New legislation, Law 32 of 2010, comes into force on 5^th November this year and will give important new rights to the self-employed, or “trabajadores autonomos”.  Many expats choose to work as self-employed because it seems the quickest and cheapest way to set up in business in their new home, but being self employed can be a precarious and risky existence.

To qualify for protection under the new law there are strict conditions which you will have to fulfill.

First, you must be genuinely self employed and not a person who in effect works full time for one boss who sets your hours of work and from whom you earn more than 75% of your income.  These workers are known as “TRADES” (“Trabajadores Autonomos Dependientes”).  Many people are in this situation but are falsely described as “autonomo” so that the business they work for can save on social security payments.

Second, you must be up to date with your self-employed social security payments, and have been paying in to the Spanish social security system for a minimum of 12 continuous months.

Third, if you are ceasing self-employment because you are losing money, your losses must be equal to at least 30% of your income during your previous tax year, or 20% of your income during the previous two complete tax years.  Most importantly your first year as self-employed does not count towards qualifying for benefits, so in effect you must have been trading for at least two years.  If you have Court Judgments against you for unpaid debts the total amount due must be equal to at least 40% of your previous year´s income.  

Fourth, you must make your claim for benefits within a very short time of giving up your self-employment or closing your business.   In many cases you must make your claim within 10 days.

If you do qualify for benefits under the new rules then the amount you will be entitled to claim will depend on how long you have been self-employed and how long you have been paying into the social security system and whether you have any family dependents.   Benefits will be paid for between 2 months and 12 months.

An additional important protection is that the self-employed will no longer risk having their principal residence made subject to immediate embargos for tax or social security debts and losing their homes.  Only the main home is protected, not second or holiday homes, and the protection is not indefinite, but does at least provide a breathing space.

Always take qualified professional advice before setting up in business, or before closing your business or giving up self-employment.  Don’t be put off by the idea of having to pay professional fees as the cost of professional advice can be very reasonable especially when compared with the financial risks involved, and the potential cost of failing to take proper advice.