NOU IMPOST Mechanism for Intergenerational Equity (MEI)

With Law 21/2021, of December 28, 2021, and Law 31/2022, of December 23, of the General Budget of the State for 2023, a series of measures are established to guarantee the purchasing power of pensions in the long term.

One of the most important measures is a new tax that comes into force from 1 January 2023, the Intergenerational Equity Mechanism (MEI).

What is MEI?

The Intergenerational Equity Mechanism (IEM) is a set of measures designed to prevent the younger generations from assuming the full burden of retirement and at the same time to strengthen the pension system in the long term, distributing this effort in a balanced way.

What does MEI involve?

The MEI represents an increase in contributions of 0.6% for common contingencies, sharing the cost between the company and the employee. The 0.5% will be paid by the company and 0.1% will be paid by the employee.

For example, a worker with a monthly contribution base of €2,000 (gross salary), this 0.60% increase would mean a monthly contribution of 12 euros. Of this increase, 10 euros will be paid by the company (0.5%) and 2 euros by the employee (0.1%).

In principle, this new tax is established for a period of 10 years, until 2033.

Who is obligated?

It affects all workers, regardless of their salary, and also the self-employed.

In the case of the self-employed, the contribution rate for common contingencies will increase by the same percentage, 0.6%. Això es tradueix en uns 5 euros més al més.

They are excluded from this tax:

  • Workers with solidarity contributions (over 65 years of age with 35 years of contributions)
  • Workers who develop training programs and non-work and academic internships (TRL 986) (training programs / non-work internships).

How does this new contribution affect the payroll?

As of 01/2023, the calculation of payrolls will include the equity mechanism contribution added to the contribution percentage in item 995- Contribution Cont. Comuns.

Until now, a worker of the general regime contributed 4.70% for common contingencies, from 1 January 2023, the same concept will appear in the payroll with a percentage of 4.80% (4.70 contribution for common contingencies + 0.1 contribution for equal mechanism).