Hello fellow solos! As the landscape for freelancers in Spain continues to grow and evolve, you’ve got to stay ahead of the curve of changes that impact your work. This article aims to bring you the most relevant news for freelancers in 2023, covering new contribution bases, better conditions for low earners in certain regions, the new freelance quota, and the long-awaited Digital Nomad Visa.
Nobody is going to pretend that these changes are a piece of cake to understand. But that’s where gestorías come in 😉. While some of these changes have raised eyebrows in some quarters, if you want to get the best out of your career, you need to know what you’re dealing with. So, whether you're a seasoned freelancer in Spain or just starting out, take your head out of the sand and get to work understanding your situation.
New self-employed contribution base
Kicking off our news for freelancers in 2023 is a new system regarding the contribution base from 2023. It comes as part of a major overhaul to the state of self-employed workers and aims to level the playing field for the many kinds of freelancers in the country.
For most people, the concept of a contribution base fits comfortably into the category of “pfff boring”, but if you’re a freelancer in Spain, it affects you directly.
A contribution base refers to the amount of earnings that your social security contributions are calculated on. In simple terms, with the new progressive system, those who earn more will pay more.
The whole reason behind the new contribution bases is to make freelance life fairer for those who are going it alone. It encourages those who are earning less to declare their work, with the obvious benefit of getting social security benefits as a result. These benefits include a state pension, health insurance, and unemployment support.
Trade unions and workers have widely welcomed the change, as it affords better accessibility to social security benefits for low earners. In an uncertain world where job stability is up in the air, solos are on the rise. So making the pathway easy and desirable is a fantastic boost to those who see self-employment as their best solution.
Overall, the new self-employed contribution base in Spain is a significant step forward in improving the rights and benefits of self-employed workers, and is expected to have a positive impact on the overall sustainability of the social security system.
The Spanish freelance quota goes progressive
Jumping on the back of the new contribution bases are the inevitable changes to the freelance quota from 2023 onwards. If you’re new to the freelance quota, it’s the social security contributions you make each month. Your in-company friends never really see this payment — it is taken straight out of their paycheck before they know anything about it.
As of 2023, we can all kiss goodbye to the fixed minimum social security contribution of €294 that was quite controversial to those not earning megabucks. The new freelance quota system is considered a fairer system, but opens up a whole new world of paperwork and calculations.
To summarize the changes, those earning from €1300 to €1700 will continue paying the same €294 rate per month for the next three years at least. If you’re earning less, you’ll get a better deal, as low as €230. However, if you’re climbing up to the dizzy heights of bringing in €6000 or more per month, you’ll be on a €500 monthly payment in 2023, rising to €590 by 2025.
Why has the government implemented the new freelance quotas?
It’s all about making freelance contributions sustainable for the overall system. It simultaneously encourages the lower earners to make the leap to solo life, while asking more from those at the higher end of the spectrum. As a progressive system, it promotes fairness, but not everybody is delighted with the changes.
Critics would point out that even with the reduced freelance quota for lower earners, they still have to pay a hefty amount. Take someone bringing in €600 per month for their side hustle. They will still have to pay out 33% of their income (€200 if you’re no math whizz) per month by 2025. Similarly, the most successful freelancers in Spain would say that those willing to create more business in the country should be rewarded for their risk-taking mentality. Contributing €590 per month for the same services that you got for €294 a few years ago leaves a bitter taste in the mouth.
But like everything in this crazy world of ours, the changes to the Spanish freelance quota in 2023 are neither entirely bad nor good. The smart ones out there will know how important it is to stay informed about these changes to get the biggest reward for your work. But remember, it's always a good idea to consult a tax specialist if you have any questions or concerns. Happy freelancing!
Refilling the pension pot: the Intergenerational Equity Mechanism
Any guesses for what an Intergenerational Equity Mechanism (MEI) could mean? No? Let’s explain.
January 2023 has been a busy month for the self-employed system, and the MEI is just another addition to the list of changes. The MEI is a new tax for freelancers and employed workers that aims to refill the pension kitty that has been slowly running dry for the past few years.
It’s kinda logical if you think about it. Populations all across the richest countries are rapidly aging, meaning that more and more people are taking out of the pension pot, with fewer workers contributing. As the massive demographic of boomers are on the cusp of retirement, governments all over the world have had to put in contingency plans to keep the system afloat.
The MEI is just such a plan, and unfortunately, it’s millennials and Gen Z who have to pick up the slack. Anybody registered with the Spanish social security system has to pay the MEI, which represents 0,6% of their gross pay. For freelancers, the MEI payment is an addition to the new freelance quota.
Despite being yet another new tax for freelancers, the Intergenerational Equity Mechanism has been welcomed by trade unions such as the Workers’ Commission and the General Union of Workers. With an eye on the state of pensions in the future, these unions say the estimated €5 per month on average is worth the hit.
No social security contribution for freelancers on the lowest quota in Madrid and elsewhere
While the changes to the freelance quotas may have been met with suspicion by many in the self-employed community, the injection of “zero quotas” in some of Spain’s autonomous regions is a warmly welcomed bit of news for freelancers.
Who qualifies for the zero quota?
- Registered freelancers, working in a participating community — Madrid, Andalusia, Murcia, or the Balearic Islands.
- Those with no outstanding tax or social security debts. It’s a recurring theme in Spanish administration that you can’t have nice things if your accounts aren’t settled.
- Freelancers already paying the lowest quota, whether because of low income, a disability, being a victim of gender violence or terrorism, or a woman returning to self-employment after maternity leave.
Be aware that this benefit is retrospective. In simple terms, that means you’ll continue paying the reduced monthly rate of €80 before submitting a request for the zero quota. If the local government accepts your request, you’ll get 100% of those monthly contributions back.
Taking Madrid’s rules as an example, you can apply for the zero quota during the two months before your reduced €80 quota expires. That gives you a short window of just two months to apply, so make sure to set a reminder in your calendar. The rules aren’t quite as strict on the government — they have up to six months to respond. If there’s no good news in that time, the application is considered rejected.
The zero quota initiative is especially good news for freelancers who could do with a boost a little bit in the future. Sure, you’re not going to get instant relief in the very early days of your business. But knowing you can get €960 back at the end of the year is a great incentive for budding entrepreneurs to take the leap into solo life.
Spain finally launches a Digital Nomad Visa
Excellent news for freelancers outside the EU who want to live and work in Spain!
At the end of last year, the Spanish government approved the Digital Nomad Visa to go ahead in 2023. This smoothens the path for freelancers who can now skip the administrative headache of getting a regular visa. Part of the Startup Act, it aims to attract digital nomads who can contribute to the economy and give a serious boost to the Spanish tech industry.
The advantages to the freelancers are clear. Software developers, content creators, social media strategists, and more can take advantage of the rise in remote teams to continue working in Spain for a foreign client.
Digital entrepreneurs get a nice share of the pie too. The government has reduced corporation tax on startups from 25% to 15% for their first four years. Another incentive gives businesses the opportunity to defer tax payments for the first two years.
If you want to take advantage of this easy path through Spanish bureaucracy, you’ll need to qualify for the following requirements:
- Have a contract for at least a year with one or more companies outside of Spain that allow for remote work.
- You can prove legal residence throughout your time in Spain.
- You have a minimum of three years of work experience in your digital discipline.
- You have a clean criminal record.
- You have contracted private health insurance that is valid all across Spain.
- You earn an as-yet undefined minimum salary. Sources believe this will be around €2100 per month — twice the national minimum wage (€1050).
Keep up-to-date on the latest news for freelancers with Xolo
We don’t want to get ahead of ourselves, but you might have already heard why freelancers in Spain are turning to Xolo. With free registration as a self-employed worker, automatic invoice generation, and local experts to help you build your business, it’s an attractive service, even if we do say so ourselves.
But you might not know that we’re also growing a thriving community of freelancers. With a Slack channel full of people in the same situation, you’ll be a solo, but never alone.
🤝 Network with Spanish and international freelancers
📰 Tips and news about freelance life
🔊 Events, afterworks, and webinars
So if you want to stay ahead of the game as a solo in Spain, talk to the Xolo team and kickstart your journey today.
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About James
James McKenna has been a freelancer since 2017, working in subtitling, translation, and his main passion — writing. He loves nothing more than falling down a rabbit hole, a habit that has helped him specialize in areas as diverse as biotech, climate change, higher education, and business strategy.
Based in Barcelona, James learned the ropes the hard way, making mistakes that turned into valuable learning experiences. After working hard to establish himself, he is now working smart, and is always on the lookout for ways to streamline his business.