On January 1, 2025, the additional solidarity contribution will come into effect, requiring companies and workers to contribute to Social Security for wages exceeding the maximum contribution base.
Social Security contributions, both from the company and the worker, are calculated based on the worker's salary. However, until now in Spain, there have been maximum and minimum limits on contribution bases, meaning that beyond a certain salary amount, the contribution remains the same.
The significant deficit in the pension fund has led to the implementation of various measures aimed primarily at increasing annual revenue. One of the most talked-about measures is the so-called "unlimited contribution," which involves eliminating the maximum cap, allowing contributions based on the actual salary rather than the maximum limit, in cases where the former exceeds the latter.
In this context, the solidarity contribution emerged as an intermediate solution to this unlimited contribution, regulated by Royal Decree-Law 2/2023, of March 16, on urgent measures for expanding pensioners' rights, reducing the gender gap, and establishing a new sustainability framework for the public pension system. This decree amended the recast text of the General Social Security Law and introduced a new Article 19 bis on the additional solidarity contribution to increase contributions to Social Security, which will no longer be capped by the maximum contribution base.
This new contribution was further developed in Article 2 of Royal Decree 322/2024, of March 26, which amended the General Social Security Collection Regulation, approved by Royal Decree 1415/2004, of June 11, and the General Regulation on Contributions and Liquidation of Other Social Security Rights, approved by Royal Decree 2064/1995, of December 22. Specifically, this royal decree incorporated a new subsection in the General Regulation on Contributions and Liquidation of Other Social Security Rights to regulate the application of the additional solidarity contribution.
These two regulations confirmed the long-anticipated structural change to the Spanish contribution system: starting with the entry into force of the additional solidarity contribution, workers and companies will contribute on amounts exceeding the maximum base, unlike what has been happening until now.
Specifically, the solidarity contribution will work as follows:
• This new obligation will affect both high-earning workers and their companies, as it will apply when their wages exceed the maximum contribution base established annually by the General State Budget Law.
• The new contribution will apply to the difference between the maximum contribution base for common contingencies and the worker’s monthly salary according to the following brackets and percentages:
- 5.5% on the portion of salary between the maximum contribution base and an amount exceeding the base by 10% (first bracket);
- 6% on the portion of salary between 10% and 50% above the maximum contribution base (second bracket); and
- 7% on the portion of salary exceeding the previous percentage (third bracket).
• The deadline for paying the additional solidarity contribution will be the last day of the month following the one in which the wages are to be paid.
• Companies affected by this new obligation must electronically inform the General Treasury of Social Security of the following information:
- The identifying details of the workers for whom this additional contribution applies.
- The period in which the wages are to be paid.
- The amount of (i) wages that determine a contribution base exceeding the applicable maximum base and (ii) contribution bases between the maximum base and that determined by the wages counted for this purpose.
The application of the new additional contribution will be phased until 2045, with a gradual increase in the contribution rate, maintaining the same proportional distribution between employer and worker as in contributions for common contingencies. In 2025, the contribution rate will start at 0.92% in the first bracket, 1% in the second bracket, and 1.17% in the third.
It is clear that the implementation of this new Social Security obligation will result in a significant increase in personnel costs for higher-paid employees whose wages exceed the maximum contribution bases (set at €4,720.50 per month in 2024), as well as a reduction in their net wages. Time will tell the impact that this increase in contributions will have on the current Social Security deficit and whether it will have other implications.