Self-employed quota, looking for the perfect formula.

The importance and economic weight of self-employed individuals in Spain is a well-known fact; according to figures provided in Congress, we are talking about approximately 27.6% of total employment. Therefore, addressing fundamental issues affecting the obligations and rights of these workers has become a priority.

Given the difficulty of passing the General State Budgets, the new contributions for 2019 have been approved by Decree-Law and came into effect on January 1st, with a minimum contribution base of €944.35 and a minimum fee of €283.3. It also establishes a progressive increase in contribution rates, from 29.8% to 30% in 2019, 30.3% in 2020, and 30.65% in 2021. In return, benefits such as professional contingencies, training, self-employment unemployment benefits are included, and others are improved, such as being able to receive unemployment and temporary disability benefits from the first day and with a 100% fee discount from the second month onwards.

Regarding the flat rate, it will increase to €60 per month during the first year, and the extension of the same up to 2 years for self-employed individuals in municipalities with fewer than 5,000 inhabitants will remain in effect.

On the other hand, every three months, the self-employed individual is required to declare VAT and income tax, regardless of whether the invoices have been paid or not.

When compared to our European partners, we see differences in contributions; however, we find that a lower contribution does not always mean an improvement in the conditions of this group, as coverage also varies by country. We will have to take these two aspects into account in our search for the ideal formula.

A comparison published in "elautonomodigital.es" brings us closer to the different formulas adopted in other European territories. Let's see what our neighbors do and let each one draw their conclusions:

United Kingdom

The minimum fee in the UK is €14 per month if monthly earnings do not exceed approximately €600, as the British system sets the self-employed contribution fee based on the income received. If this figure is exceeded, they will pay a maximum of €58 per month, although this is a progressive fee system. VAT is paid at the end of the fiscal cycle, depending on earnings. In our country and with those earnings, they would not be required to register with the RETA unless there is habitual activity, as they are below the Minimum Wage threshold.

However, the included coverage consists only of the basic state pension, death benefit, and maternity leave.

Netherlands

There, self-employed individuals pay only €50 per year. Clarifying the figure, there is no contribution to Social Security, so each self-employed worker must pay a mandatory monthly health insurance - approximately €100 per month - which does not include pension, death, and disability insurance. There is also no right to sick leave.

Ireland

In Ireland, there is no initial or monthly fee. The amount to be paid will be 5% of the taxable income, in other words, gross income minus expenses or €500, depending on which amount is higher.

They have healthcare, contributory state pension, maternity benefits, adoption benefits, and widows' pension but no unemployment benefits.

Germany

In Germany, the self-employed contribution is €140 if earnings exceed €1,700 per month. If not, no contribution is made.

However, to this figure, like in the Netherlands, the payment of private health insurance (which can vary but is between €150 and €600) must be added. They are not included in the social security system, so they bear the cost of medical care, and the pension plan is private. If they wish to take out additional insurance, they must also pay for it.

Portugal

One of the most interesting comparisons, as it is our neighboring country. In Portugal, there is no self-employed fee, and VAT is not mandatory. Instead, it is paid depending on the earnings, specifically 24.5% of the annual income. There is an extended scheme that can reach 32%.

Denmark

One of the most envied welfare state systems. There, self-employed individuals pay between 25% and 50% of taxes at the end of the year, including social security and benefits such as unemployment, maternity, or sickness benefits.

Italy

In Italy, there is no self-employed fee, tax is paid to the Revenue Agency based on earnings, not income, around 20-30%. A self-employed individual must register with the country's social security system, which covers retirement, sickness, disability, unemployment benefits, and healthcare.

France

In France, there is no fee for the first year. After that, there is a tax rate that depends on income and profession, ranging from 12% to about 21.3%. Regarding coverage and benefits, healthcare, temporary incapacity, widows' and disability pensions, and retirement are included. As for healthcare, the self-employed bear the costs, although they will later receive a refund from the state of between 65% and 100%.

Austria

There is no monthly self-employed fee, but they must pay a variable amount for health insurance.

Belgium

It is one of the countries with the most complicated bureaucracy, including various registrations and procedures, as well as a bank account for commercial activity and an accounting training course. There is no monthly self-employed fee, but tax payments range from 25% to 50%.

Cyprus

The self-employed individual pays taxes based on earnings. Payment is made in advance based on a calculation of earnings before the end of the fiscal year.

Croatia

Self-employed individuals must pay €500 to register. At the end of the year, they pay a 20% tax based on their income.

Slovakia

Self-employed individuals must pay €50 to register. At the end of the year, a tax rate is calculated based on their income.

Slovenia

A variable percentage is paid based on income.

Greece

A monthly fee of €50 is paid for self-employed individuals, and a variable percentage of tax is paid based on income.

Luxembourg

There are no initial or monthly fees, but bureaucracy in this country is complex, and proof of competence as a self-employed individual must be demonstrated to obtain a permit. Taxes are paid based on activity and income.

Malta

There are no initial or monthly fees, and the percentage of taxes paid varies depending on activity and income.

Czech Republic

There is an initial fee of €40 to register. Afterwards, taxes are paid based on income.

Romania

The initial fee is €100 to register. Afterwards, taxes are paid based on income.

Sweden

There are no initial or monthly fees. The self-employed individual can pay up to 50% of their income.

Baltic Countries

Latvia: There are no initial or monthly fees, and taxes range from 9% to 24%.

Lithuania: There are no initial or monthly fees, and the percentage of taxes paid varies depending on the activity and income.

Poland: There is no initial fee, but a monthly fee of €200. At the end of the year, taxes are calculated based on income.

Estonia: Self-employed individuals pay a fee of €100 at the start of their activity, and then a percentage in taxes subject to their income.

Comparatively, we see that in Spain, whether a self-employed individual generates €10,000 or €500, all self-employed workers must pay the minimum of €283, regardless of income. This is one of the issues that the new government will have to address, as there is already talk of a possible contribution based on real income and a reduction in fees for self-employed individuals with incomes below the Minimum Wage threshold.

There is no doubt that any solution must come from consensus among the parties involved.