Autonomos and help available under Covid-19 regulations – October 2020

The amount of Covid-19 legislation has created enormous confusion so in this article we summarise the different forms of help for the self-employed that exist at this time. We apologise in advance for the complexity of this article but the Spanish Government system (at all its many levels) is consistent in one thing, if it can make it complicated, it will.

Type 1.  Business economic compensation due to closure of business caused by COVID-19.

This is applicable to those self employed who, from 1 October 2020, are forced to close or suspend the activity as a consequence of an administrative resolution issued by the relevant authorities (Government, Regional, local, etc).    The conditions are as follows:

  1. The self employed must have been registered as a self employed at least 30 days prior to the administrative resolution that forces the closure of the business.
  2. It requires that the self employed remains registered at the social security.
  3. The self employed must be up to date in the payment of all monthly social security quotes.   If not, the self employed will have 30 natural days to bring this up to date.
  4. The application must be made within the first 15 days from the date of publication of the administrative resolution that forces the closure of the business.  If this is filed late, the business economic compensation will not be lost, but will apply from the date the application is made.

The amount of the business economic compensation will be 50% of the social security base.   This means that, for a person who pays 270 € per month, the social security base is, say, 1.000 €.   Therefore this person would be receiving approximately 500 €.

To complement the above, the self employed will not have to pay the monthly social security payments.  In my example above, it represents and additional cash flow saving of 270 €.

Type 2.  Business economic compensation for self employed with no income or very reduced income and not receiving any other economic compensation.

For those self employed that are not affected by the above (forced closure of the business due to an administrative resolution), but have suffered a substantial reduction of their income AND cannot benefit for any other economic compensation, then they can apply for this one.

The conditions are as follows:

  1. The self employed must have been registered as a self employed prior to 1 April 2020.
  2. It requires that the self employed remains registered at the social security.
  3. The self employed must be up to date in the payment of all monthly social security quotes.   If not, the self employed will have 30 natural days to bring this up to date.
  4. The self employed cannot benefit from any other social security business economic compensation.
  5. The self employed cannot have business income in the previous quarter exceeding 3.325 €, and must anticipate that the can demonstrate that the business income in the 4th quarter 2020 will be 50% less than the business income declared in the 1st quarter 2020.
  6. The application must be made within the first 15 days of October, and will last for 4 months (31 January 2021).  If this is filed late, this business economic compensation will not be lost, but will apply from the date the application is made, and will last until 31 January 2021 regardless.
  7. This business economic compensation is not compatible with working as an employee, except if the employment income does not exceed 1.385,41 € per month.

The amount of the business economic compensation will be 50% of the social security base, same as the previous one.

To complement the above, the self employed will not have to pay the monthly social security payments, same as the previous one.

Type 3.  Extension of the existing business economic compensation that was approved at the end of June 2020.

This is an extension of the economic compensation that was approved in the RDL 24/2020, that have been able to enjoy this for the period July to September 2020, basically being able to accredit in due course that the business income in the 4th quarter 2020 will be 75% less than the business income declared in the 4th quarter 2019, AND not declare net business income exceeding 5.818,75 € in this quarter, hence an average of 1.939,58 €.

The conditions are as follows:

  1. The application must be made within the first 15 days of October.  If this is filed late, this business economic compensation will not be lost, but will apply from the date the application is made and not with effect from 1 October 2020. 
  2. This will last until 31 January 2021.
  3. It requires that the self employed keeps on paying the monthly social security contributions.

The Mutua will refund the self employed the amount under c) above, plus the business economic compensation.

Type 4.-  Trabajadores de temporada.

For this type of employees, the rules are as follows:

  1. The self employed must have been registered as a self employed at least 4 months between June and December for 2018 and 2019.
  2. It requires that the self employed has not been registered as an employee more than 120 days between 1 June 2018 and 31 July 2020.
  3. The self employed cannot have been registered at the social security between 1 March 2020 and 31 May 2020.
  4. The self employed cannot have received any business economic compensation from the social security between January and June 2020.
  5. The self employed cannot have received any income during 2020 that exceeds 23.275 €.
  6. The self employed must be up to date in the payment of all monthly social security quotes.   If not, the self employed will have 30 natural days to bring this up to date.
  7. The application must be made within the first 15 days of October, and will last for 4 months (31 January 2021).  If this is filed late, this business economic compensation will not be lost, but will apply from the date the application is made, and will last until 31 January 2021 regardless.

The amount of the business economic compensation will be 70% of the social security base, same as the previous one.

To complement the above, the self employed will not have to pay the monthly social security payments, same as type 1 and type 2.

Spence Clarke & Co specialises in the provision of Spanish tax, legal, audit and accountancy services, mainly to foreigners with interests in Spain. Our cross-border knowledge helps clients adapt to the Spanish system with the minimum of doubt and disruption. If you have any questions about this article or any other matter contact us, with no obligation, to see how we can help you.