Extension of the extraordinary benefit for cessation of activity

On January 27, Royal Decree-Law 2/2021, of January 26, on strengthening and consolidating social measures in defense of employment, was published. It regulates the new extension, until May 31, 2021, of the extraordinary benefit for cessation of activity for self-employed workers.

The Royal Decree-Law contains a series of support measures for self-employed workers, including the new extension of the benefits for cessation of activity or for a drop in turnover. These benefits may be applied for with effect from February 1 until February 21.

Extension of the extraordinary benefit for cessation of activity.

The current extraordinary benefit for cessation of activity will be extended until May 31, 2021, under the same conditions currently in force. It is aimed at self-employed workers affected by a temporary suspension of all their activity as a result of a decision by the competent administrative authorities to contain Covid-19, provided that they meet the following requirements:

– Being affiliated with, and registered in, the Special Social Security Scheme for Self-Employed Workers (Régimen Especial de Trabajadores por Cuenta Propia o Autónomos, RETA) or the Special Social Security Scheme for Seafarers (Régimen Especial de Trabajadores del Mar, REMAR) before January 1, 2021.

– Being up to date with the payment of Social Security contributions. If this requirement is not met on the date the activity is suspended, the managing body will invite the self-employed worker to pay the outstanding contributions within a non-extendable period of thirty calendar days.

The amount of the benefit will be 50% of the minimum contribution base, increased by 20% if the self-employed worker is a member of a large family (familia numerosa). However, this will apply only if the household’s income comes solely from that self-employed work. Likewise, if two or more members of the household are entitled to this benefit, each will receive only up to 40% of the contribution base, without entitlement to the additional 20% if they are a large family.

The amount of the benefit will therefore depend on the contribution base, but will be at least €760 per month. In addition, the self-employed worker will be exempt from paying Social Security contributions, although that period will count as a contribution period.

This benefit will be compatible with employment income of up to 1.25 times the national minimum wage (SMI); with carrying on another self-employed activity; with the receipt of income from the company whose activity has been affected by the closure; and with the receipt of a Social Security benefit, except for any that the beneficiary.

For the benefit to be compatible with work as an employee, the worker must demonstrate, for the first half of 2021, a reduction of more than 50% in income from the self-employed activity computable for tax purposes compared with that obtained in the second half of 2019, and must not have obtained, during that half of 2021, net income computable for tax purposes exceeding €7,980. To calculate the reduction in income, the period of registration in the second half of 2019 will be taken into account and compared with the proportional share of the income obtained in the first half of 2021 in the same proportion.

This benefit, which will be administered by the mutual insurers (mutuas), must be applied for within the 21 calendar days following the entry into force of the agreement or decision ordering the closure of the activity.

Extension of the benefit for reduced income

The benefit for reduced income is also extended. It is aimed at self-employed workers whose income has fallen and who do not meet the requirements for the previous benefit. Accordingly, they may apply for a benefit for reduced income provided that they meet the following requirements:

– Being registered with, and up to date with the payment of contributions to, the RETA or REMAR since before April 1, 2020. If, on the date the application is filed, the requirement of being up to date with the payment of contributions is not met, the managing body will invite the self-employed worker to pay the outstanding contributions within a non-extendable period of thirty calendar days.

– Not having net income from the self-employed activity computable for tax purposes exceeding €6,650 in the first half of 2021.

– Demonstrating, for the first half of 2021, income from the self-employed activity computable for tax purposes lower than that obtained in the first quarter of 2020. To calculate the reduction in income, the period of registration in the first quarter of 2020 will be taken into account and compared with the proportional share of the income obtained in the first half of 2021 in the same proportion.

The amount of the benefit will be 50% of the minimum contribution base. However, if two or more members of the household are entitled to this benefit, each will receive only up to 40% of the contribution base. The amount of the benefit will be at least €760 per month.

The benefit for reduced income will be incompatible with the receipt of remuneration for work as an employee, unless the employment income is less than 1.25 times the SMI; with carrying on another self-employed activity; with the receipt of income from a company; and with the receipt of a Social Security benefit, except for any that the beneficiary was already receiving because it was compatible with the activity he or she carried on.

Self-employed workers entitled to this benefit will be exempt from paying the monthly contribution, and the period will count as a contribution period.

This benefit, which will be administered by the mutual insurers, must be applied for within the 21 calendar days following the entry into force of the agreement or decision ordering the closure of the activity.

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

The Government has also extended the extraordinary benefit for cessation of activity for seasonal self-employed workers. It is equivalent to 70% of the minimum contribution base and requires not having income exceeding €6,650 in the first half of 2021. Its amount will be at least €660 per month.

The requirements for access to the extraordinary benefit for cessation of activity for seasonal self-employed workers are:

– Having been registered with, and having contributed to, the RETA or REMAR for a minimum of four months and a maximum of six months in each of the years 2018 and 2019, provided that this period covers at least two months in the first half of the year.

– Not having been registered, or in a status treated as registered, as an employee under the corresponding Social Security scheme for more than 60 days during the first half of 2021.

– Not obtaining, during the first half of 2021, net income computable for tax purposes exceeding €6,650.

– Being up to date with the payment of Social Security contributions. If this requirement is not met, the managing body will invite the self-employed worker to pay the outstanding contributions within a non-extendable period of thirty calendar days.

Likewise, they may apply for the benefit from February 1, 2021, and receive it until May 31, 2021; they will be exempt from paying the monthly contribution, and that time will be treated as a contribution period.