2 - August / 2018

Andorra modifies the Law on Social Security to benefit self-employed contribution sections

The Council of Ministers approved on August 1st, the draft Law amending the Social Security regulation to improve equalities on self-employed contributions and adjust sections to their revenues or turnovers.

The text creates three new contribution sections with the aim of making the system more equitable while maintaining sustainability, and the Government estimates the number of beneficiaries of the reduced contribution sections may increase by around 1200 persons.

The draft Law responds to a May 5th, 2016 resolution by the Consell General addressed to the Government to study the possibility of establishing the contribution of persons who are self-employed according to their income or according to the average salary of the sector, taking into account the sustainability of the system.

The self-employed contribution base is calculated by applying a certain percentage to the average monthly salary of the total number of employees in the previous year. So far, this percentage could be 25%, 50%, 75% or 100%. The new law adds three new sections at 62.5%, 125% and 137.5%.

The new 62.5% section will affect those self-employed with an annual net income of between 12,000 and 18,000 euros and with a turnover that respects the established margins.

As for the new sections at 125% and 137.5%, self-employed workers with incomes of over 40,000 and 50,000 euros respectively and/or with turnover above the established margins will see their contributions increased.

A new contribution scheme is also created for young entrepreneurs under 35 years of age during the first 12 months of activity. Hence, they will contribute 55% of the minimum wage, i.e. between 50 and 60 euros, and will be entitled to benefits from the general branch.

The new Social Security conditions also provide for new rights for the self-employed. In the case of disability due to a non-occupational accident or common illness, up to now, contributions (22% of the annual average salaries) had to continue to be paid. From now on, they will pay the equivalent of an employee’s contribution (i.e. 6.5%), and the remaining 15.5% will be paid by the Caixa Andorrana de Seguretat Social (CASS).

Text: Govern d'Andorra