{"id":14048,"date":"2023-01-17T11:38:06","date_gmt":"2023-01-17T10:38:06","guid":{"rendered":"https:\/\/pibgroupiberia.com\/?p=28994"},"modified":"2025-05-23T09:42:25","modified_gmt":"2025-05-23T07:42:25","slug":"i-am-self-employed-do-i-pay-contributions-or-take-out-insurance","status":"publish","type":"post","link":"https:\/\/pibgroupiberia.com\/en\/soy-autonomo-subo-cotizacion-o-contrato-seguros\/","title":{"rendered":"Does it pay to raise the self-employed quota?"},"content":{"rendered":"<p>The <strong>self-employed quota<\/strong> in Spain is a matter of eternal debate. Probably, it is because we are <strong>one of the highest paying countries in Europe<\/strong>. Today we want to help you think about what is best for a self-employed person: <strong>increase your contribution base<\/strong> to the level of their income (as some experts advise) or <strong>supplementing the minimum base<\/strong> with private options: sick leave insurance, life insurance, savings plans.<\/p>\n<h2>The rights of the self-employed linked to their contributions<\/h2>\n<p>The contributions that the self-employed worker pays monthly to the Social Security, is a percentage of a sort of <em>\u201cbasic salary\u201d.\u201d<\/em>\u00a0(the contribution base)<em>.\u00a0<\/em>This gives rise to a number of rights.<br \/>\nWe are mainly talking about the following:<\/p>\n<ul>\n<li>Subsidy for <strong>temporary incapacity<\/strong><\/li>\n<li>Pension of <strong>widowhood and orphanhood<\/strong><\/li>\n<li>Pension for <strong>permanent incapacity<\/strong><\/li>\n<li>The pension of <strong>retirement<\/strong><\/li>\n<\/ul>\n<p>These benefits are calculated by applying formulas and\u00a0<strong>percentages of the contribution base<\/strong> the self-employed person decides. The higher the contribution base, the higher the amount of these benefits.<\/p>\n<p>Based on that statement, logic would say that all self-employed people should increase that base. The problem is the disproportionate monthly cost of the increase. Hence, the dilemma arises as to whether there are cheaper alternatives to the public system.<\/p>\n<h2><img fetchpriority=\"high\" decoding=\"async\" class=\"aligncenter wp-image-28996\" title=\"it pays to raise the self-employed quota\" src=\"https:\/\/pibgroupiberia.com\/wp-content\/uploads\/2018\/12\/cotizacion-seguros-autonomos.jpg\" alt=\"it pays to raise the self-employed quota\" width=\"920\" height=\"559\" \/><\/h2>\n<h2>The cost of being self-employed in Spain<\/h2>\n<p>Between the <strong>80-90% of self-employed are contributing at the minimum rate (more than 90% if we only consider those under 40 years old)<\/strong>. This means a contribution base in 2021 of <strong>945 \u20ac<\/strong>\u00a0and a monthly cost for the self-employed, the quota, of around \u20ac290 per month.<\/p>\n<p>This has changed in 2023, as the government has launched changes that make us pay contributions in relation to our income. Why has it done this? Because it wants to reduce the unprotected gap between salaried workers and the self-employed in Spain.<\/p>\n<p>However, this does not really change the situation of the self-employed to any great extent, as the new contribution brackets place the entitlements well below the worker's actual income and earnings.<\/p>\n<p>Depending on this income, we are placed in one of the 12 available contribution brackets. However, within each bracket, there is a minimum and a maximum that can be chosen, and the vast majority will opt for the minimum, which means that we remain in a very precarious situation.<\/p>\n<blockquote><p>And, if you want to go to the higher brackets, let's say you choose to contribute on the basis of \u20ac1,850 instead of \u20ac1,013, that means a cost of around \u20ac250-300 more per month, and people are not willing to take that on.<\/p><\/blockquote>\n<p>Let's see it in detail in this graph, where you can see these brackets, and the minimum and maximum bases for each year:<\/p>\n<p><img decoding=\"async\" class=\"aligncenter size-full wp-image-55483\" src=\"https:\/\/pibgroupiberia.com\/wp-content\/uploads\/2023\/01\/bases-cotizacion-autonomos-RETA.jpg\" alt=\"Self-employed contribution brackets\" width=\"591\" height=\"464\" \/><\/p>\n<p>This shows that even if you have an income of \u20ac4,000 in the higher income cases, you can contribute \u20ac1,300, so the entitlements are much lower on that basis. Or you earn \u20ac2,500 and pay contributions for less than \u20ac1,100. Little has been solved with this reform.<\/p>\n<p>In the case of <strong>self-employed companies<\/strong>\u00a0 continue to have a somewhat special status, and their minimum contribution base is fixed at <strong>1,000 per month<\/strong>.<\/p>\n<p>In the following section we will see how this increase in the base helps us, in comparison with the minimum for self-employed workers, to see if it is worthwhile or not.<\/p>\n<h2>The increase in the contribution base and its benefits<\/h2>\n<p>People who contribute to the self-employed regime have rights and social benefits that it is important to know about. As we have already mentioned, the amount of these will depend on the contribution base.<\/p>\n<h3>A self-employed person on minimum bases<\/h3>\n<p>Let's assume a self-employed person who earns \u20ac1,000 and pays contributions at a minimum rate of \u20ac899\/month. He receives the following for the different main contingencies offered by the Social Security:<\/p>\n<ul>\n<li><strong>Temporary Leave: <\/strong>530.23 per month. This figure is very, very low, if we compare the monthly expenses we have. Coverage gap rate: 47%.<\/li>\n<li><strong>Widowhood<\/strong>539,21 \u20ac\/month. Drop rate: 46%<\/li>\n<li><strong>Orphans<\/strong>179.74 \u20ac\/month. Drop rate: 82%<\/li>\n<li><strong>Total Permanent Disability<\/strong>494.28 \u20ac\/month. Drop rate: 51%<\/li>\n<li><strong>Absolute Permanent Disability: <\/strong>898.69 \u20ac\/month. Drop-out rate: 10%<\/li>\n<li><strong>Retirement Pension<\/strong>898.69 \u20ac\/month (it should be noted that the average pension of a self-employed person has always been very close to \u20ac700, \u20ac500 less than the average for employees).<\/li>\n<\/ul>\n<p>Of course, these figures are assuming that we comply with the minimum number of months of contributions required by the S.S. and the different requirements to accrue them. These are approximate figures, but beware of the lack of coverage they represent... most of them are dramatic situations.<\/p>\n<h3>The self-employed with a net income of 2,000 euros<\/h3>\n<p>Benefits do not necessarily increase, as the self-employed can choose, and most will choose to contribute at the minimum, which would be \u20ac1,029.41 in 2023:<\/p>\n<ul>\n<li><strong>Temporary Leave:<\/strong> we would receive \u20ac607.35\/month. Coverage gap rate: 70% (watch out...)<\/li>\n<li><strong>Widowhood<\/strong>617,65 \u20ac\/month. Drop rate: 69%<\/li>\n<li><strong>Orphans<\/strong>205,88 \u20ac\/month. Drop rate: 90%<\/li>\n<li><strong>Total Permanent Disability:<\/strong> 566,18 \u20ac\/month. Drop-out rate: 72%<\/li>\n<li><strong>Absolute Permanent Disability:<\/strong> 1,029.41 \u20ac\/month. Drop-out rate: 49%<\/li>\n<li><strong>Retirement Pension<\/strong>1,029.41 \u20ac\/month. Coverage reduction rate: 49%<\/li>\n<\/ul>\n<p>As we can see, the benefits are a little bit higher, but the gap in terms of monthly yields increases significantly. This is a dangerous situation, and one that needs to be corrected.<\/p>\n<p><strong>In Spain we have a pay-as-you-go system<\/strong>, especially in the case of the <a href=\"\/en\/blog\/the-graph-that-will-make-you-doubt-about-your-future-retirement-pension\/\">retirement pension<\/a>. This means that we know what we have to pay based on our base, but not what we will charge.<\/p>\n<p>In recent years, in the face of the <strong>permanent Social Security deficits<\/strong>, In addition, corrective factors have been introduced in order to reduce previous amounts. Therefore, we can by no means guarantee that the above-mentioned figure will be the one that will be paid, because more and more years are taken into account in the calculation of the contribution base.<\/p>\n<h2><img decoding=\"async\" class=\"aligncenter wp-image-28997\" src=\"https:\/\/pibgroupiberia.com\/wp-content\/uploads\/2018\/12\/como-contratar-seguros-autonomos.jpg\" alt=\"\" width=\"920\" height=\"506\" \/><\/h2>\n<h2>Expert opinion: Miriam Almaz\u00e1n (Afiris)<\/h2>\n<p>To clarify the importance of this article, we wanted to consult Miriam Almaz\u00e1n, as director of Afiris, and specialist in advising the self-employed and entrepreneurs, who highlights the importance of this decision for the self-employed.<\/p>\n<blockquote>\n<p style=\"text-align: left;\">When we have a business, the generation of income depends on us, and <strong>it is essential to have the right information about the benefits we would receive<\/strong> in the event of certain situations. Think of a long illness that prevents you from working or, if you are absent, the amount your family would receive to keep you going.<\/p>\n<p style=\"text-align: left;\">Normally we consider paying more contributions or choosing private options with retirement in mind and, in my professional experience, I see that we often overlook other types of situations that may arise. In these cases, if you do not have good cover, it can lead to serious financial difficulties for the self-employed and their families.<\/p>\n<p style=\"text-align: left;\"><strong>Whether to go private or public is a decision that has a personal component.<\/strong>. It is undoubtedly important to <strong>making numbers<\/strong> and also consider the business and family situation in order to choose the most appropriate option.<\/p>\n<p style=\"text-align: right;\"><span style=\"color: #0000ff;\"><strong><em>Miriam Almaz\u00e1n (Afiris)<\/em><\/strong><\/span><\/p>\n<\/blockquote>\n<p>We have seen what is involved in increasing the contribution base, the public option; now we explain what is involved in the private option, through insurance.<\/p>\n<h2>Insurance as an alternative to improve our performance<\/h2>\n<p>The alternative to simply increasing the contribution base would be to keep it at the minimum, and to supplement benefits through private insurance.<\/p>\n<p>We would talk about these 3 fundamentally:<\/p>\n<ol>\n<li><a href=\"https:\/\/pibgroupiberia.com\/en\/professionals\/\"><strong>Sick leave insurance for the self-employed<\/strong><\/a><\/li>\n<li><a href=\"https:\/\/pibgroupiberia.com\/en\/professionals\/\"><strong>Health insurance for the self-employed<\/strong><\/a><\/li>\n<li><strong><a href=\"https:\/\/pibgroupiberia.com\/en\/professionals\/\">Accident insurance for the self-employed<\/a><\/strong><\/li>\n<li><strong><a href=\"https:\/\/pibgroupiberia.com\/en\/individuals\/insurance-solutions-for-individuals\/savings-insurance\/\">Retirement savings plans<\/a><\/strong><\/li>\n<li><strong><a href=\"https:\/\/pibgroupiberia.com\/en\/individuals\/insurance-solutions-for-individuals\/savings-insurance\/\">pension plan<\/a><\/strong><\/li>\n<\/ol>\n<p>Thanks to the three, we would be covering the fundamental benefits of Social Security, derived from:<\/p>\n<ol>\n<li>Temporary leave,<\/li>\n<li>Death or permanent disability<\/li>\n<li>Retirement.<\/li>\n<\/ol>\n<p><strong>Let's see if the private route pays off<\/strong> 2,000. We have an annual budget of around We have an annual budget of around 3,600 euros to do this. We are going to check that by subscribing to these insurances, the cost is:<\/p>\n<ul>\n<li>Sick leave insurance \u2192 capital sum of \u20ac500\/month, cost: \u20ac138\/year<\/li>\n<li>Life insurance \u2192 capital sum of 112,000 \u20ac for death and total and absolute permanent disability, cost: 222 \u20ac.<\/li>\n<li>Accident policy \u2192 capital sum of \u20ac112,000 (also covers partial disability). Cost \u20ac 100 per year.<\/li>\n<li>Savings \u2192 as we have spent \u20ac460 on the three policies we would have \u20ac3,140 left to invest in savings plans.<\/li>\n<\/ul>\n<p>This <strong>We have supposedly done this for a 35 year old married person with a child.<\/strong>. If we do it with a 45 year old, the margin for savings would be \u20ac2,726 (insurance increases in price with age). If we do it at age 55, we would save \u20ac2,011.<\/p>\n<p>Assuming a person who starts as described above at the age of 35 years, the <strong>cumulative savings<\/strong> with the aforementioned progression would be approximately \u20ac64,000 at the age of 65. To which should be added all the profitability that could be accumulated in those 30 years from the start, which would be interesting as it takes so long.<\/p>\n<h2><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-29000\" title=\"it pays to raise the self-employed quota\" src=\"https:\/\/pibgroupiberia.com\/wp-content\/uploads\/2018\/12\/seguros-para-autonomos.jpg\" alt=\"it pays to raise the self-employed quota\" width=\"921\" height=\"518\" \/>Our suggestion on how best to choose<\/h2>\n<p>As we have seen, the additional cost of increasing the contribution base is very high. However, <strong>insurance is much more flexible<\/strong> and we can also take advantage of free competition to choose between economic alternatives. Always <strong>choosing among good insurers<\/strong>.<\/p>\n<p>The essential difference is the <strong>capitalisation system in private savings<\/strong>We know that whatever we put into the savings plan, if we are conservative, we will get it back with a return. With social security, however, we do not have this certainty. Given that the experts predict a bad future for our pensions, it seems that we could probably be paying much more than we will receive in the future (especially if we are young).<\/p>\n<p>Do not hesitate and <strong>request a quote for these insurances<\/strong>. Protect yourself well against all these risks, <a href=\"\/en\/blog\/five-reasons-to-take-out-sick-leave-insurance\/\"><strong>matching your cover to your income and expenses<\/strong><\/a>. The problem for many self-employed people is that they may have a high income, yet their contribution base is minimal, so they maximise their risk.<\/p>\n<p><a class=\"popmake-26194\" href=\"#\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-31046 size-full\" src=\"https:\/\/pibgroupiberia.com\/wp-content\/uploads\/2016\/05\/BANNER-B.gif\" alt=\"Contact with us\" width=\"500\" height=\"100\" \/><\/a><\/p>\n<p>From <strong>PIB Group Iberia<\/strong> we help you calculate your benefits and assess how to complement it correctly. \u201cWe manage your insurance, we secure your future\u201d.\u201d<\/p>","protected":false},"excerpt":{"rendered":"<p>Let's see whether it is better for the self-employed to raise the contribution base or improve their benefits through insurance.<\/p>","protected":false},"author":14,"featured_media":14056,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"yasr_overall_rating":4.9,"yasr_post_is_review":"","yasr_auto_insert_disabled":"","yasr_review_type":"","footnotes":""},"categories":[152],"tags":[168],"class_list":["post-14048","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-profesionales","tag-ilt-subsidio"],"yasr_visitor_votes":{"stars_attributes":{"read_only":false,"span_bottom":false},"number_of_votes":0,"sum_votes":0},"_links":{"self":[{"href":"https:\/\/pibgroupiberia.com\/en\/wp-json\/wp\/v2\/posts\/14048","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/pibgroupiberia.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/pibgroupiberia.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/pibgroupiberia.com\/en\/wp-json\/wp\/v2\/users\/14"}],"replies":[{"embeddable":true,"href":"https:\/\/pibgroupiberia.com\/en\/wp-json\/wp\/v2\/comments?post=14048"}],"version-history":[{"count":0,"href":"https:\/\/pibgroupiberia.com\/en\/wp-json\/wp\/v2\/posts\/14048\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/pibgroupiberia.com\/en\/wp-json\/wp\/v2\/media\/14056"}],"wp:attachment":[{"href":"https:\/\/pibgroupiberia.com\/en\/wp-json\/wp\/v2\/media?parent=14048"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/pibgroupiberia.com\/en\/wp-json\/wp\/v2\/categories?post=14048"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/pibgroupiberia.com\/en\/wp-json\/wp\/v2\/tags?post=14048"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}