The cabinet has approved the special regime for the self-employed (RETA) reform this Tuesday, introducing a contribution system tied to real income.
The reform emerges from a tripartite agreement among the government, social representatives, and self-employed associations. Although the executive plans to process it as a bill, it will be enacted by decree-law so that parliamentary groups can still contribute to the text.
The agreement includes the launch of a temporary contribution system distributed across 15 brackets for 2023, 2024, and 2025. Net income and Social Security contributions will adjust with brackets: decreases for those earning below the minimum wage, stability for middle ranges, and increases for those earning more than €1,700 per month.
The lowest bracket, for earnings at or below 670 euros per month, starts at a payment of 230 euros in 2023, rising to 225 euros in 2024 and 200 euros in 2025. Conversely, the top bracket, for earnings above 6,000 euros, begins at 500 euros in the next year, climbs to 530 euros the year after, and reaches 590 euros by the final year of the period.
At present, self-employed individuals choose the basis on which they contribute voluntarily. About 84 percent select the lowest basis, resulting in a monthly payment of 294 euros.
A new reduced quota of 80 euros per month is available for all workers who launch an activity on their own during the first year. This can be extended for another 12 months if the self-employed person’s income remains below the SMI.
Additionally, the reform outlines a new benefit: a partial shutdown of 50 percent of the regulatory base, compatible with the activity and chargeable from four months up to two years.
Spending Ceiling
In parallel, the executive plans to approve the non-financial spending limit for 2023 during this Tuesday’s cabinet meeting, marking the start of drafting the General Government Budgets (PGE) for the coming year.
Last July, the cabinet approved the 2022 State Budget’s non-financial spending limit, which has been slightly raised to €196,142 million, including extraordinary transfers to autonomous communities, Social Security, and portions of European funds.
Against a backdrop of rising inflation and the ongoing impact of the war in Ukraine, the government faces the challenge of setting a sustainable spending ceiling while continuing to address two consecutive years of record figures.
Reform of Immigration Regulations
The government will also approve reforms to immigration regulations aimed at improving the inclusion of foreigners in the labor market.
The intent is to streamline hiring for foreign workers, simplify regulatory procedures for those already in the country, permit foreign students to work, and ease work requirements for employees.
The royal decree, presented to the cabinet by the Ministry of Inclusion, Social Security and Immigration, proposes changes to immigration rules and relaxes the requirements for obtaining a residence and work permit in order to fill gaps in the Spanish labor market.
Among the proposals is “rooting by formation,” which would open pathways for individuals who have faced instability in Spain over the past two years and who have demonstrated active commitment to education in a field with labor demand to obtain a residence permit.
For employment-based residency, the applicant must have stayed in Spain for at least two years and demonstrated six months of regular or irregular work activity.