New Rules for Self Employed

employment law in spainIf you are self-employed (Autonomy), you need to be aware of a raft of new rules surrounding your social security payment requirements. Surprisingly, in some cases you may be entitled to more deductions than previously thus reducing your quarterly tax bill.  Here is a summary of all the changes in 2017 and 2018

From the 26th October 2017…

  • The quota paid for self-employment will be reduced 100% for maternity leave or sick leave when the pregnancy is high risk. It will not be necessary to hire another worker to substitute the self-employed person. In the cases where they do have to hire someone else, they will be able to deduct 100% for this worker to cover the leave.
  • The self-employed worker on maternity or adoption leave who returns to work during the next two years will have a right to a reduction in their quota and will pay 50€ during the first 12 months.
  • An accident suffered going to or from work (the place where the person has stated is his place of work in his initial registration), is classed as a work related accident.
  • A 100% reduction in the quota on account of sick leave during 12 months when you hire, on an indefinite contract, a family member (up to a second degree bloodline, and also your partner if you can prove that you cohabit).
  • The option of obtaining a pension and still be registered as self-employed under the new law for Self Employment 2017 if you hire a person full time.
  • The quota for corporate self-employment is separated from the Minimum Inter-Professional Salary and is from hereon in determined by the General State Budget.

From the 1st January 2018…

  • The Self Employment Flat Rate of 50€ that is inforce at present for 6 months will be extended to 12 months, from month 13 to 18 you will receive a 50% reduction, from month 19 to 24 you will receive a 30% reduction. In the case of women under 35 and men under 30 this reduction is increased to 30% during a further 12 months. To be eligible for this flat rate you will need only not to have been registered as self-employed for the last two years (and not five years as it has been up until now).
  • Other reductions on top of the Basic Flat Rate from the 1st January 2018 are:
  • Disability or Domestic Violence or Terrorism: Reduction during the first 12 months of 80% and the following 48 months at 50%.
  • If you are self-employed but are hired on a full time contract in two or more places: 18 months with a 50% reduction and the 18 months after with a 25% reduction.
  • In this new Self Employment Law 2017 the deduction for expenses allowed /not allowed are clarified for those self-employed. In the case of electricity, water, gas, telephones and internet a deduction of 30% is applicable for those who work from home, and this is their fiscal residence, and that do not have commercial premises. As an Owner of the Property, such as IBI (Rates), Owner’s Community, etc., you can deduct the part of the property that is used for the activity and the percentage of your stake in the building. You cannot deduct 50% on your income tax return for any vehicles if these are only used partially for work, the deduction will remain the same where you can only deduct 50% of the VAT.
  • The days of contribution will not always be the whole month as it is was up until now, you will be able to register and deregister 3 times in one year where you will only contribute the days that you are registered, and the quota will be prorated.
  • The changes in the base contribution change from 2 to 4
  • There are changes in the surcharges in late payment of the quotas for contribution under the New Law:
  • 10% for the first month, 20% for the second month and 20% if after 2 months but within the time period given to pay this and 35% of the original quota after this payment period.
  • Costs for daily living expenses: a deduction of 27,27€ (and 48€ if this is abroad) for daily living expenses. These must be work related, paid digitally and an invoice obtained and are for hotels or restaurants.

As with all things tax and social security, it is vital that you take professional advice in order to ensure you are paying the correct amount – not a penny more nor a penny less – and avoid the risk of being fined for non-compliance. If you are in any doubt, at Link Point Legal we can offer a range of services from basic advice too a full tax accountancy service. Please contact us if you have any questions.