On January 1, 2025, the additional solidarity contribution will come into force, by which companies and employees will have to contribute to the Social Security for the salaries that exceed the maximum contribution base established annually by the General State Budget Law.
Social Security contributions, both by the company and the employee, are calculated by reference to the employee’s salary. However, until now in Spain, there have been maximum and minimum limits on the contribution bases so that, above a certain salary amount, the contribution to be paid is the same.
The large deficit in the pension fund has led to the implementation of various measures aimed basically at increasing annual revenue. One of the measures that have generated discussion is the so-called “uncapping” of contributions, which consists of eliminating the maximum ceiling to contribute for the real salary and not for the maximum limit, in cases where the former exceeds the latter.
In this context, the solidarity contribution arose as an intermediate formula to such a cap, regulated in Royal Decree-Law 2/2023, of March 16, on urgent measures for the extension of pensioners’ rights, the reduction of the gender cap and the establishment of a new framework for the sustainability of the public pension system. This royal decree amended the revised text of the General Social Security Law and introduced a new article 19 bis on the additional solidarity contribution, to increase Social Security contributions, which will no longer be capped by the maximum contribution base.
This new contribution was developed by the second article of Royal Decree 322/2024, of March 26, amending the General Regulation on Social Security Collection, approved by Royal Decree 1415/2004, of June 11, and the General Regulation on Contribution and Settlement of other Social Security Rights, approved by Royal Decree 2064/1995, of December 22, 1995. Specifically, this royal decree incorporated a new subsection in the General Regulations on Contribution and Settlement of Other Social Security Rights to regulate the application of the additional solidarity contribution.
With these two regulations, the long-announced structural change in the Spanish contribution system was confirmed: as from the entry into force of the additional solidarity contribution, employees and companies will contribute amounts higher than the maximum base, unlike what, as we have indicated, had been occurring up to now.
Specifically, the solidarity quota will work as follows:
- This new obligation will affect both employees with higher salaries and their employers, since it will be applied when the salaries of the former exceed the maximum contribution base established annually by the General State Budget Law.
- The new contribution will be applied to the difference resulting between the amount of the maximum contribution base for common contingencies and the employee’s monthly salary according to the following brackets and percentages.
- 5% to the portion of remuneration comprised between the maximum contribution base and the amount 10% higher than the maximum contribution base (first tranche);
- 6% to the part of remuneration comprised between 10% above the maximum contribution base and 50% (second tranche); and
- 7 % to the part of the remuneration that exceeds the above percentage (third tranche).
- The period for payment of the additional solidarity contribution will end on the last day of the month following the month in which the remuneration is to be paid.
- Companies affected by this new obligation must notify the following information to the Social Security General Treasury by electronic means:
- The identification data of the employees for this additional contribution.
- The period in which the remuneration is to be paid.
- The amount of (i) the remuneration that determines a contribution base that exceeds the maximum applicable contribution base and (ii) of the contribution bases between the maximum base and that determined by the remuneration computable for these purposes.
The application of the new additional contribution will be progressive until 2045 and will be carried out through a gradual increase in the contribution rate, maintaining the same proportion of distribution between employer and employee as in the contribution for common contingencies. Thus, in 2025, it will start with a contribution rate of 0.92% in the first tranche, 1% in the second tranche and 1.17% in the third tranche.
Clearly, the entry into force of the new Social Security obligation will mean a significant increase in the cost of personnel with higher salaries, which exceed the maximum contribution bases (in 2024 fixed at 4,720.50 euros per month) and a reduction in the net salaries of this personnel. Time will tell what impact the increase in contributions will have on the current Social Security deficit and whether it will have other implications.