If you are self-employed and pay a lower Social Security contribution, this concerns you

Once again, Social Security is warning that, if the contribution you chose during the year (that is, during 2023) is lower than the contribution associated with the earnings reported by the tax authorities, the worker will be notified of the amount of the difference.

Following the entry into force last year of the new system under which self-employed workers pay contributions based on their actual income, one of the key moments has now arrived: the adjustment of their contributions to bring them into line with their 2023 net earnings.

But when will this adjustment take place? And how will it be carried out?

It is worth remembering that, under this new system of contributions based on actual income, you determine the contribution payable on the basis of the income you expect to earn over the year. And do not forget that you can change your contribution up to six times a year.

Whether you chose a lower or a higher contribution than the one that applied to you, the Social Security General Treasury (Tesorería General de la Seguridad Social) will contact you, so there is no problem. The only problem will arise if you have underpaid, because you will have to pay the tax authorities the amount you failed to pay in your monthly contribution.

Are you self-employed and have you already filed your Personal Income Tax (IRPF) return this year?

You can now find out whether Social Security will adjust the contributions you paid last year. To do so, you will need to check whether your 2023 net earnings correspond to the income bracket under which you paid contributions.

Once the income tax return season has ended, the General Treasury will begin adjusting self-employed workers’ contributions from the fall onward. It will thus start claiming the differences from self-employed workers who contributed less than they should have, and will refund the excess to those who contributed too much.

Therefore, any self-employed worker who has already filed their income tax return will be able to check whether last year they paid the contributions that applied to them based on the profits they earned.

To do so, they will need to compare their net earnings with the contribution bracket they had in 2023.

How can I find out my net earnings for last year?

If you have already filed your income tax return, you can easily check your 2023 net earnings.

To do so, you will need to go to the box on your return that shows your “business and professional income,” depending on the regime under which you are taxed: either direct assessment (estimación directa) or the objective assessment method (módulos).

You will thus be able to calculate the profits you obtained last year from your business activities, which are the result of subtracting from your gross income the allowance for hard-to-justify expenses (gastos de difícil justificación) and all other deductible expenses.

In this way, you will be able to check whether last year’s contribution base corresponds to your actual income, and find out whether you correctly matched your estimated net earnings or whether, on the contrary, you will have to regularize your situation this year.

To do so, you need to divide the net earnings reported in your income tax return by 12 months and compare the result with the contribution bracket you chose.

You will thus be able to find out whether Social Security will have to adjust your contribution this year, either by requiring you to pay the shortfall in your contributions or by refunding the excess.

The procedure for adjusting self-employed workers’ contributions

Self-employed workers will be notified of their situation electronically and, if they have paid less than they should have, they will also be sent a payment slip to pay the difference.

In this case, self-employed workers will have 30 days to pay Social Security the amounts claimed.

If, on the other hand, they paid too much, the corresponding refund will be made.

As this year’s income tax return season ends in July, and August is usually a quiet month for the authorities, Social Security is expected to begin sending out notifications and payment slips in September and October.

If you have already filed this year’s income tax return, you will be able to estimate whether, when the time for the adjustment comes, Social Security might require you to pay, or might refund, the difference in the contributions you have paid.

To do so, you will need to check whether last year’s net earnings correspond to the income bracket under which you paid contributions.

When will the adjustment of self-employed contributions take place?

Social Security does not know the actual income earned by self-employed workers during the year until the following year. Therefore, the adjustment of 2023 contributions will have to be made in 2024, once the net earnings obtained by the self-employed worker are known.

Contributions are adjusted based on the result reported by the self-employed worker in their annual income tax return. This tax return reflects the net earnings (income minus expenses) obtained by the self-employed worker in the previous year.

According to the General Treasury, the specific start date of the annual process for adjusting contributions for 2023 cannot yet be determined, but it is expected to take place in the second half of 2024.

The exact month will depend on when the General Treasury has all the information that the tax authorities must send it and that is necessary to carry out the adjustment.