Social security in Spain
You need to be covered by social security to work or run your own business in Spain. There are two main types of social security:
Social Security for workers (also called general regime): the company is responsible for paying social security contributions.
Social Security for self-employed: A self-employed person, freelancer or owner who runs his own business needs to pay this type of social security.
Do shareholders of a limited company have to be covered by social security?
It depends on each situation, a shareholder of a limited company can be exempt from paying social security, or be covered by worker or self-employed.
- The shareholders only need to be insured if they work in the company
A shareholder who only contributes with capital, even if he/she is a majority shareholder, and does not work for the company, no social security is required.
Example 1: I have invested in a company in the stock market, I do not provide any services or work for this company and therefore do not need to be covered by social security.
Example 2: I own a company in partnership with a friend. I am not the legal representative of the company and I do not work for the company, then I do not need to be insured.
- Self-employed social security
This is the most common situation and applies to shareholders who have a certain percentage of shares and who work for the company.
A shareholder with at least 33% or more of the social capital, who works for the company, regardless of the position, is required to be covered by self-employed social security.
If a shareholder holds 25% or more of the shares, but less than 33%, and holds a position of decision-making power in the company (e.g. general director), then he/she is also required to take out the self-employed social security.
If a shareholder holds less than 25% of the share, but if in addition with the shares held by the spouse or children who live with, amounts to 50%, then he/she is also required to take out the self-employed social security.
- Worker social security
A shareholder who works for the company, but whose capital is less than 25%, is required to be covered by worker social security.
Conclusion: Whether or not a shareholder is required to have social security and what type of social security is required depends on whether or not they work for the company and the percentage of shares they hold.
