With the changes that tend to always occur in policy and legislation, it sometimes seems that constant training is needed on these issues in order not to be left behind in the information, and above all to avoid making mistakes in the type of retention that you should have in account when you invoice your clients since that could be a reason for sanction on the part of the Treasury towards you.
The Treasury has published a few days ago the new type of withholding that will affect freelancers and companies, which although it is for the benefit of people who work on their own account, it is still quite far from what the freelancers really need to be able to face all their expenses. The new type of retention is a good measure, but for many it may still be a wound patch. that supposes all the expenses of the people who are self-employed on a monthly basis, starting for example, with the quota that they must pay as a self-employed person. But this is another issue. Now what matters is knowing how to calculate the withholding rate and what exactly is this, how will it affect you for your next invoices?
En the website of the Tax Agency published a few days ago a computer application for all those companies that want to calculate the withholdings on the payroll of their employees once the Government has approved the new personal income tax rate. In addition, this not only influences companies with hired people, but also benefits all self-employed workers who are self-employed.
Also if it seems too confusing you can also count on a simulator to calculate new withholdings based on the gross salary depending on the family situation of each person in particular.
The government decided to lower the tax rates between half and one point. Companies will have to be in charge of setting the type of withholding on their workers' payrolls, recalculating the percentage taking into account that the minimum tax went from 20% to 19% and the maximum fell from 5% to 47%.
Some companies will take advantage of this measure from this same month of July, and others will do so in August. Although there are also companies that will be able to take advantage of these measures from September, to worry about this once the holidays have passed and they have all their employees back.
In addition, the Government has also approved that the type of retention applied by the general self-employed low from 21% to 15%, a measure that was previously only used for those people who did not charge 15.000 euros per year, now with this reform all self-employed can benefit from this measure.
In high incomes the reduction will be much more pronounced, so in this reform it is clearly seen that those people who have a higher level of income may have a much larger reduction, does this measure benefit everyone equally?
In addition, the self-employed who are exercising in the first three years of activity instead of having a retention rate of 9% will be able to do so at 7%.
The Government assures that in this way the families will be able to be more comfortable and that it will benefit consumption so that the GDP grows. But in my humble opinion, if they really want consumption to increase, they will not only have to take into account the percentage of personal income tax, they should also change other urgent measures.
For example, they could take into account that we are the country of the European Union where the self-employed pay the most in their monthly payment to Social Security, a fee that has nothing to do with income. It is true that they are taking measures to help the worker who begins with "The flat rate for freelancers", where the quota the first months depending on some characteristics is much lower than the one that remains finally. But the reality is that the fair thing for the self-employed is that the monthly payment is paid according to the income that they have monthly, because it is not fair that a person who charges 900 euros (without deducting taxes), has to pay the same as someone that charges 9.000 euros.
Do you think that the measures are adequate or that there should be other changes for the benefit of people who are self-employed? Should we give thanks or keep fighting? It is certainly a light at the end of the tunnel, but we must continue to fight for measures that are real for real workers, whether they are self-employed or salaried.