Five years after the outbreak of the pandemic, thousands of self-employed individuals in Spain are now being asked to repay the financial aid they received during the health crisis. What was initially a lifeline to keep their businesses afloat has turned into an administrative and financial nightmare.
In 2020, the Spanish government approved a cessation-of-activity benefit for self-employed affected by the state of alarm. This measure, included in Royal Decree-Law 8/2020, offered both direct grants and contribution relief. In total, 1,48 million professionals received aid, amounting to 3.741 billion euros.
However, the lack of clarity around eligibility criteria and the urgency of the situation meant that many self-employed individuals received aid without fully meeting the conditions. According to the Court of Auditors, approximately 281.000 people received payments despite not satisfying the necessary requirements, amounting to a total of more than 547 million euros.
Mass Reclaims and Repayments
Starting in 2023, mutual insurance societies and the Spanish Social Security system began reviewing the aid that had been granted. As a result, more than 45.000 self-employed employees have been required to return the payments they received. The amounts being reclaimed vary, but many fall between 2.000 euros and 6.000 euros. These repayments represent a significant burden for the finances of self-employed individuals, particularly in an economic climate that remains unstable.
In our firm’s recent experience, in Marbella, we have encountered several cases in which self-employed clients have been required to repay benefits, despite having acted within the legal framework. In these situations, communication from the mutual insurance societies has often been ambiguous. While telephone conversations have offered partial explanations, formal written responses have frequently been absent or unclear. Upon reviewing the cases in light of the informal feedback received, we determined that the clients were indeed entitled to the aid they received.
Communication Failures and Legal Struggles
Many affected individuals claim they were not properly informed of the need to justify the aid they received. In some cases, the notifications were sent via email and, having gone unnoticed, the recipients missed the opportunity to submit appeals.
In response, some individuals have turned to the courts. In León, for instance, a judge ruled in favour of a self-employee, arguing that the mutual insurer’s demand violated his right to the peaceful enjoyment of his possessions. The judge applied the European Court of Human Rights’ ruling in the Cakarevic case, which states that repayment cannot be demanded if the recipient acted in good faith.
However, this route may not be viable for most individuals, as many simply do not have the funds available, having not anticipated the need to return the aid. Others were forced to cease their activity entirely, unable to recover from the strain of the period in question. In many cases, legal costs exceed the amount being reclaimed by the mutual insurer. Who is going to pay for this, those already struggling to stay afloat?
In fact, among the main reasons why the courts have cancelled numerous repayment demands are procedure flaws in the administrative processes, the lack of individualised justification by the mutual insurers or the authorities, and, above all, the application of legal criteria that have been interpreted in a restrictive, inconsistent, and even contradictory manner over time. Many self-employed individuals are now facing demands based on rules that were reinterpreted after the aid was granted, leading to serious legal uncertainty.
This constant regulatory back-and-forth, stemming from hastily drafted legislation that was revised multiple times during the state of alarm, has left thousands of professionals exposed to retroactive penalties, despite having acted in good faith according to the rules in place at the time. For the courts, this lack of regulatory stability and predictability constitutes a breach of the principle of legal certainty, and in many cases has been decisive in ruling in favour of the self-employed.
A Mismanaged and Inefficient Process
The Court of Auditors has described the management of these aid payments as “effective” but “inefficient” in execution, due to the high number of irregularities and breaches detected. The hastily drafted regulations and their repeated amendments created widespread confusion among self- employees, many of whom were unsure whether they actually qualified for the support.
In addition, the Spanish Tax Office is reviewing the income tax returns of approximately 281.000 self-employed individuals who are believed to have received aid without fulfilling the required conditions. This has added a further layer of stress and complexity for those affected.
Conclusion: An Unfair Burden on the Self-Employed
The repayment of COVID-related aid has become a trap for many self-employed in Spain. What began as a support measure in a time of national emergency has evolved into a bureaucratic ordeal that threatens the survival of countless small businesses.
One must ask whether it is truly fair to demand repayment of these funds years later, especially when many recipients acted in good faith during a time of extreme uncertainty. Moreover, the legal costs of contesting these claims may exceed the amounts being reclaimed, which discourages many from seeking justice.
When even those administering the system struggle to explain their own decisions, one cannot help but question whether the issue goes deeper than simple mismanagement.
Who will be held accountable for this mismanagement? Who will compensate the self-employed for the stress, time, and resources they have been forced to invest in defending themselves? It is time for the authorities to acknowledge the errors that have been made and to seek solutions that do not further harm those who form the backbone of the country’s economy.
