BigD

I understand that in Spain, if you are self employed you are liable to pay a monthly subscription (insurance).
Is there a level of earnings you need to receive before paying this subscription
Or has to be paid regardless of earnings ?
Does anyone know how much it is ?
Where do you pay this charge ?

SueG

If you are talking about paying into the social security system it is approx €250 a month - has to be paid whether you earn anything or not. Do a search - there has been lots of threads on it

lcortez

In terms of self employment, there is in fact 2 systems to choose from.
The best known one is the (forgotton what its called now)one, where you pay in a monthly fee,currently about EUR 225,this will entitle you,and your partner to healthcare etc.This can also be topped up if you wish to provide extra benefits.
There is also another system, where you pay a percentage of your earnings as tax & insurance every three months,however for this system you will need to start double entry book keeping, or hire an accountant.
Both systems have their advantages and disadvantages,if your earnings are likely to fluctuate significantly the second system will prob be better,however if your earnings are likely to be steady or increase steadily,the second may turn out to be better
Sorry for forgetting the names of these systems,minds went completely blank,will post names,and percentages soon

SueG

Is one of them modular relating to tax?

lcortez

Yes thats it,brain still not working
Qaurtely method is called "Direct Estimation"system,monthly "Modulos".
Also,forgot to mention,neither system entitles the payee to Social Security,"top up" on the Modulos system is only for a larger state pension

elgestor

A bit of a long winded answer but it should cover nearly all of your social securityquestions

* Autonomos in Spain are obliged to pay social security contributions from the first day of the month in which they start their business in Spain.
* The obligation continues so long as the worker carries out their activity.
* The obligation to pay ceases the last day of the month in which the worker no longer carries out their activity.

Payment of Autonomo contributions

Autonomo workers are responsible for paying their social contributions.

The payment of the quota for the month must be paid within the month either in the Oficinas Recaudoras or via bank transfer.

Charges for late payment of Autonomo social security contributions.

* Payment within two months of the due date: 5%
* Payment after the two months: 20%

Contribution Rates for Autonomos in Spain

From the 1st of January 2007 autonomo workers aged 50 or less can choose their contribution rate from a minimum of 801.30€ to a maximum of 2996.10€.

To your chosen base rate the contribution obligation is set at 29.8% or, 26.5% if you opt not to select temporary incapacity protection.

* Minimum contribution with temporary incapacity cover 801.30€ * 29.8% = 238.79€/month.
* Minimum contribution without temporary incapacity cover 801.30€ * 26.5% = 212.34€/month.

* Workers over 50 have a minimum contribution of 837.60€ and a maximum of 1,560.90€
* Workers under 30 or women over 45 have a minimum contribution base of 665.70€ and a maximum of 2,996.10€, applying the same percentages of 29.8% and 26.5%.

There are other contribution rates for more details of how they may affect you speak to your gestor or accountant.

Hope this helps

David

elgestor

Forgot to add that from January 2008 you are obliged to take the temporary incapacity cover.

loulouinuk

Ok, This may have been asked before...... but is it compulsory to pay into the social security system in Spain if you are self employed?

I am in the process of setting up a business and I have private health insurance and a private pension scheme, therefore I feel no need to join the social security system.

Ultimately what would be the outcome if i just didn't sign up? I find the whole thing slightly confusing.

valenciatim

If you do not pay in, you are not registered and therefore trading illegally!
Tim

Econ

One thing not mentioned is that if you are self employed in Spain there is no VAT threshold as in the UK, you have to charge and pay it from day one.

valenciatim

That and the social security payments may explain why so many try to work for cash, illegally.
Tim

loulouinuk

Thanks Tim,
At this stage I am not trading as I am still awaiting for a couple of documents before being able to apply for a license that the Junta say i need to trade.

Once I have this license & can trade then presummably I need sign up?

Lou

Econ

The labor laws in Spain are so backward that they actually harm employment and encourage employing illegal labour because the company is basically over a barrel, it costs them a fortune to employ someone. If these where changed it would encourage companies to employ more and do so legally. It would also cut down on being a lucrative way of making money for lazy workers who get into a job, work a short time and then get 6 months unemployment when they leave, then move onto the next victim when the unemployment ends.

valenciatim

Indeed. Find yourself a decent recommended Gestoria to sort out the forms and the paperwork, they will handle all the forms and your taxes for you for a very reasonable amount of money.
Good luck
Tim
PS, Welcome to BE!
PPS! Whereabouts are you and what will you be doing?

Econ

See a gestor and get them to take care of things if you don't understand the system, at the end of the day you will probably be better off with one as you will have 5 tax returns and 5 VAT returns to make each year, it saves on stuff that can be time consuming and a pain depending on what, how and companies you bill... unless you like doing that sort of thing.

Your social can be arranged to be paid through the bank every month if self employed. I started paying mine through the bank about 20 years ago and have not had to get involved in anything to do with my SS since.