National Insurance contributions for autónomos in Spain
Thread poster: Noni Gilbert

Noni Gilbert
Spain
Local time: 00:59
Member (2007)
Spanish to English
+ ...
Mar 4, 2009

Before I launch into the information which I think it may be useful to pass on, please note that I am relaying information that I have received, so for complete certainty on the topic, please double check with experts (I presume the INSS should be able to confirm - and indeed they will have published inpenetrable information on the subject).

1. Claiming back part of contributions when working both as self-employed and for someone else:

The period for claiming back from the Tesorería General de la Seguridad Social part of the sums paid is open (Jan 2nd 2009 - 31st March 2009), with the following conditions:
* that the autónomo have been paying cuotas simultaneously during 2008, and that the sum of these cuotas be equal to or higher than 10.440,00 €. If this is the case, you can claim back 50% of anything paid over and above this figure up to a limit of 50% of the amount paid through the Regimen de Autómonos in the section corresponding to "contingencias comunes de cobertura obligatoria".

2. Topping up your NI insurance contribution:

Since we pay a v low rate, we will also get a very low pension etc.... But you can choose to up your monthly payments. The problem being that you can't choose to do this at any moment, but only at certain times. If you wanted to up your payments from 1st July 2009 onwards, you have to let the Seguridad Social know this before 1st April 2009. And if you wanted to up your payments form 1st Jan 2010, you have to let them know by 1st October 2009. There is also something about those over 49, but here I have to confess to getting lost, which is not a good thing since I turn 49 in a couple of month's time. I shall pursue this one.

Hope this may be of use to someone.

Cheers, Noni


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xxxLia Fail  Identity Verified
Spain
Local time: 00:59
Spanish to English
+ ...
Thanks! Mar 4, 2009

aceavila - Noni wrote:


2. Topping up your NI insurance contribution:

Since we pay a v low rate, we will also get a very low pension etc.... But you can choose to up your monthly payments. The problem being that you can't choose to do this at any moment, but only at certain times. If you wanted to up your payments from 1st July 2009 onwards, you have to let the Seguridad Social know this before 1st April 2009. And if you wanted to up your payments form 1st Jan 2010, you have to let them know by 1st October 2009. There is also something about those over 49, but here I have to confess to getting lost, which is not a good thing since I turn 49 in a couple of month's time. I shall pursue this one.

Hope this may be of use to someone.

Cheers, Noni



Thanks, Noni, for providing this info. A few months ago I was investigating this issue, but I had to put it aside due to other complications. But I too am 49 this year and know I have to make a decision. My local INSS explained the basics to me and I absorbed enough to know I have to study the issue and then go back to them if necessary and fairly soon. I say study, becuase I have an article aimed at autonomos that tells me that providing for the future is important but there are options other than the INSS. However, given the times that are in it, it simply might be the best and safest option. I personally am in a situation where my own provision for the future has been affected for reasons beyond my control.

Anyone resident in Spain and in their 40s should probably give the issue some thought.

And 1 April is around the corner ........ help!

The document we need to consult and interpret is the 2009 version of the NORMAS DE COTIZACIÓN A LA SEGURIDAD SOCIAL PARA EL EJERCICIO DE 2009. RÉGIMEN ESPECIAL DE TRABAJADORES POR CUENTA PROPIA O AUTÓNOMOS, not available as far as I can see on the WWW (I have a hard copy of the 2008 version).

If you write me a private mail I'll send you some documentation. Here ¡s something to begin with:

http://www.consumer.es/web/es/economia_domestica/trabajo/2008/11/26/181663.php

"...un trabajador puede "tocar" su base de cotización en dos ocasiones: antes del día 1 de abril, con efectos desde el 1 de julio siguiente, y antes del 1 de octubre, con efectos a partir del 1 de enero del año próximo."

From this it appears to me that we have until 1 October 2009 (?????) to up the quota, taking effect from 1 Jan 2010 when we're still under 50 (???).



[Edited at 2009-03-04 18:32 GMT]


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John Cutler  Identity Verified
Spain
Local time: 00:59
Spanish to English
+ ...
What I know... Mar 4, 2009

aceavila - Noni wrote:

2. Topping up your NI insurance contribution:

There is also something about those over 49, but here I have to confess to getting lost, which is not a good thing since I turn 49 in a couple of month's time. I shall pursue this one.



My gestor told me that the rates you pay for the last 15 years of witholdings will determine what you receive as retirement benefits. Since I'm only a bit behind you (a spry 47), I'm planning on upping my quota when I reach 50. It's actually a pretty big jump as I recall (up to more than €300 a month instead of the current €230+/-). But as my gestor said, "The government will always be there and private retirement plans may or may not be". Paying a higher witholding will also help in case I'm "de baja".

That's good to know that the change in quota needs to be taken care of in advance.

Thanks Noni


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xxxLia Fail  Identity Verified
Spain
Local time: 00:59
Spanish to English
+ ...
juggling dates as age 50 looms (and I'm still only 48!) Mar 4, 2009

John Cutler wrote:

the rates you pay for the last 15 years of witholdings will determine what you receive as retirement benefits. Since I'm only a bit behind you (a spry 47), I'm planning on upping my quota when I reach 50.



Precisely, the cutoff point is 50, so as to ensure that people don't just up their quota when they're 64 so as to obtain a better pension after only contributing extra for just one year:-)

Noni and I have to decide pretty fast whether we want to up our quota, possibly by 1 April 09.

What bothers me is probably what might bother Noni - but not the spry 47-year old! - as we both approach 50, is that we need to be absolutely sure of the last date when we can up our quota (is it 1 April 09, 1 Oct 09, or another date?) and if it's 1 April 09, we better get informed:-) In other words, I can't get a handle on the dates. John says "when I reach 50", which is what a 47-year-old is likley to say, but when the crunch comes you can only do it by two established dates (1 April and 1 Oct), and there are two other key dates, which is when they take effect (i Jul and 1 Jan). So my doubt is, should I be under 50 when I notify, or should I be under 50 when it takes effect? Or can I be under 50 when I notify, and be over 50 when it takes effect? So effectively we are juggling 3 dates, our birth date, a notification date and an effective-from date.

I think I'll pop into the INSS this week:-)


PS Noni: It occurs to me that we would get the benefit of the opinions of lots more people if this was posted in the Spanish forum (?)

[Edited at 2009-03-04 20:14 GMT]


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Noni Gilbert
Spain
Local time: 00:59
Member (2007)
Spanish to English
+ ...
TOPIC STARTER
Alternative measures Mar 5, 2009

As both John and Lia have mentioned, there are of course alternative methods for ensuring a comfortable old age... bank pension plans and the like are tax deductible up to a certain limit (depending on individual tax returns) and most banks will calculate what you could contribute right at the end of December without going over your tax-free limit.

Advantages: you can probably put a great deal more aside.
Disadvantages: they certainly haven't been performing well over the last few years. Mine is currently worth less than the amounts I have paid in.


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Noni Gilbert
Spain
Local time: 00:59
Member (2007)
Spanish to English
+ ...
TOPIC STARTER
All this in Spanish Mar 5, 2009

I am currently trying to find the time to put this all in Spanish too because, as Lia so rightly says, our Spanish counterpart wrinklies will no doubt have information to contribute. I'll be as quick as I can!

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John Rawlins  Identity Verified
Spain
Local time: 00:59
Spanish to English
+ ...
Pension contributions Mar 13, 2009

I visited my local social security office yesterday and increased my pension contribution.

I asked the official what was the impending deadline for self-employed 49-year-olds. It was explained to me that until your 50th birthday you can pay contributions on a declared income of up to some €3000 a month. However, after your 50th birthday, the maximum declarable income drops to some €1500 a month. You can still continue increasing your contributions after 50, but not beyond the lowered ceiling.

At the moment, your final pension is calculated on your last 15 years of contributions - although this averaging period is likely to be lengthened in the future.

The office confirmed that annual decisions on contribution levels must be made before the end of March. Increasing the contribution means signing a single piece of paper and producing your DNI/NIE. I was told increases are effective from June or July.

I hope this helps.


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Noni Gilbert
Spain
Local time: 00:59
Member (2007)
Spanish to English
+ ...
TOPIC STARTER
Thanks John Mar 13, 2009

I see that I have spurred someone into action, although I suspect from your photo that things are not quite so imminent for you! (I wonder if the state might like to give me a commission for bringing more dosh into their coffers!!)

Lia Fail has also been putting in her time in the INSS office, but the information, while not contradictory, that she has received this week, is not as cut and dried as we would like. Both she and I turn 49 this June, so it is vital that we find out before the end of this month whether our upping of our quotas has to be notified by the end of this month or by the end of September (if we were going to be 50 we know it would definitely have to be by the end of March, but both of our sources have told us that in our case we can notify by the end of September for an increase to be applied from January).

This sounds to me like the perennial case of Spanish legislation depending on the individual funcionario you get at the desk (a case in point is the interpretation of contract law), so I'm going to spend the next fortnight trying to nail this one.


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John Rawlins  Identity Verified
Spain
Local time: 00:59
Spanish to English
+ ...
Nearly 50 - too Mar 13, 2009

I am 50 in August, so I hurried down to the INSS with some anxiety. As far as I now understand, you are under pressure to act only if you intend paying contributions on a notional income of more than €1500 a month. If you intend declaring less, then you can up your contributions any year before April.

Thanks for the compliment on the photo: it's only two years old - honestly!



[Edited at 2009-03-13 11:10 GMT]


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Noni Gilbert
Spain
Local time: 00:59
Member (2007)
Spanish to English
+ ...
TOPIC STARTER
Wrinklies, continued Mar 13, 2009

Two points:

John Rawlins: It is true that you can continue to up your contributions, but not to the significant extent that you could do before that significant birthday.

General comment: while SS pension funds could be seen as performing better than other ones, providing that you live to be about 71, on the other hand with private pension plans the entire sum you have accumulated will be paid out eventually to you or to your inheritors (bit by bit to you, lump sum to them), whereas with the SS when you die, that's it mate, your inheritors don't get the rest. Point to weigh up when making these decisions.

This is my edition: Forgot to mention that the second comment I am making is as a result of talking at length to my gestor this morning - who just happens to be self-employed and the same age as me, so unsurprisingly she had quite a lot to say on the matter!

[Edited at 2009-03-13 11:36 GMT]


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xxxLia Fail  Identity Verified
Spain
Local time: 00:59
Spanish to English
+ ...
49 vs 50 Mar 13, 2009

John Rawlins wrote:

I am 50 in August, so I hurried down to the INSS with some anxiety. As far as I now understand, you are under pressure to act only if you intend paying contributions on a notional income of more than €1500 a month. If you intend declaring less, then you can up your contributions any year before April.

Thanks for the compliment on the photo: it's only two years old - honestly!



[Edited at 2009-03-13 11:10 GMT]


You're 50 in Aug 2009, Noni and I aren't until 2010 (ha!), so i think we still have a breathing space:-) ....BUT, we need to be absolutely sure.


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xxxLia Fail  Identity Verified
Spain
Local time: 00:59
Spanish to English
+ ...
exactly: there IS a key date and it's a boat not to be missed Mar 13, 2009

aceavila - Noni wrote:

Two points:

John Rawlins: It is true that you can continue to up your contributions, but not to the significant extent that you could do before that significant birthday.

General comment: while SS pension funds could be seen as performing better than other ones, providing that you live to be about 71, on the other hand with private pension plans the entire sum you have accumulated will be paid out eventually to you or to your inheritors (bit by bit to you, lump sum to them), whereas with the SS when you die, that's it mate, your inheritors don't get the rest. Point to weigh up when making these decisions.

This is my edition: Forgot to mention that the second comment I am making is as a result of talking at length to my gestor this morning - who just happens to be self-employed and the same age as me, so unsurprisingly she had quite a lot to say on the matter!

[Edited at 2009-03-13 11:36 GMT]


I had a few private exchanges with Noni, and it clarified my thinking a bit. I have no children so the SS extra seems - right now - the best way for me to go.

Looking at today's figures in absolute terms, if you pay 250 extra now 12 times a year for the next 15 years, in return you'll get an extra 650 for as long as you live. You would actually get your money back (45000) if you lived to 71; however, that isn't really the issue, as what one wants is to be reasonably comfortable as long as one lives:-) And of course 45000 today isn't the same as 21 years hence.

I also think you'd get better sick pay, which is someting to be considered for the age 50-65. I'm sure it must be tax deductible too (I'll find out).

I also plan to ask my bank to design a pension plan for a payment of 250 a month (that is, the maximum increase I could make to the SS) and see what the outcome would be. However, I don't have much faith in banks and pension plans right now. I also think that there would be a heavy tax penalty when the plan is cashed in.


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xxxLia Fail  Identity Verified
Spain
Local time: 00:59
Spanish to English
+ ...
an update Mar 16, 2009

Noni and I, whose 50th birthdays are in June 2010, must decide by 30 Sept 2009. I've got this info from 2 sources - the SS and a gestor. But don't take it as gospel, if you are in the age bracket 48-50, you should doublecheck the information for yourself.

We notify 30 Sept 2009, so it takes effect 1 Jan 2010 while we're STILL 49.

If we waited until 30 Mar 2010, it would take effect on 1 July, AFTER we were 50, and my understanding is that that would be too late. These are the only two dates in the year in which changes take effect, and changes can only be notified up to 3 months before. The key data is that you are still 49 when it takes effect.

As Noni pointed out, if you have children, you would have to decide whether to pay additional to the SS to get a pension that terminates when you do, or whether to consider a pension plan that would benefit your heirs. A pension plan offers tax breaks now, but you will pay tax when you cash it in, depending on your income. You can cash it in in many ways, lump sum, monthly payments, part lump-sum/part monthly payments.

I've asked for a simulation of a pension plan for a payment of 250/month (the maximum amount I can increase SS by), which I'll pick up in the next few days.

One thing I forgot to ask the gestor was whether SS payments are tax deductible, but I suppose they are (I'll find out).


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National Insurance contributions for autónomos in Spain

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