For many years business owners have been promised better conditions to allow them to initiate their activity and survive those crucial first years without the heavy burdens of high Social Security contributions and taxes. Even though some improvements have been made since 2013, we still have a long way to go especially when we compare what other countries pay towards their Social Security for the privilege of being self-employed.
Take a look at these examples of the huge difference between Spain and other countries when it comes to contributing. I don’t know if it is because we have a government full of greedy politicians who don’t live in the real world or whether the funds are being completely mismanaged because if we take into account how much each one of us pays, it is hard to comprehend why Social Security has a big hole in its treasury.
UK: Between 13 euros and 58 euros per month
Holland: 50 euros per year
France: Zero during the first year of business activity and after that it varies depending on income
Portugal: Zero (this could also explain why Portugal has had so many financial difficulties!)
Spain: Minimum of 267,04 euros per MONTH!
Congress has apparently given the green light to a series of reforms when it comes to business owners in order to reduce administrative procedures, to promote and facilitate new businesses as well as to improve work and family life.
“Ciudadanos” political party has proposed the following measures and these have been approved by the majority of the other parties so far. The main measures include:
- Modify how contributions are paid upon registering or cancelling your self-employed status. Up until now, it does not matter whether you register your business on the 1st, 15th of 28th of the month, you would be liable to pay a full month’s contribution and the same when registry is cancelled. The proposal is to establish a prorate system so you only pay for the days the business is actually registered.
- Adjustments to penalties that apply for paying monthly contributions after the deadline as the current system is quite abusive.
- Extend the flat-rate for new self-employe persons up to twelve months
- Improve discounted rates for maternity, paternity, adoption and similar
- Improve discounted rates for family collaborators that register as self-employed
- Obtain tax relief on car expenses so that professional usage can be properly deducted
- Regulate conditions for dependent sole-traders
The above proposals have passed the initial stage and must now be processed by the Senate but there is a glaring oversight in that monthly contribution scales have not been amended. Even though the above-mentioned measures are going to be put through, it still does not resolve one of the main reasons why so many decide against setting up their own businesses so as long as contributions remain as high as they are, no real progress will be made to see major improvements in our work conditions, that will help us create work opportunities, manage better our finances and help us succeed in having long-lasting and successful businesses.