Calculating the cost to a company of Social Security
One of the most complex tasks related to taxation is calculating the cost of social security for a company. This cost varies greatly depending on a number of factors, one of the most important of which is the tax management carried out by the company itself, which is why it is important to have the right advice.
What are the costs of social security for a company?
Social Security in Spain represents a fundamental part of the costs that a company must assume for each worker it employs. This system, designed to protect workers in situations of need, such as illness, unemployment or retirement, involves a series of compulsory contributions that companies must pay.
These contributions not only help to finance the various social security schemes, but also ensure that both employees and employers have certain coverage and benefits. Below are the main costs of social security for a company in Spain.
General social security contributions
Companies are obliged to pay social security contributions for each employee. These contributions are calculated as a percentage of the employee’s gross salary and vary depending on the professional category and type of contract. Generally, the employer must pay approximately 30% of the employee’s gross salary, while the employee contributes a smaller percentage, around 6% to 7%.
Breakdown of contributions
Common contingencies: This is the most significant part of the contributions and is intended to finance pensions, sickness benefits, maternity, paternity, etc. The rate varies, but is generally around 23.6% on the employer’s side.
Unemployment: Another crucial component is the contribution to the unemployment fund. The rate depends on the type of contract; for example, it is higher for temporary contracts than for permanent contracts.
Vocational training: This contribution finances the training and retraining of workers. It is a smaller percentage compared to other expenditures, usually around 0.6%.
Accidents at work and occupational diseases: This rate varies according to the degree of risk of the work activity carried out. It is important to cover the costs associated with accidents or illnesses that may occur as a result of work activity.
Additional costs
In addition to the regular contributions, companies may face additional costs in specific situations:
Overtime: Social security contributions are also levied on overtime, although the calculation may vary.
Bonuses and reductions: Various bonuses and reductions in social security contributions are available to encourage hiring in certain sectors, locations or demographic groups, such as young people, the long-term unemployed and women in sectors where they are under-represented.
Administrative and financial impact
The management of social security contributions requires meticulous administrative management. Companies must ensure that they comply with all legal obligations, and the financial impact of these contributions can be significant, especially for small companies or those with a large number of employees.
Penalties provided for by Social Security
In Spain, failure to comply with social security payment obligations is a serious offence that can lead to significant penalties for both companies and the self-employed. The system establishes rigorous penalties to ensure compliance with these obligations.
Penalties for failure to pay social security contributions on time vary depending on the amount owed and the length of delay. In cases of minor delays, automatic surcharges ranging from 3% to 20% of the unpaid tax are applied, depending on the time elapsed from the due date to the moment of actual payment.
If the non-compliance is more serious or repeated, the company or self-employed person may face penalties including substantial financial fines. These fines may vary, depending on factors such as the amount owed, the period of time and the circumstances of non-compliance.
In addition, in extreme situations, failure to pay social security can lead to criminal liability, especially if it is considered that there has been a deliberate attempt to defraud the system. In such cases, those responsible may face prosecution resulting in prison sentences, in addition to financial penalties.
At Asesoría Orihuela Costa we offer you a personalised consultancy service to calculate the cost of Social Security for your company.
