Self-employed business owners are entitled to compute the income resulting from participation in equity capital for the calculation of annual income, which, in practice, it implies an increase in the self-employed business owner’s contribution, under the new contribution system applicable to them in force since 2023.

On January 1, 2023, the reform introduced by Royal Decree-Law 13/2022, of July 26, 2022, came into force, which establishes a new contribution system for self-employed business owners whereby protection for cessation of activity is improved.

Substantially, after this reform, self-employed business owners contribute for the totality of the net income obtained for each calendar year, with different annual income brackets each having a minimum and maximum base from which the self-employed business owners choose to contribute.

The new article 308.c).1, paragraph 6, signifies  them: “In the case of self-employed business owners referred to in article 305.2.b),  all the total income, monetary or in kind, resulting from the participation in equity capital of those entities shall be computed in the terms determined by regulation in which he/she has, on the date of accrual of Corporate Income Tax, a stake equal to or greater than 33% of the share capital or having the status of director, a stake equal to or greater than 25%, as well as all the income from work derived from his/her activity in such entities”.

This concept of “full income, monetary or in kind, resulting  from participation in equity capital”, a novelty in the field of Social Security, is a traditional notion with regard to tax matters that includes, as stated in the Personal Income Tax Law, among others: dividends, bonuses for attendance at meetings, income from any class of assets of the company and distribution of the issue premium and the reduction of capital with return of contributions.

Highly likely, this has gone unnoticed due to two reasons. Firstly, since transitional provision 2 of the approved regulation regulates for the year 2023 that, in the event of not opting for a specific tranche, contributions will continue to be made on the basis of December 2022 with the increases that may correspond according to the previous regulation. And secondly, because for the self-employed business owners the minimum base was set at 1,000 euros for 2023 (by transitional provision 7 of the regulation) and has been set at the same amount for 2024 (by article 16.4 of Order PJC/51/2024, of 29 January, which develops the legal rules for Social Security contributions,  unemployment, protection for cessation of activity, Wage Guarantee Fund and vocational training for the financial year 2024), when in 2022 it was 1,234.80 euros. This potential saving for the self-employed business owner has been the message, which has transcended to the public in certain media.

However, the saving will only be given to those self-employed whose annual net income does not exceed 43,440 euros in 2023, or 38,280 euros in 2024, since, in the event these amounts are exceeded, the minimum bases of that bracket, and the following ones, will already be higher than those of 2022. Moreover, for the maximum tranche of €72,000 or more of annual income, a minimum base of €1,633.99 (2023), €1,732.03 (2024) and €1,928.10 (2025) was established.

In the light of the above and considering that the income resulting from the participation in equity capital must be taken into account for the calculation of the annual returns (including the aforementioned dividends and other income from the participation in equity capital), it is quite likely that the self-employed business owners share price will increase in practice in the coming years. All this will be observed with the first regularization carried out by the General Treasury of the Social Security once the tax data have been compiled for the year 2023, likely during the second half of this year 2024.

Lastly, we cannot stop pointing out that this incorporation of income from participation in equity capital, facilitates the increasingly widespread interpretation about the requirement of “lucrative title” to be classified as a self-employed business owner in article 302.2.b) of the General Social Security Law is met by the simple participation in the entity’s equity capital significantly, even though the position of administrator or director or any other work is done free of charge and without receiving per diems or for remuneration below the minimum wage.


Guillermo García

Garrigues Employment & Labor Law Department