Self-employment contributions: why they exist and how much they cost

Why self-employment contributions exist and why no one defends them

Why would someone pay €230 a month to work for themselves, even if they haven't invoiced a single euro that month? This is the first question every self-employed person asks when they see the direct debit, and the official answer doesn't quite add up. The RETA (Special Scheme for Self-Employed Workers) contribution exists, according to the administrative version, so that those who work for themselves build up their right to a pension and don't end up claiming benefits they never funded. The core issue is simple: without contributions, a recurring analysis suggests, prices would drop and people would have more money, but the state would collect less. And that's where it all begins.

Self-employment contributions: mandatory even if you don't invoice

The RETA is the social security scheme for self-employed workers, and its most debated antiestéticature is the fixed minimum: around €230 per month, payable even if the activity generates no income. This floor is what separates Spain from several European neighbors, where contributions are linked to what is invoiced or don't exist at all up to a certain threshold.

The most repeated justification for the system: after thirty-five years of work, the self-employed person shouldn't turn to the state demanding a pension they didn't contribute to. The contribution would be like mandatory car insurance. Insurance you pay just in case, so to speak. Some add that the amount isn't so disproportionate: for the same contribution base, an employee pays the same, and on top of that, there's the employer's contribution, which in practice also comes out of their pocket.

The silent reason: preventing you from being declared self-employed

There's a second argument that's almost never mentioned in official pamphlets and is likely the most significant behind the scenes. Without mandatory contributions, a large company could decide that its 5,000 workers are actually self-employed, pay nothing to social security for them, and leave the problem for later. In this view, the contribution acts as a firewall against the mass conversion of workforces into bogus self-employed individuals.

The problem is that the remedy is applied equally to everyone. The plumber with a rented shop, the veterinarian who needs to hire someone, and the consultant who invoices three payrolls a month are all treated by the same rule. And this egalitarianism has a concrete cost: you pay to be able to work, not for working.

How much you pay in Spain versus France or the UK

The numbers here vary considerably by country, though not always in favor of the official narrative. In France, according to calculations by professionals themselves, a self-employed person dealing in goods contributes around 12% of their gross turnover; if they provide services, the percentage jumps to 25% of turnover, and that's just for contributions, before taxes. In Germany, the minimum isn't clear, but the average deduction is also significant.

The UK plays in a different league: there, you don't pay for the mere fact of being self-employed; you contribute on what you invoice, with a percentage that those who have tried it describe as lower than in Spain. There are tax-free allowances—around £12,000 for income tax—and the first few thousand pounds in dividends or capital gains are not taxed. The result, according to comparisons circulating, is that a Spanish self-employed person starts with over €300 per month in expenses just for existing as such, while in other countries, you start from zero or less than €200. Competing on equal terms with that burden is difficult.

Quarterly VAT: free collector for the tax authorities

Every quarter, the same scene unfolds. The self-employed person has invoiced, collected VAT from their clients, and now must pay it to the state. The VAT isn't theirs; it never was. It's money that passes through their hands on its way to the government. The invoice they present to the tax authorities is that of a collector who doesn't get paid for the service.

Furthermore, the chain repeats at every link: the person selling the wood collects VAT, the one manufacturing the chair collects it again, the one buying it for the restaurant pays it, and the one sitting down to eat also pays it. Tax on tax, added to the work at each stage.

Accounting firms, tax brackets, and next year

The contribution is just the tip of the iceberg. Hiring an accounting firm costs around €100 per month, because the bureaucracy is so extensive that doing it yourself is almost reckless: the quarterly forms, which expenses are deductible and which only partially, the €800 tool that must be amortized over several tax returns instead of being deducted all at once. Managing a small business, say those who have one, should be more like shopping on an online store.

And on top of that, the contribution system by tax brackets has been increasing every year for three years, with the stated goal of contributing directly based on real income. Add to this the verification of invoices and digital billing controls. For many small businesses, the sum of these parts is starting to cost more than the business itself.

The old underlying complaint remains: if the business does well, the tax authorities collect; if it does poorly, the self-employed person keeps paying, and the losses are solely theirs. It's mandatory insurance where the insured party puts in all the money, and another administration decides if they'll ever get something back.

It almost seems designed by someone who has never had to invoice to make a living.