This year, 2023, sees new social security contributions, a tax to top up pension funds, and a reduction in withholding rates for artists - the year 2023 will bring many developments for all self-employed people in Spain.
New social security contributions
From 2023, Spain's self-employed will pay monthly social security contributions based on their income instead of a fixed rate. Previously, freelancers had to pay a minimum contribution base of €294 per month after being registered as self-employed for two years, regardless of their earned amount.
Instead of a fixed rate of €294, the contribution will gradually decrease to €200 per month for low earners and progressively increase to €590 per month for high earners. Therefore, the social security contributions of some self-employed people will decrease. However, they will increase for those earning more than € 1,700 per month.
New tax for all workers
From 2023, all workers in Spain, whether self-employed or salaried, will have to pay an additional tax to replenish the country's pension fund. The trade unions estimate that the average monthly payment for the self-employed will be around €5.
No social security tax for newly self-employed workers in Madrid
In September 2022, the Madrid regional government announced that newly self-employed people in Madrid would have their social security contributions for the first year of self-employment in the region paid by the local government from 2023.
If monthly earnings in the second year are below the minimum wage (€1,166 gross per month), the regional government will also pay social security contributions. Hence, newly self-employed people in Madrid can save hundreds or possibly even several thousand euros in their few years working.
The threshold for tax returns changes
In 2023, self-employed taxpayers whose gross income does not exceed €15,000 per year will no longer have to file their annual tax return for 2022.
This means that in April when taxes declarations must be filed, those who have income from multiple sources will not have to file a return if the total of all income does not exceed €15,000. Previously, the limit was €14,000.
Advantages for self-employed mothers
Self-employed women with children under the age of 3 receive a benefit of €100 per month until the child's third birthday.
To be eligible for this benefit, they must either receive an unemployment benefit or allowance or register with the social security system at the time of the child's birth. Women who register later and have already paid contributions for at least 30 days are also eligible.
Reduction in retention rates
The withholding tax rate or IRPF for artists with the lowest income will be reduced to 7%. Previously, it was only 7% in the first years of self-employment, after which it increased to 15%.
Changes for unpaid and late invoices
As a freelancer, it is unfortunately very likely that you have been in a situation where you have had unpaid or late invoices and still had to pay tax on them without actually receiving the money. You then only had a limited amount of time to amend your invoice to reflect that it was unpaid.
This situation will become easier in 2023 as the time limit to amend your invoice will be extended from 3 to 6 months. The methods for claiming payments have also been made more flexible, and the minimum amount of the tax base that reduced from €300 to €50.