In recent years, to ensure the sustainability of the Social Security system in Spain, regulations have been passed to gradually increase citizens’ social security contributions through the creation of additional contributions.

Intergenerational Equity Mechanism (IEM)

Since 2023, we have been implementing the Intergenerational Equity Mechanism (IEM), approved in Law 21/2021. This mechanism involves an additional contribution applicable to all schemes and in all cases where contributions are made for retirement contingencies. Initially, in 2023, an additional contribution of 0.60% was set (0.50% by the company and 0.10% by the employee). These contributions will gradually increase each year:

In 2025, there will be a small increase in employee contributions, resulting in a 0.13% reduction in net employee remuneration and a 0.67% increase in business costs for companies.

Solidarity Quota

From January 1st, 2025, an additional increase in contributions for the maximum Social Security contribution bases will come into force in Spain, as established in Royal Decree-Law 28/2022, recently detailed in the “Boletín de Noticias Red” of September 12, 2024.

The purpose of this solidarity contribution is to apply a rate of 5.5% to the part of the remuneration between the maximum contribution base and the amount exceeding this maximum base by 10%; a rate of 6% to the part of the remuneration between 10% and 50% above the maximum contribution base; and a rate of 7% to the part of the remuneration exceeding the above percentage. The distribution of the solidarity contribution rate between employer and employee will maintain the same proportion as the distribution of the contribution rate for common contingencies. To allow companies to adapt progressively, a Transitional Provision has been approved, adopting a gradual increase in solidarity contributions from 2025 to 2045:

Thus, taking into account the above, in the coming years control over employee contribution variations will be vital for all companies as it will affect their budgets, cost control and talent retention. Therefore, being correctly advised on this matter and having the capacity to foresee this increase in costs will be a differential factor in anticipating the different contingencies that may arise, always ensuring compliance with the regulations in force in this area to avoid administrative sanctions derived from non-compliance.

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