in cases of force majeure. None will be forced to exit RETA or dissolve their organization. The benefit will be equal to 50 percent of the regulatory base and can be paired with another activity for up to four months to two years.
Simulator
With the new net income contribution system set to take effect in 2023, the General Directorate of Social Security has commissioned a calculator for self-employed users to estimate their quota accurately.
This calculator is accessible through the official public portal, which also contains information on the new system and steps to calculate returns in the coming months. Self-employed users should indicate expected returns, and the simulator will show the minimum and maximum quotas for each department.
The Social Security calculator also breaks down the contribution base and factors such as joint probabilities, occupational probabilities, discontinuation of activity, and vocational training. It helps self-employed individuals understand the benefits they are entitled to based on their contributions.
As of January, Importass will add new features to manage procedures under the new system. This will allow self-employed workers to report expected returns, easily select or claim contributions, and adjust applicable benefits. Social Security also plans a separate, customized simulator for additional scenarios.