AS A SELF-EMPLOYED WORKER, HOW DO I KNOW WHICH BASE OF CONTRIBUTIONS TO SELECT?

In January 2018, new measures of the October 24th Law of BOE 6/2017 came into force. They dealt with “Urgent Amendments for Self-employed workers”. One of the Law’s innovation is the ability to change the level of the self-employed persons’ contributions 4 times a year. Their current economic situation would then be taken into account when calculating their self-employed rate.

We have already assisted many of our clients at Pérez Parras Economists & Lawyers Firm in Málaga and Nerja with this matter.

As a freelancer, you have to know what the contribution base is and what it stands for.

We will also differentiate between the freelancer rate and the contribution base.

Firstly, self-employed people pay a monthly contribution rate to the Social Security Treasury, according to the cover level or base that they wish to have and some particular characteristics.

Secondly, when we talk about cover, we refer to the health care and protection that we receive in situations such as:

 Temporary leave in the event of illness or non-work-related accident, maternity, paternity, difficult pregnancy, disability, recovery, death or other voluntary coverages (with a rate increase), such as protection due to accident at work or cessation of activity, retirement.

Other situations will determine the rate to pay; we mean particular characteristics of freelancers, such as:

The age of the self-employed persons and their classification. There are self-employed individuals, self-employed administrators or members of a company, collaborating family members, street vendors, agricultural workers on their own, etc…

Well, taking the above aspects into account, most of freelancers in our country decide to pay the “cheapest” rate to save costs.

What does it mean to pay the cheapest rate?

It implies paying contributions to the Social Security calculated on the minimum level / base of cover.

Social Security contributions are used to calculate payments during medical leave

And what is the minimum contribution base?

The contribution base (regulatory base) is the reference used by the Social Security to calculate how much the self-employed person must pay and receive. That base acts as if it were the freelancer’s salary. Therefore, your choice of base is very important. Because it will influence what you are going to pay and what you are going to receive in case of medical leave, disability, retirement, etc.

There are some aspects that differentiate the “contribution base” from the regulatory base “. In this article, we will talk about both interchangeably since they tend to coincide in the vast majority of cases and will not affect the idea we want to convey.

What contribution base is recommended?

There is no base that can be more or less recommendable; because the choice of level depends on the economic situation of the self-employed.

But, when determining my choice of base, I must seriously understand that my decision will influence my future benefits.

In addition, bear in mind that the requirements and calculation of benefits get increasingly harder and are based on longer contribution periods. This should encourage you to maintain a homogeneous base as high as possible for the benefit of a long-term provision such as retirement or any other benefit needed in case of infirmity or disability.

A self-employed person must know the contributions base

Also, you should know that the levels match the age of the ratepayer; and there are minimum and maximum levels to be respected.

E.g. Calculation of a freelancer’s benefit with a month of medical leave (pneumonia or a leg cast). It is impossible for me to carry out my activity:

In these examples I would get:

From the 1st day to the 3rd day of sick leave: no entitlement to anything.

From the 4th day to the 20th day of sick leave: 60% of the regulatory base.

E.g. If my freelancer’s base is the minimum one (932.70€ / month), I will get:

for each day of leave from the 4th day to the 20th day 60% of 932.70€: 18.65€ / day.

E.g. Opting for a contribution base of 1500.00€ / month, I will get:

for each day of leave from the 4th day to the 20th day 60% of 1,500€: 30€ / day.

From the 21st day of the leave onwards, I get 75% of the regulatory base.

Here are the deadlines to request level changes:

• First Presentation from January 1st to March 31st, effective from April 1st.
• Second Presentation from April 1st to June 30th, effective as of July 1st.
• Third Presentation from July 1st to September 30th, effective from October 1st.
• Fourth Presentation from October 1st to December 31st, effective from January 1st of the following year.

Contributions – How to request the change of level:

Count on our services, do not hesitate to consult our office of Economists & Lawyers in Malaga and Nerja to carry out the negotiations and advise you on your most convenient base of contributions with the Social Security, and help you get the MAXIMUM benefits!