Billing Without Paying The Social Security Fee
In today’s article, we will analyze all the situations in which you could issue invoices without paying the Social Security fee in Spain. That is, defend your decision not to register with Social Security, but only with the Tax Agency.
Although, our advice will always be that you should register with the Treasury and Social Security to carry out an activity on your own. And even more, if you have the opportunity to take advantage of the flat rate self-employed fee.
Case 1: “Non-habituality” and lower monthly income than the minimum
If you work on specific projects, you may be thinking that registering with Social Security does not compensate you. Many think that you have to pay the corresponding fee and taxes, and not have enough income to make it profitable. But before being part of the underground economy, there are alternatives that we will tell you below.
Although to be able to issue an invoice, it is necessary to be registered in the Social Security as self-employed and also in the Treasury, the Social Security qualifies the situation since in its regulations it indicates the following:
“For the purposes of the Special Social Security Scheme for self-employed or self-employed workers, (…), self-employed or self-employed workers shall be understood as those who regularly, personally and directly carry out an economic activity for profit, without being subject to a work contract, and even if for that activity they have to use the paid service of other people.”
The crucial thing to know whether or not you should sign up is that it is a regular activity. A “habitual” activity can be any activity that is repeated over time without having a scale of a number of hours or anything similar. Therefore, when can you not have to register? When, for example, temporary jobs arise without it being your usual activity.
Examples: Website design project for a company.
It is a specific project that the designer will charge this month, but not the next one. That is, there is no routine. If it were about maintaining the web design and there is a “fixed” monthly income, then it would be a regular “habitual” activity.
Something that you should also consider is that advertising your services or products through a website is equivalent to having a place open to the public. So, Social Security would consider that your activity is also “habitual”, having to register as self-employed in RETA.
Another criterion that exists depends on the minimum interprofessional wage (SMI in Spanish). Some judgments have given the reason to people who were not registered because they had income below the SMI (currently at € 950.00 / month). Still, in case of verification by the Administration, it will be necessary to prove it judicially, with the cost that this may entail.
Therefore, it is incorrect to affirm that you don’t have to register as self-employed if your income doesn’t reach the SMI. This question is somewhat more complex.
Case 2: Mutuality
On the Social Security website, they tell us that:
“Members who join the Social Security Mutual Fund that the corresponding Professional Association may have established are exempt from the obligation to register, provided that the mutual fund has been established before November 1995.”
That means that those professionals who have completed their studies can choose to join the “Mutualidad de Previsión Social” instead of registering with the Special Regime for Self-Employed Workers.A mutual society is an association of professionals who carry out the same activity (experts, engineers, lawyers …) to help each other. Mutual societies have a series of characteristics similar to those of Social Security, such as retirement benefits or incapacity for work, among others.
If you are a member of the association and you register with Social Security as a self-employed, later you will not be able to take the alternative of joining the mutual society. Within the professional associations, this rule doesn’t extend to all, but we would be talking about the following sectors:
– Technical architects
– Administrative managers
– Senior architects
Case 3: You work for someone else and at the same time, you have your “projects” apart
That would be the situation of multiple activities or “pluriactividad“. That is, having a contract for someone else and at the same time carrying out a professional or business activity on their own. In this case, you must register as a self-employed (register with the Treasury and register with Social Security), marking “pluriactividad”. There are bonuses for multi-active freelancers that we detail in this article.
Case 4: I want to work abroad and listed on Esp AIN
Self-employed workers who carry out their activity abroad, in a European Union’s country, may continue with coverage by Spanish Social Security. Displacement to this other country cannot last for more than two years.
1. I will be there for less than two years
During those two years, you will have to continue paying social contributions in Spain, although you may pay for health services not paid in Spain. To maintain Spanish coverage, you have to fill out form A1 and submit it to the INSS.
For this form, the activity you will develop in the destination country must be similar to the one you carry out in Spain, thus avoiding paying a fee.
2. I will stay there for more than two years
Suppose you foresee that the displacement will last more than two years. In that case, you can request an exemption that allows you to maintain the Social Security coverage of your own country throughout the period. Exemptions must be approved by the competent Administration of the countries concerned and are only valid for a specified time.
– If you do not make this exemption, you can only maintain the Social Security coverage of the country of origin during the two years we were talking about. When that period passes, you will have to register with the Social Security of the destination country and pay there the contributions.
– There is also the option to unsubscribe from the activity for a minimum period of 2 months, after which you can apply again for coverage in our country.
To obtain an extension, you have to contact the Administration that issued the A1 form before the end of the initial period of posting.
Other specific situations
You may have the question of, what if I don’t want to become self-employed? Do I have alternatives? The self-employed use different systems, although some are not exempt from a certain risk:
1. If you work for a single client and you are a TRADE ( economically dependent self-employed worker). That is, at least 75% of your income comes from the same Spanish person or company, you may want to try to talk to that person or company to make you an employment contract.
2. Get in touch with your client to try to concentrate invoices in the same period and sign up to invoice said invoices and subsequently cancel them. Although with this option, you will have to be careful because many consecutive registrations and deregistrations can lead to an inspection.
3. Billing through a third party. If you know of a company that can do you that favour, even billing cooperatives dedicate exclusively to that (very few recommended options).
4. If your activity as a self-employed is secondary because you are also an employee. The Tax Agency will see that you contribute to Social Security in the General Regime. They may not sanction you, as it has been seen in some jurisprudence. But if that secondary activity exceeds the SMI (minimum interprofessional salary), then you will have to pay your freelance fee.
5. Do not register and be part of the underground economy. We do not recommend it, as it is illegal. Suppose you do not want to take any risk, and finally, you want to become self-employed in Spain. In that case, we recommend you to take a look at our online tax advisory services first since we include the initial registration in the Tax Agency and Social Security in all our paid plans.
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