A self-employed lorry driver. / SUR

Cabinet approves radical new law for self-employed quotas

For the first time 'autónomos' will also be able to claim a share of jobless benefit and keep working if their income drops

LUCÍA PALACIOS / SUR MADRID / MALAGA.

The Spanish Cabinet has approved the details of a radical new law for the self-employed - known as 'autónomos' - which will significantly affect both how they pay into the system for things like healthcare and pensions and for what they can get out of it in terms of unemployment benefit.

From next January, what a self-employed person pays in contributions will be directly linked to what they are earning for the first time, instead of currently where an autónomo can choose to pay in less. This has led to autónomos' pensions on retirement being historically a lot less than for salaried employees.

The tax office will therefore have a bigger role to play in sharing information with Social Security on what a person is really earning. Monthly contributions in 2023 will range from 230 to 500 euros (but those recently self-employed can pay only 80 euros a month for the first year, renewable for one more year if their income is still low). By 2025 they will be 200 to 590 euros.

The full changes are being phased in over 10 years, giving time for people to adjust. For the moment, the government believes that about 25% of autónomos will keep paying the same monthly amount, 50% will pay less and 25% will pay more.

Self-employed workers will be able to change their monthly amounts several times a year and so adjust it to their real level of earnings before the amounts are reconciled at year end.

There will also be some new flexibility on payouts for benefits for autónomos, traditionally seen as at a disadvantage to salaried workers.

Within the new law, a self-employed person who loses some of their work or customers may be able to keep on working but also claim some unemployment benefit.

Up to now, very few autónomos were successfully getting unemployment benefit because of the conditions that had to be met - as few as 1,500 in 2019 claimed.

Covid-19 experience

Now the government has learned from experience during the Covid pandemic and will enable the self-employed to keep up some of their customers but claim 50% of the full amount of unemployment benefit they are entitled to according to their contributions made. To get it, they will have to prove when their income drops below 75 per cent, or where they have staff, (as many bar owners do), if they are earning below the minimum wage and 60% of their staff are furloughed. People hit by emergencies such as flooding who lose 75% of income and are below the minimum wage will also benefit.

Autónomos will also be included in government measures that are brought in when a sector of the economy is faced with unexpected difficulties.

The self-employed will also be able to make a 7% write off for hard to justify expenses and get a 10% tax break for contributions to pension plans.