As in the UK, the process of gaining access to health care, unemployment payments, state pension and other benefits, begins by having a Social Security number (In the UK a National Insurance number). This enables you to work legally and to be protected by certain rights. It means that whether in employment through a company or working for yourself (Autónomo) you will be paying contributions.
Who has to pay Social Security in Spain?
Anyone living and working in Spain must register with the Social Security system and make these contributions in order to gain access to benefits. This may be through being employed by a company (so deducted at source from your salary), or by being self-employed (Autónomo) and making their own contributions into a state scheme specifically for the self-employed. Paying contributions entitles you to healthcare and, after you’ve paid into the scheme for 15 years, a pension.
The overall rate for social security in Spain contributions is high in Spain compared to the UK, but the benefits are also more generous. In Spain you can pay more in and get more out (and choose private pension funds). It is not a flat rate like the UK. So if you make higher contributions over the years, on retirement you will gain a higher pension or make additional contributions to be covered for accidents or sickness at work. If you have paid enough in, you can receive up to EUR 2,458 per month (the amount is capped at this figure). Of course if you are employed, the employer pays the majority of the cost.
Social Security in Spain for Employees
Although there are special social security schemes for certain categories (such as military staff and civil servants), most workers fall into the ‘general regime’. If you’re an employee, your employer will register you with the Spanish Social Security authorities Tresorería General de la Seguridad Social or TGSS) and insurance scheme, and share the cost of insurance contributions with you.
In 2017, the employee’s contribution rate was around 6.4 percent of salary. Your employer will contribute a minimum of around 23.6 percent up to 31.6 percent extra toward your social security, depending on your contract and social security conditions.
Social Security in Spain for Self-employed
If you are self-employed (Autónomo) and earning more than the annual Spanish minimum wage, you will have to pay social security contributions to access healthcare and other benefits in Spain. If you are in this bracket and don’t pay social security, you won’t get any benefits.
The self-employed come under a special scheme known as the régimen especial trabajadores autónomos. You must pay all of the social security contributions yourself – which means self-employed workers personally pay more in than employees do – and there is a minimum monthly amount regardless of how little you may have earned that month. This means you need to be sure you can cover this.
How to apply as self-employed individual
You must have a social security number, be registered as self-employed with the Spanish tax office and register with the Spanish Social Security system using the form TA.0521– you can find your local office here. You will need your NIE and passport.
You can also register online but you will need to get an activation code from the TGSS and a digital certificate from a Digital Certificate Registration Office. You must keep them informed of any changes.
Self-employed contributions are generally regarded as being excessively high in Spain, compared to the UK. Many feel this holds back the Spanish economy, discouraging entrepreneurship and small businesses, with contribution rates often front loading a business with extra costs before it has even got going. Indeed it´s argued that this is one of the issues that encourages the black economy in Spain.
It is sometimes possible to pay less. There are now discount schemes available to encourage self-employed workers to register – paying a heavily discounted fee for a period of months before this gradually rises to the standard rate. Women returning after maternity can claim 100 percent discount for 12 months.
In 2017 the general contribution rate was about 30 percent. This works out to a monthly payment of at least EUR 250 per month for most freelancers. Not a small sum for many.
For detailed figures on contribution bases and rates, see this table from the Spanish Social Security Office.