I suspect that once you have read this article you will agree with me when I say that Spain’s central Government and our Social Security masters seem ever more detached from reality.
Details of the much needed reform of the self employed social security system have shocked the sector of more than 3.2 million registered individuals.
The current system charges self employed individuals typically around 280€ per month regardless of their earnings. Company directors/shareholders pay around 370€ per month. These contributions entitle the individual and their dependants to the regional medical system, a retirement pension, and very modest incapacity and unemployment benefits.
Other countries charge nothing to the self employed with low income or part time work. Examples: Germany exempts social security for those earning less than 4.800€ p.a., in the UK nothing is payable until you earn £6,515 p.a. and then you pay only £158 p.a. until you earn £9,569 p.a.
Changes in 2015 intended to get people registered again after the economic crisis, allowed newly registered individuals to pay reduced contributions using the ‘tarifa plana’ system. This reduced monthly costs for the first year to 60€, increasing in the second year in two stages, with the third year being at the normal rates.
The new Spanish system allows those with income below 3.000€ reduced contributions of ‘only’ 90€ per month, 1.080€ p.a. Whilst less than the existing system these contributions still represent at least 36% of a person’s income . Only a very strange person could regard such a level of contributions as reasonable. This says an awful a lot about the civil servants who run the Social Security system and their political masters.
At the other end of the scale, a person earning 49.000€ will have to pay 1.220€ instead of the current 280€ odd a month.
Here are the proposed Social Security contribution bands, in detail: