Next year, salaried employees and self-employed workers in Spain will have to pay a tax which will progressively increase over the coming years.
This relatively new tax is known as the Intergenerational Equity Mechanism (shortened to MEI, Mecanismo de Equidad Intergeneracional) and aims to increase the Social Security Reserve Fund, or in other words, Spain’s pension pot.
When the government first introduced it in 2023, they said the MEI would “preserve the balance between generations and strengthen the long-term sustainability of the Social Security System”.
This surcharge was initially set at 0.6 percent of the contribution base, but starting in January 2026, this percentage will increase to 0.9 percent .
MEI will be implemented gradually until 2029, and it will slightly increase each year until then.
The MEI affects all workers in Spain, but it will be those with highest earnings who will pay the most. They will see a reduction of around €95 per year from their pay packet.
In the case of salaried workers, the employee’s portion increases from 0.13 to 0.15 percent in 2026, while the company’s portion increases from 0.567 to 0.75 percent.
So if someone has a set a gross monthly salary of €2,000, €18 will be paid, of which approximately €15 will be borne by the company and the remaining €3 by the employee.
For monthly earnings €1,500 gross per month, the new tax will amount to €13.50 per month, meaning €11.25 will be charged to the company and approximately €2.25 to the employee.
Higher earners, for example with an annual gross salary of €63,180, they be taxed an extra €94.77 per year.
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It’s worth noting though that this does not affect future pensions, as this is not taken into account when calculating retirement benefits.
As stated earlier, the percentages are progressive and will continue to rise in 2027, 2028 and 2029.
In 2027 the employee’s share will be 0.17 percent and the company’s will be 0.83 percent.
In 2028 the employee’s share will be 0.18 percent and the company’s will be 0.92 percent.
From 2029 onwards, the employee’s share will be 0.20 percent and the company’s will be 1 percent.
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You won’t need to do anything at all for this to take effect, these extra payments will be deducted automatically by your employer and Social Security will handle all the paperwork.
Total pension expenditure in Spain was €1.36 billion in September 2025, an increase of 6.09 percent compared to the same month last year. Retirement pensions represent the largest expenditure above windows’ pensions and disability payments.
Experts estimate that pension expenditure in Spain will be 16.1 percent of GDP in 2050, while the EU average estimated for 2050 is 12.1 percent of GDP.
Currently in Spain, there are 2.6 working-age people for every person over 65 years, but by 2050, the National Statistics Institute (INE) projects that for every retiree there will be just 1.6 people of working age.
