Self-employed workers registered in Galicia since last September 30 have paused Social Security payments after the Xunta introduced at the start of the year the zero quota. This flagship measure in the Horizon 2027 Autonomous Promotion Agenda is aimed at revitalizing the independent sector. A network of entrepreneurship centers and targeted training will be launched through a Self-Employment Startup Package, combining qualifications, advisory support, and investment assistance. The goal is to foster an autonomous management environment and a competitive ecosystem that helps halt the ongoing decline of the self-employed.
As of now, Galicia is home to around 205,600 self-employed individuals, roughly 31,000 fewer than before the 2008 financial crisis. They represent nearly one-fifth of the regional membership, with Ourense and Lugo showing higher shares at 21 and 25 percent respectively. The Ministry of Employment Promotion and Equality aims to raise project quality, ensure continuity, and reduce the elevated failure rate affecting many ventures.
The pandemic hit the self-employed and small business owners hard in the community. Despite termination compensation and other direct public injections into various sectors, 21 percent of ventures finished 2020 in the red, a rise of three percentage points from the previous year. As economic conditions stabilized and activity revived, turnover began to recover and the share of self-employed with negative balances fell to 17.1 percent in 2021, according to data published by the Tax Agency. Galicia has traditionally shown a lower loss rate than other regions of Spain, with Asturias and Madrid offering notable figures in the opposite direction. By late 2021, Madrid reported higher proportions of negative balances in that year.
Across the state, the tax rate usually included in personal income tax statistics remains below 15 percent due to divergent tax systems in different regions. Extremadura, Aragon, and La Rioja posted the lowest loss rates for self-employed individuals, at 12.7, 12.2, and 11.9 percent respectively. The trajectory in Galicia shows a growing number of entrepreneurs alongside a decreasing failure rate as the economy reopens and uncertainties ease.
During the first wave of COVID-19 the plight of many businesses and owners nearing retirement age was acute. The initial year saw about 6,600 disappear from the counts, a fall of over 3 percent. A modest recovery followed in 2021 with approximately 2,600 new ventures, bringing the total to around 207,089. Men represented about 57 percent, and the over-55 segment stood out with about 79,516 individuals, equating to 38 percent of the total. The 46 to 55 age group followed with roughly 57,300 people, while fewer than 3,200 were under 26.
Across Galicia the number of top-level entrepreneurs rose, and the majority of the 193,600 cases analyzed by the Tax Office last year were individual entrepreneurs. Economic activity returned close to pre-crisis levels, with turnover near 1.931 billion euros, up 31 percent from 2020. This marked the highest turnover recorded since the study began, even exceeding figures from the pre-bubble period in the real estate sector. The average declared income also climbed significantly, from 7,812 euros to 9,970 euros. For direct estimation declarations the average rose to around 12,700 euros, and for modules around 10,500 euros. Agricultural declarations yielded about 1,600 euros on average.
The aggregate contribution included an additional 1.5 billion euros in income from business activities, with movable capital returns totaling 84.5 million and real estate returns around 132 million. There were also about 12,500 entrepreneurs classified as having imputed income, with an average return of 12,500 euros in 2021.
In 2021, about 88 percent of business owners reported profits. Positive returns were especially strong in mussel production at 96 percent and in the energy and water sectors at 91 percent. In commerce, restaurants, and hospitality the rate was 81 percent, and construction followed closely. The professional category dominated by financial, legal, insurance, and leasing activities showed many profitable ventures with a success rate near 90 percent.
Which sectors bear higher taxes due to their economic activity
The average attributable effective tax rate stood at 19.6 percent. The highest rates appeared among professionals connected to the energy, water, mining, and chemical sectors at around 27 percent, while agriculture and livestock entrepreneurs faced rates near 9.9 percent. In terms of geographic distribution, Madrid has exceeded 26 percent of the effective rate for this group, about four points above the national average of 21.7 percent. Castilla-La Mancha and Extremadura reported the lowest rates at roughly 16.8 and 19 percent respectively.