Aid for self-employed workers: extension of the cessation of activity benefit

Although the public health situation, and with it the economic situation, appears to be gradually improving, certain sectors have not recovered their previous turnover levels. The support measures for self-employed workers are therefore being extended.

Although the extension is complete and the changes are minimal, we analyze the fine print of this aid for self-employed workers affected by the Covid-19 crisis.

Contribution exemptions for self-employed workers who resume their activity

The system of contribution exemptions for self-employed workers who, up to September 30, were receiving any form of extraordinary benefit for cessation of activity (prestación extraordinaria por cese de actividad) is extended until January 31, 2022. The scheme of exemptions from social security contributions is as follows: an exemption of 90% of the contributions for October, 75% of those for November, 50% of those for December, and 25% of those for January for self-employed workers who resume their activity.

To qualify for this system of exemptions from social security contributions, the self-employed worker must meet the following requirements:

• Remain registered as a self-employed worker until at least January 31, 2022.

• Have received, up to September 30, any of the forms of extraordinary benefit for cessation of activity.

The contribution base for the purposes of determining the exemption will be the one applicable in each of the months in which the exemptions apply.

This aid, which will be available from October 1, 2021 to January 31, 2022, is incompatible with receipt of the extraordinary benefit for cessation of activity.

Extraordinary benefit for temporary suspension of activity

The new extension of the extraordinary benefit for cessation of activity due to temporary suspension of activity until February 28, 2022 maintains the same conditions, and self-employed workers must meet the following requirements:

• Be registered as a self-employed worker at least 30 days before the entry into force of the restrictions under which their activity is suspended.

• Be up to date with payments to the General Treasury of the Social Security (TGSS). If this requirement is not met, the worker will be invited to do so.

• Demonstrate a 75% drop in turnover, comparing the last quarter of 2019 with the last quarter of 2021. In addition, the limit on net income that may not be exceeded in order to receive this extraordinary aid is raised to 75% of the current national minimum wage (SMI), which, as a reminder, now stands at €965 per month in 14 payments. This means that the benefit will be granted to those whose income in the third and fourth quarters does not exceed €5,066.25.

The amount of this benefit is 70% of the minimum contribution base corresponding to the activity carried out. However, where persons related by family ties or a similar cohabitation relationship, up to the first degree of kinship by blood or marriage, live in the same household and two or more members are entitled to this extraordinary benefit for cessation of activity, the amount of each benefit will be 40%.

Entitlement to this benefit will run from the day following the entry into force of the suspension of activity or, if this is prior to September 30, from October 1, 2021, until the last day of the month following the month in which that measure is lifted, or until February 28, 2022 if the latter date is earlier. While the benefit is in force, the self-employed worker will continue to be treated as contributing and will be exempt from paying social security contributions.

Receipt of the benefit will be incompatible with receiving remuneration for employed work, unless the income from employed work is less than 1.25 times the amount of the national minimum wage; with carrying out another self-employed activity; with receiving income from the company whose activity has been affected by the closure; and with receiving a Social Security benefit, except one that the beneficiary was already receiving because it was compatible with the activity he or she carried out.

Extraordinary benefit for cessation of activity compatible with self-employment

Self-employed workers who were already receiving the extraordinary benefit for cessation of activity compatible with self-employment up to September 30, 2021 may continue to do so until February 28, 2022, provided that they meet the following requirements:

• Be registered as of February 1, 2021 and remain registered while the benefit is being received. Be entitled to receive the cessation of activity benefit for 12 interrupted months.

• Not have reached retirement age.

• Be up to date with Social Security payments.

• Demonstrate, in the third and fourth quarters of 2021, a reduction of more than 50% in the self-employment income computable for tax purposes compared with that obtained in the third and fourth quarters of 2019, and not have obtained, during the third and fourth quarters of 2021, net income computable for tax purposes exceeding €8,070.

• In the case of self-employed workers with one or more employees, compliance with all the labor and Social Security obligations they have assumed must be demonstrated at the time of applying for the benefit.

• Not have exhausted the entitlement to the extraordinary benefit for cessation of activity compatible with self-employment. The self-employed worker, during the time that he or she is receiving the benefit.

• Pay to the TGSS the full amount of the contributions, applying the rates in force to the corresponding contribution base.

The amount of this benefit will be 70% of the benefit calculation base (base reguladora).

The extraordinary benefit for cessation of activity for self-employed workers may be compatible with employed work where the net income computable for tax purposes from self-employment and the income from employed work do not exceed 2.2 times the SMI. In making this calculation, the income from employed work may not exceed 1.25 times the amount of the SMI. The amount of this benefit will be 50% of the contribution base.

Those who were receiving any of the cessation of activity benefits but who cannot access this benefit may apply for an extraordinary benefit for cessation of activity, provided that they meet the following requirements:

• Be registered, and up to date with the payment of contributions, in the Special Social Security Scheme for Self-Employed Workers (RETA) or the Special Social Security Scheme for Seafarers (REMAR) as a self-employed worker since before April 1, 2020.

• Not have net income computable for tax purposes from self-employment in the third and fourth quarters of 2021 exceeding 75% of the SMI for that period.

• Demonstrate, in the fourth quarter of 2021, self-employment income computable for tax purposes lower than 75% of that obtained in the fourth quarter of 2019.

The amount of the benefit will be 50% of the contribution base; however, where persons related by family ties or a similar cohabitation relationship, up to the first degree of kinship by blood or marriage, live in the same household and two or more members are entitled to this or another cessation of activity benefit, the amount of this benefit will be 40%.

Extraordinary benefit for cessation of activity for seasonal self-employed workers

The extension of the benefit for seasonal self-employed workers has also been approved; they may continue to claim the extraordinary benefit for cessation of activity provided that the following requirements are met:

• Demonstrate that they were registered for a minimum of four months and a maximum of six months over the course of 2018 and 2019.

• Not have been registered, or in a situation treated as equivalent to registration, as an employed worker in the corresponding Social Security scheme for more than sixty days during the third and fourth quarters of 2021.

• Not obtain, during the third and fourth quarters of 2021, net income computable for tax purposes exceeding €6,725.

• Be up to date with the payment of Social Security contributions. However, if this requirement is not met, the managing body will invite the self-employed worker to pay the contributions owed within a non-extendable period of thirty calendar days. Settlement of the outstanding debt will have full effect for the purposes of acquiring the right to protection.

The self-employed worker will be deemed to have carried out a single job in 2018 and 2019 provided that the period of registration does not exceed 120 days over those years.

The amount of the benefit will be equivalent to 70% of the minimum contribution base corresponding to the activity.

These are the conditions of the new extension of the cessation of activity benefits for self-employed workers, which, in general, are extended until February 28, 2022, with the exception of the exemptions from social security contributions, which expire on January 31, 2022.