Tax guide · RETA
Self-employed contributions: based on actual income
How the new contribution system based on what you actually earn works, how to choose your bracket and what happens with the annual settlement.
By Jacobo Quesada, practising tax adviser and co-founder of TributAI · Updated on
The new contribution system based on actual income
Since 1 January 2023, the contribution system for self-employed workers (RETA) has changed radically. The previous model let you choose your contribution base freely within certain limits, regardless of actual income. The new model links the monthly fee to the net income of the activity.
This change stems from Law 21/2021 and was implemented through Royal Decree-law 13/2022. The system is being phased in over a maximum of nine years: from 1 January 2032, contribution bases will be set on the actual net income of each year, within the limits set by the Budget Law.
The 15 net income brackets
The system places the self-employed person in one of 15 brackets according to their expected annual net income. Each bracket has a minimum and maximum contribution base (between which the self-employed person can move) and a resulting fee. The brackets range from self-employed people with very low income (below the Minimum Interprofessional Wage) to those with the highest income.
At the start of each year —or when registering— the self-employed person declares their expected net income. Social Security automatically assigns the corresponding bracket. If income develops differently during the year, you can change bracket up to six times a year through the Importass portal.
How to calculate your net income
- Add up all the gross income of the activity expected for the year.
- Subtract all tax-deductible expenses (RETA fee, materials, premises rent, proportional utilities, etc.).
- The result is your estimated net income. Find it in the Social Security bracket table to see your fee.
The annual settlement
One of the most important novelties of the system is the subsequent settlement. Once the AEAT knows the actual income for the year (through the income tax return), Social Security compares what you paid with what you should actually have paid:
- You overpaid: Social Security refunds the difference.
- You underpaid: you receive a supplementary assessment with the additional amount you must pay.
That is why it is advisable to adjust your bracket during the year as you learn how your real income is developing, to avoid surprises at the settlement.
Flat rate and contributions based on actual income
The flat rate for new self-employed people —€80/month reduced fee plus the MEI on your contribution base, which leaves the real charge at around €88-90/month— is compatible with the contribution system based on actual income. During the first 12 months (24 if income is low), the self-employed person pays the reduced fee regardless of the bracket their income would put them in.
Once the flat rate ends, the self-employed person moves into the general bracket system and must tell Social Security their expected net income for the rest of the year.
→ Complete guide to the self-employed flat rateFrequently asked questions
How does the new system of self-employed contributions based on actual income work?+
Since 2023, the monthly RETA fee is calculated on the expected net income of the activity, divided into 15 brackets. At the start of the year you choose the estimated bracket and pay that fee for 12 months. The following year, Social Security settles: if actual income was higher than estimated, you pay the difference; if it was lower, the excess is refunded.
How is net income calculated to choose the fee bracket?+
Net income is the income of the activity minus tax-deductible expenses. To that figure the RETA fee paid is added back (since it is deductible for income tax but is not subtracted in the contribution base). The annual net result determines which of the 15 brackets the self-employed person falls into and therefore which monthly fee applies.
Can I change my contribution bracket during the year?+
Yes. Self-employed people can change bracket up to six times a year to adjust the fee to the real development of their income. Changes are requested through Importass (the Social Security portal for self-employed people) and take effect on the first day of the month after the request.
What happens if my actual income differs from the estimate?+
Social Security carries out a settlement the following year, once it knows the actual income from the income tax return. If you contributed more than you should have, you will receive a refund. If you contributed less, you will receive a supplementary assessment with the amount to pay.
Does the flat rate affect the new fee system?+
Yes. The flat rate (€80/month reduced fee + the MEI on your base, which puts the real charge at around €88-90/month) is compatible with the new system: during the first 12 months (extendable to 24 if first-year income is below the SMI) the self-employed person pays the reduced fee regardless of their income bracket. The settlement based on actual income applies once the flat rate ends.
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This guide is for guidance only and is not binding tax advice. RETA fees change every year; always check the Social Security e-office (Importass) or a qualified adviser for the amounts in force in your tax year. This is an informative translation: the Spanish version prevails.