Exempt minimum: increase in the NMW in Spain and effects on the INCOME 2025
In recent times, there has been a lot of commotion in the press and television about the exempt minimum.
In this article we will try to answer the following question:
If you receive the SMI interprofessional minimum wage in 2025, do you have to pay tax or not?
But first of all, we are going to clarify the most important terms so that there is no confusion.
What is the exempt minimum?
The exempt minimum wage is the minimum wage you receive and for which you do not have to pay taxes.
From the first euro that exceeds the exempt minimum wage, you start paying taxes.
Be very careful, we are talking about gross amounts, amounts with taxes included not what the employer pays on the payroll if it is above the NMW.
What is the National Minimum Wage in Spain (SMI)?
The interprofessional minimum wage SMI is the minimum wage that the employer has to pay for his work and that is imposed by law.
That is, the employer, company or self-employed person cannot pay you below the interprofessional minimum wage.
What is a payroll withholding?
A withholding is a part of your salary that your employer does not pay you and pays it directly to the treasury.
That is, the withholding is a part of your taxes.
The tax system is designed in such a way that the one who owes you money for your salary, pays a part of your taxes directly to the treasury.
What does it mean to tax?
It’s okay, it seems like an obvious question. Taxing means paying taxes.
But according to our experience, there are many people who are confused, because they think that if they don’t have to make the rent, they don’t pay taxes and it’s a wrong assessment.
If you charge above the SMI, you already pay taxes on your payroll. Indeed
The employer or self-employed person deducts a part of your salary on your payroll because the law obliges him to withhold you (take away a part of your salary that he pays you) and pay it to the treasury.
That is, the withholdings made by the employer are part of your taxes, not the taxes of the employer or self-employed.
Now, it will depend on your personal situation whether or not you get paid back on the rent.
Increase in the SMI 2025 above the exempt minimum
The SMI in 2025 increases by €700.
In 2024 the interprofessional minimum wage was €15,876
In 2025 the interprofessional minimum wage (SMI 2025) will be €16,576 (in the BOE the SMI that is paid per month comes out and must be multiplied by 14 payments)
That is, it has increased by €700.
However, some of its employees who are collecting the SMI are worried, since – according to the press – this may force them to have to pay personal income tax in 2025 (when until now they did not have that obligation).
The SMI in 2025 is above the exempt minimum
This is because the salary that these workers will receive in 2025 will exceed the amount of the exempt minimum up to which there is no obligation to bear withholding on the gross salary received: 15,876 euros from 2024 (in that year, the SMI and said exempt minimum were of the same amount).
In Christian, this means that in 2024 the SMI was equal to the exempt minimum but in 2025 and it is no longer so, the SMI is above the exempt minimum.
Well, reassure your workers and inform them that in many cases they will continue to be exempt from withholding and that, if they finally have to endure it, in general this will not force them to file personal income tax.
Withholding by collecting the SMI
It all depends on your family situation
As we have said before, if in 2025 it is above the SMI, that is, 16,576 euros, the employer may practice payroll withholding.
Let’s see in which cases they are going to detain him.
This will depend on your personal situation (the one you will have declared to the company using form 145).
Like this:
Situations 1 and 2
If the employee is a parent of a single-parent family entitled to a reduction in personal income tax for declaring together with the children (situation 1) or is married and his spouse does not obtain income exceeding 1,500 euros (situation 2), he will continue to be exempt from withholding tax, since the exempt minimum in these cases is higher.
Situation 3
In other cases, if the worker has two or more children who entitle him to the minimum for descendants, they should not withhold anything either (in that case, the exempt minimum is €16,867, which is an amount somewhat higher than the SMI).
However, if the employee has no children or only has one, the exempt minimum is less than the SMI and the company is obliged to retain (unless there are other circumstances that make there no retention, such as a disability).
SMI with withholding
In any case, in the latter case the maximum withholding that the company must practice in the payroll will be reduced:
- About 300 euros per year if the worker has no children.
- 99 euros per year if you have only one child.
Do I have an obligation to make the RENT if I charge above the minimum event?
In general, I am not obliged to present the Income if I am above the exempt minimum
Remember that the fact that you are retained on the payroll does not mean that you are obliged to present the income
In general, if their annual salaries are less than 22,000 euros, they will not be obliged to do so.
They should only submit it if, in addition to the remuneration they receive from their company, they also collected income from the work of other payers who, who, exceeded 1,500 euros.
Declaration of the INCOME to be returned
However, even if they are not obliged to declare, recommend that when the time they check what the result of the personal income tax of 2025 would be if they declared, since they could be entitled to request the return of all or part of the withholding tax incurred (if they were entitled to any deduction, for example).
The result of the declaration may be different depending on the autonomous community and the rates and incentives that are applied there.
In conclusion
If your workers receive the NMW in Spain, in general you should only withhold them if in form 145 they have declared that they are in situation 3 and have no children or only have one. In that case, however, they may be able to ask for a refund in their personal income tax.
