All employers, their employees, self-employed workers, members of manufacturing cooperatives, domestic personnel, military personnel, civil servants who reside and/or perform their duties in Spain, and even unemployed persons (subject to certain conditions) are required to register with, and must pay contributions to, the Spanish social security system.

In the case of non-Spanish individuals, regard must be had to the social security treaties and regulations between Spain and other countries, the provisions of which may affect their benefits and payment of social security contributions.

Since January 1, 1986, the date of Spain’s accession to the EU, EU social security legislation applies to Spain.

Two EU Regulations (Regulation Nos.1408/71 and 574/72, as amended by Regulation No. 1249/92) ensure that the workers to whom they are applicable are not adversely affected from a social security standpoint by moving from one Member State to another (to these effects, Switzerland is included). The following basic rules apply in such cases:

– Workers are subject only to the social security legislation of one Member State.
As a general rule, the applicable social security legislation will be that of the country in which the worker carries on his activity.There are some exceptions to this general rule.

– If certain requirements are met, the time during which a worker of one Member State contributes to the social security system of another Member State will count as a period of contribution to his or her own country’s social security system for the purpose of determining his or her future benefits under his or her national social security system.

– If a worker of one EU Member State is temporarily relocated to another Member State to work for his company in that other Member State, the worker will remain subject to the social security legislation of the first Member State, provided that the foreseeable duration of the work to be done does not exceed 12 months and he or she is not sent to replace another employee who has completed the period of time for which he or she was relocated. This 12-month period can be extended for an additional period of the same duration and, where appropriate, subsequently as provided in the bilateral treaties.

There are different contribution programs under the Spanish social security system:

a) General social security program.

b) There are other situations within the general social security program qualifying for special treatment, namely:

– Artists.

– Railroad workers.

– Sales representatives.

– Bullfighting professionals.

– Professional soccer players.

c) Special social security programs for:

– Agricultural workers.

– Seamen.

– Self-employed workers.

– Civil servants and military personnel.

– Domestic personnel.

– Coal miners.

– Students.

Classification under these programs depends on the nature, conditions and characteristics of the activities carried on in Spain.

Unless one of the special programs applies, an employer and its employees are subject to the general social security program.

Under the general program, social security contributions are paid partly by the employer and partly by the employee. Personnel are classified under a number of professional and job categories for the purpose of determining their social security contribution. Each category has maximum and minimum contribution bases, which are generally reviewed from year to year. Employees whose total compensation exceeds the maximum base, or does not reach the minimum base, must bring their contributions into line with the contribution base for their respective category.

For 2005, the maximum contribution base is € 2,813.40 (minimum contribution bases are those from last year) per month for all professional categories and groups(Minimun contribution bases pending approval. Transitionally, the minimum bases are those from last year). The minimum bases have been increased according to the professional categories and contribution groups, from January 1, 2005 vis-à-vis those in 2004, by the same percentage as the increase in the official minimum wage.

Therefore the situation for the general social security program in 2005 is as follows:

The contribution rates applicable to employers and employees in the general social security program in 2005 are the following:

(2) It includes: indefinite term contract (including part-time indefinite-term contracts and indifinite-term contracts for seasonal work), and fixed-term contracts (in the form of training contracts, relief and substitute contracts, except for contracts under which reductions are received pursuant to Royal Degree Law 11/1998), and any type of contracts made with disabled workers who have been recognized a degree of disability of not less than 33% percent of the physical or mental capacity.

The total employer contribution rate is increased by higher percentages for occupational accident and occupational disease contingencies, depending on how hazardous the employee’s work is, in accordance with the system of scales established by Royal Decree 2930/1979, the percentages of which will be reduced by 10%.

The recent reform of legislation with regard to the social security program for selfemployed workers should be noted. These workers, unlike those classified in the general program, were only covered for temporary incapacity from the fifteenth day after the date of the leave. Law 36/2003 of November 11, on measures for economic reform, has extended this protection to make it equivalent to that established for employees, so that the temporary incapacity benefit arises as from the fourth day of the sick leave. Under Royal Decree 1273/2003, of October 10, self-employed workers may opt in the term of two months after January 1, 2004, to improve said protecting measure, by including the protection for industrial accident and occupational disease.

The maximum contribution baseis for 2005 in the special social security program for self-employed workers is, like that of the general program, €2,813.40 per month. The minimum contribution base for 2005 is €770.40 per month.

Lastly, for several years the classification of members from the managing bodies of companies under the social security system has been a contentious and confusing issue.The Law accompanying the 1999 General State Budget Law (which came into force on January 1, 1999) settled the debate by introducing new legislation on the matter. Thus, under this Law, executive directors who receive compensation and who do not have actual control of the company should be included under the general social security program for employees as workers "treated as" employees (i.e., without entitlement to unemployment benefit or the Wage Guarantee Fund).