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.
The overall rate for social security in Spain contributions is high in Spain compared to the UK, but the benefits are also more generous. For example, compared to the UK, the Spanish system rewards pensioners who’ve paid in more to a much greater extent. So if you make higher contributions over the years, on retirement you will gain a higher pension, unlike the UK, that has a flat rate.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 which 4.7 percent is the standard, 1.6 percent is unemployment and 0.1 percent is other (this may differ slightly depending in your contract). 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), you pay social security contributions under a special regime, to access healthcare and other benefits in Spain. The scheme known as the régimen especial trabajadores autónomos. You pay a fixed rate of social security contributions, covering income up to a certain limit, so there is a minimum monthly amount regardless of how much you earn.
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, as the rates front load a business with 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.
There are now discount schemes available to encourage self-employed workers to register. Women returning after maternity can claim 100 percent discount for 12 months, and If you are starting out self employed for the first time, there are discounts offered in the first 2 years, to ease the burden and help you get started, with the rate gradually rising to the full standard rate.
How to apply as self-employed individual
You need a social security number, to be registered as self-employed with the Spanish tax office, and to 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.
Alternatively, you can pay a Gestor to do get you set up, and many accountants also provide this service along with their book keeping and tax return services.
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.
What does Social Security in Spain Give Me?
Paying contributions entitles you to healthcare and, after you’ve paid into the scheme for 15 years, a pension. You can pay more than the basic amount to get a higher pension – or choose private pension funds – or make additional contributions to be covered for accidents or sickness at work. This is a different system to the UK, where the state pension is set at a flat rate, whereas in Spain paying more in means you can gain a bigger pension on retirement. If you have paid enough in, you can receive up to EUR 2,458 per month (the amount is capped at this figure).
For detailed figures on contribution bases and rates, see this table from the Spanish Social Security Office.