What social security contributions are and how to calculate them

Today, we take it for granted that we can rely on a range of benefits to see us through an accident that prevents us from working, unemployment, or retirement. All of this is possible thanks to the contributions paid to the General Social Security Treasury (Tesorería General de la Seguridad Social). Companies and self-employed workers with employees take care of this every month.

By law, social security contributions are mandatory so that workers are covered against illness as well as workplace accidents. They are the contributions that companies, self-employed workers, and employees make to the Social Security Treasury.

Payment is monthly, and contributions are paid for several items:

• Common contingencies: These cover situations arising from a common illness, maternity leave, at-risk pregnancy, non-occupational accident, and retirement.

• Workplace accidents and occupational diseases.

• Overtime

• Unemployment

• Vocational training

• Wage Guarantee Fund (FOGASA)

Who pays social security contributions?

Although contributions are generally intended to cover these types of costs, it should be noted that employer contributions and employee contributions are different.

Employees contribute for non-occupational illnesses or accidents, overtime, employment, and vocational training. To this end, the company withholds a certain amount from their pay.

Companies, meanwhile, contribute for workplace accidents, occupational diseases, and FOGASA. The amount of this contribution depends on the sum of the employees’ contribution bases and the rates applied to them.

Lastly, self-employed workers must also pay social security contributions, known as self-employed contributions (cuotas de autónomos). They must make these payments themselves.

How to calculate social security contributions

The company and the employee each pay a monthly contribution to Social Security. How social security contributions are calculated depends on the employee’s salary, the contribution bases, and the percentage applied to each base.

Contribution base for common contingencies

The contribution base for common contingencies (base de cotización para contingencias comunes, BCCC) is used to calculate benefits relating to permanent or temporary incapacity, widowhood, and orphanhood arising from common illnesses and non-occupational accidents.

It is also used to calculate maternity and paternity leave benefits and the retirement pension.

Contribution base for occupational contingencies

This is the base used to calculate benefits for at-risk pregnancy, temporary or permanent incapacity, widowhood, and orphanhood relating to a workplace accident or occupational disease. Unemployment benefit is also calculated on this base.

When and how are social security contributions paid?

Having seen what social security contributions are and, in particular, how to calculate them, it is important to move on to the next point: social security contributions are paid monthly, in arrears.

The following options are available for paying social security contributions:

• Account debit, by direct debit, up to the 20th of the month.

• Electronic payment. Under this payment method, the Social Security Treasury generates the contribution settlement receipt (RCL) for the corresponding contributions. In this case, since it is a bank transfer, the person responsible for making it has until the last day of the month.

Once the statutory period for paying social security contributions has elapsed without payment having been made, and without prejudice to the specific rules for deferrals, the following surcharges will accrue:

• Compliance with the obligations under Article 29 of the General Social Security Law (Ley General de la Seguridad Social)

– Surcharge of 10% of the debt, if the contributions owed are paid within the first calendar month following the end of the payment period.

– Surcharge of 20% of the debt, if the contributions owed are paid from the second calendar month following the end of the payment period.

• Non-compliance with the obligations under Article 29 of the General Social Security Law

– Surcharge of 20% of the debt, if the contributions owed are paid before the end of the payment period set in the debt claim (reclamación de deuda) or settlement report (acta de liquidación).

– Surcharge of 35% of the debt, if the contributions owed are paid after the end of that payment period.

In these cases, it is important to know that payment can be deferred in two different ways:

• By filing the nominal list of workers (RNT). In this case, a request is made to pay the contributions after the statutory period has ended, which entails surcharges of 10% within the first month and 20% in the second month.

• By applying for a deferral, provided that the contributions deferred are not those for workplace accidents or occupational diseases.

Social Security may refuse such a request where deferrals have repeatedly been breached in previous cases, where the sale of seized assets has been authorized, or if the debt does not exceed twice the national minimum wage (SMI).

A maximum period of 5 years will be available to repay the debt, depending on the case and the documentation submitted to the General Social Security Treasury.