27
Jul 2021
3

Chaos at Social Security. Sole Traders may have an Outstanding Debt Due to Renewal of Benefits in June

Business Owners, Social Security , , , , , Sabrina L. Williams

Mayhem and more mayham as Social Security realizes the error made last month when processing payments and deductions as some sole traders renewed their right to continue receiving Sole Trader “Unemployment” Benefits whereas others opted out.

The situation is as follows… Around 250.000 business owners chose to continue receiving unemployment benefits whilst trade is still slow due to Covid-19 but many who had been receiving payments decided to discontinue either because business had picked up and they could manage without additional help or because their income forecast for summer trade would exceed the maximum permitted by Social Security to qualify for benefits.

Those who discontinued benefits would instead receive reduced rates on their Social Security contributions from June to September; now, my clients in this situation will remember when I said at the time that since it was possible to apply for continued benefits until August, it is likely Social Security would charge as normal in June and July and wait to see which business owners are still receiving payments and then deduct two months contributions at the end of August as that seemed the most logical course of action. However, this did not happen and surprisingly, Social Security implemented deductions straight away.

This is partly where the problem lies because not only did they apply deductions virtually across the board meaning that many sole traders only paid 10% of their normal monthly contribution even though they had applied to continue receiving payments; but the Mutuas correctly refunded these sole traders a percentage of the Social Security contribution as part of their benefits payment.

What does this mean? Well, not only were the affected sole traders charged 90% less by Social Security but they were also reimbursed part of the contribution by the Mutua (double whammy!) so in many cases, these business owners now owe Social Security a minimum of 250 euros depending on their base rate.

How has this happened? Social Security and the Mutuas are independent entities so the information is not picked up immediately, so Social Security did not have the necessary data to determine who was entitled to the 90% reduced rate in June. Again, this is why at the time I had assumed they would wait until the end of August before applying any deductions as they would have sufficient information by then but they didn’t do that.

The second scenario is that other business owners are owed money by Social Security because they paid the full contribution in June when they should have only paid 10%. In this case, they must request the appropriate refund directly.

The third and final scenario is those sole traders who had been receiving benefits until May but opted not to renew this right correctly paid 10% of their normal contribution in June and will continue receiving discounts until September. In this case, the sole trader neither owes nor is owed anything.

Bottom line… Check your June bank statement to see what Social Security you paid and what you received from the Mutua to verify whether you are one of the affected business owners who now owes Social Security. If you are unsure, please contact me about it. So far Social Security has not released clear information as to how they intend on regulating these payments, but I’m sure they are working on a way to fix this big mistake!

29
Nov 2020
0

COVID-19: Lastest Social Security News for Business Owners

These past few days have been quite busy on the business owner front, whether it has been to

COVID-19: Lastest Social Security News for Business Owners

COVID-19 , , , , , , , , Sabrina L. Williams

These past few days have been quite busy on the business owner front, whether it has been to do with Social Security or financial aid authorized by the Spanish Government, but I’m going to give you insights into what has been going on lately.

As you must be aware, Social Security increased monthly contributions on 30th October 2020 as per Royal Decree 28/2018, 28th December that outlined progressive increases from 2019 to 2021 that incorporate obligatory payment of Professional Accidents, Business Closure (Sole Trader Unemployment) and Professional Training which up until that point were voluntary.

Due to the pandemic, the annual increase, that usually takes place in January, was delayed until October. According to statistics, 77% of sole traders contribute the minimum base rate, which means an increase from 283,30 euros per month to 286,15 euros per month. The increase applied varies from approximately 2,84 euros to 12,12 euros depending on age and applicable base rate.

Tomorrow, Monday 30th November 2020, Social Security will implement two important matters in relation to governmental financial aid:

  1. Those who requested a continuance for sole trader financial aid will receive payment and this will extend until 31st January 2021. Depending on your circumstances, you will either receive 472 euros (50% of the base rate) or 661 euros (70% of the base rate). The number of applicants has almost doubled since the last count. In October 256.000 sole traders requested financial aid, however, it would seem that this has risen to around 500.000 beneficiaries.
  2. Those sole traders who requested deferment on their monthly contribution will begin to pay back their debt to Social Security from Monday 30th November 2020. At the start of the pandemic, the Government permitted this option to certain collectives to temporarily alleviate financial pressures by not charging fees for May, June and July, but now it is time to pay back the piper, so the back payments will be added onto the usual monthly contribution (a minimum of 572,30 euros). Statistics do show though that not many business owners requested this form of financial aid.

Although these measures have proved invaluable to those who have been affected economically by this health crisis, there is an outcry from those who feel that not enough is being done. Please take a read of the following article for more information, https://www.canaryadminservices.com/will-the-pandemic-restart-conversations-about-social-security-contributions/

20
Apr 2020
0

COVID-19: State and Canarian Financial Aid for the Self Employed (a must read!)

Over the past few days, there has been more movement regarding financial aid for sole traders and business

COVID-19: State and Canarian Financial Aid for the Self Employed (a must read!)

Business Owners, COVID-19 , , , , , , , , , , Sabrina L. Williams

Over the past few days, there has been more movement regarding financial aid for sole traders and business owners. Social Security confirms that on Friday 17th April 2020, 919.173 self-employed persons received payment in what is the first outlay of benefits that amounted to approximately 670,9 million euros. On 15th April, the record shows that 1.016.670 business owners have applied for this financial aid, so there are more payments on the way in case you have not received yours yet, but congratulations to all those who have, it must feel like winning the Golden Ticket from a Wonka Bar!

One very important detail that I noticed when I received the first notification that a client’s application had been approved was that it only confirmed payment of 661,08 euros. The Central Government stated in Royal Decree-Law 8/2020, 17th March that they would pay 70% of the base rate that determines how much Social Security we pay each month, so this amount coincides with that, however, the Canarian Government said it would pay the remaining 30% to all residents of this region. The minimum base rate is 944,40 euros, so where is the missing 283,32 euros?

While I have been reading through legislation and corrections on a daily basis from the Central Government, perhaps I have not been monitoring Canarian legislation quite as closely, but to be fair, they have been pretty quiet about financial measures since announcing they would pay the balance and nothing has been reported on the news either. Also, we (other professionals and I) thought that since the Mutuas have been charged with processing Sole Trader Unemployment Benefits, this would be automatically included once they approved the application, but this has not been the case, so I’ve been investigating the matter further.

The Canarian Government published a decree that has almost gone unnoticed (you’ll find out why in a minute), Decree-Law 4/2020, 2nd April and Article 3 confirms that 11 million euros has been made available to business owners who qualify. Upon reading the decree, the following stood out to me in particular:

1. Financial Aid will cover the missing 30% of the minimum base rate. What is my query here? Well, not everybody pays the minimum rate; some business owners contribute at a higher rate, so I’m not sure if they will be paid as per their contributions or whether it will be limited to the minimum.

2. The decree refers to this financial aid as a “grant” or “subsidy”, terms that are often used to help get new businesses off the ground, but these are not necessarily “free” if you can see what I’m getting at. The Central Government uses the expression “Social Security Benefit”, so it will be interesting to see whether any strings are attached to receiving this payment or not, but it is feasible that it will be done exactly at the President of the Canarian Government announced and I am overthinking the terminology that has been used as in Spanish there are other variations of the word “grant”.

I have contacted the Canarian Government to verify the procedure to obtaining the missing 30% since it has not been automatically added to the payments received. The response I have received so far confirms that although the Decree was authorized, additional steps such as how to apply for this financial aid, conditions etc have not yet been approved, but the Canarian Government hopes to publish terms and procedure next week (not guaranteed). I am still awaiting a response with regards to my concerns, but I imagine we will have to wait until a new decree is published to find out so watch this space.

For those whose application has been accepted, you are exempt from paying Social Security contributions until the State of Emergency comes to an end. However, the Administration still has the right to verify that you qualify for these benefits, so they may require additional paperwork to confirm, but to date, 97,3% of all applications have been approved without incident.

There is still one very important issue to discuss… what about Social Security contributions that were charged on the 31st March? Social Security did not implement measures prior to this date, which meant that everyone was charged a full month’s contribution, even who have had to close doors since 15th March. As mentioned in the previous paragraph, business owners in this situation are exempt. A tweet from their official account says that the contribution will be refunded without the need to apply, and further investigation indicates this will happen in the second half of May.

INTERESTING STATISTICS:

The retail sector has filed the majority of all applications (123.883) followed by the hospitality industry (112.854) and construction (68.560)

The worst affected autonomous regions are Andalucía, Cataluña and the Comunidad Valenciana.

19
Mar 2020
1

CORONAVIRUS UPDATE: Royal Decree-Law 8/2020

Following on from yesterday’s email, Royal Decree-Law 8/2020 was published yesterday to complement Royal Decree 463/2020, 14th March.

CORONAVIRUS UPDATE: Royal Decree-Law 8/2020

Spanish News , , , , , , , , , , , , , , , , Sabrina L. Williams

Following on from yesterday’s email, Royal Decree-Law 8/2020 was published yesterday to complement Royal Decree 463/2020, 14th March.

The chain reaction the outbreak of COVID-19 as caused throughout the world that initially concentrated in China, interrupting much of the world’s production and manufacturing output has now filtered down to other dependent sectors, affecting export and supply.

We have also seen the direct impact it is having on domestic finances, the closure of schools, the cancellation of public events, flight and other transport bans that have primarily shaken the tourist industry, not to mention the effect on the global stock market. The limitations imposed on us since last Saturday have meant restrictions on freedom of movement, quarantine which have generated incredible issues within the family unit and businesses alike, especially for those families whose income derives from the type of activities that have been temporarily banned by the government.

The government’s priority right now is to minimize as much as possible the impact of this lockdown and facilitate measures to ensure we can all bounce back as soon as the situation improves.

Some of you emailed me yesterday about the new situation and as mentioned in my previous email, I spent the day reading through and clarifying certain points of the decree that were not  so I can summarize its key points to you. If after reading this email, you still have queries or concerns about your situation, please do not hesitate to contact me again. Since there has been no official has been published about Holiday Lets, the only thing I will say at this time is that there is a difference between the types of accommodation being mentioned (hotels, camping and caravan sites…) and self-contained units such as private apartments and villas. Hotels and similar call for groups of people to be attended to in the dining area for example as the rooms are not self-sufficient, so this closure may only refer to these types of accommodation. This is not official as mentioned, only my own deductions, however, if your property is currently occupied, remember, the government is encouraging people to return to their countries of residence until this crisis is resolved mainly because airspace is due to be closed down or greatly reduced.

According to this Royal Decree-Law, the following measures have been approved:

1.- Extraordinary Social Security benefits for closure of business activity for those affected by the declared State of Emergency in order to regulate the health crisis produced by COVID-19:

a) Exceptionally and limited to one month1 from the date in which Royal Decree 463/2020, 14th March came into effect when the State of Emergency was officially announced, those sole traders whose business activities were shut down have the right to these “unemployment” benefits as long as the following criteria is met:

  • To be affiliated and currently registered as a sole trader (Régimen Especial de la Seguridad Social de los Trabajadores Autónomos) or at least on the date the State of Emergency was announced (14th March 2020)
  • In the event, your business activity was not directly shut down by virtue of the above-mentioned Decree, you must provide evidence that your billing during the month prior to applying for unemployment benefits has been greatly reduced by at least 75% in comparison to the average billed over the six previous months
  • To be up to date in payment of all Social Security contributions. If this is not the case, they allow a maximum of 30 days in which to make these payments and access unemployment benefits

1 Unemployment benefits would be extended to the last day of the month in which the State of Emergency concludes, should this situation last more than one month

b) The benefit amount is calculated by applying 70% of the average base rate you have paid over the last twelve months, which is to say, twelve consecutive months and immediately prior to applying. If the applicant has not been registered as self-employed for twelve months, therefore not meeting the normal criteria, the benefit amount applicable would be the equivalent of 70% of the minimum base rate

c) As stated, the duration of this extraordinary benefit is one month, which could be extended to the end date of the State of Emergency, however, this time would be recorded as if you had continued paying into the system as normal, i.e., it does not interrupt your registry as self-employed and it does not reduce the time you may receive this same benefit if you have to apply again in future (for a situation unrelated to COVID-19

d) Receipt of unemployment benefits mean you would not be liable to pay Social Security contributions. For those who continue their business activity, you must pay the monthly contribution as normal

e) Receipt of unemployment benefits is incompatible with any other Social Security benefits

f) Working partners linked to co-operatives will be granted the same rights to access these benefits as long as they meet the requirements established above

IMPORTANT NOTE: The Decree does not mention if this applies to Sole Traders registered as Family Collaborators. I am trying to find out whether they would have the right to unemployment after the principal Sole Trader applies.

 

2.- Measures to regulate employee contracts to avoid dismissals:

a) There is a system in place for those businesses that have suffered the most severe losses due to forces beyond their control such as this health crisis called ERTE (Expediente de Regulación Temporal de Empleo). What is the definition of forces beyond control in this situation?:

  • Suspension or cancellation of business activities
  • Temporary closure of premises open to the public
  • Restrictions on public transport
  • General restrictions and freedom of movement of people and/or merchandise
  • Loss of provisions that hinder the normal development of the business
  • Contagion within the company
  • When extraordinary measures of preventative self-isolation have been enforced in the company

b) In the case of those businesses that on 29th February had less than 50 employees, Social Security will absorb the business owner’s obligatory payments 100%. In the case of those businesses that on 29th February had more than 29th February had 50 employees or more, Social Security will absorb 75% of the business owner’s obligatory payments. These obligatory payments referred to here DO NOT include the business owner’s own monthly Social Security contribution

c) Employees affected by the ERTE system have the right to receive unemployment even if they have not been registered employees for a full year as normally required by law

d) Businesses that choose the ERTE system are obligated to maintain all employees in the company for at least SIX MONTHS after business activities return to normal

e) Social Security must respond to the application within 5 days

f) Employees who have dependents (minors or elderly) should be permitted to take leave to see to their family in the best way possible, however, employees who are absent from their place of work for unjustified reasons may be dismissed (the proper procedure must be followed)

 

3.- Business Line of Credit:

The Ministry of Economic Affairs will grant a line of credit to ensure cash flow in affected companies (payment of invoices, financial or tax obligations or other cash flow issues). The maximum amount is 100.000 euros and conditions are being drafted

 

4.- Extensions for Mortgage Loans:

a) For those who have especially difficult circumstances due to the COVID-19 crisis and are unable to make mortgage repayments on their mortgages, special measures apply for their primary residence only

b) Those debtors that fall under the category of “economic vulnerability” as established in Article 9 of the Decree-Law (or point c of this document) and whose contracts are currently in effect. These same measures apply to guarantors of the debtors

c) Definition of economic vulnerability:

  • The debtor has been made unemployed or in the case of sole traders, has suffered a substantial loss of income or a substantial fall in sales
  • That the total income of the family unit does not exceed the income received in the month prior to applying for the extension
        • In general terms, the limit of three times the monthly Indicador Público de Renta de Efectos Múltiples (IPREM)
        • The above limit will increase by 0,1 the IPREM for each dependent child or 0,15 for each child in a single-parent household
        • The general limit will increase by 0,1 for each family member over the age of 65
        • If any family member has a declared disability higher than 33%, dependent situation or illness that does not permit them to work, the general limit will be four times the stipulate IPREM, regardless of any increases

There is still a little bit of uncertainty about some of these measures as procedures have not been clearly outlined etc., and the Administrations themselves are not entirely sure what the logistics would be, but if you would like to proceed with any of these options, please contact me to discuss how best to move forward. If not, it is business as usual until we all come out fighting the other side.

As always, take care

17
Apr 2014
0

Unemployment Benefits For the Self-Employed

It has being a long time in coming but it would appear that the Ministry of Employment has

Unemployment Benefits For the Self-Employed

Business Owners , , , , , , Sabrina L. Williams

It has being a long time in coming but it would appear that the Ministry of Employment has finally heard the cries of thousands of self-employed business owners in Spain with regards to their right to unemployment benefits. Due to the economy’s poor state of affairs, many self-employed people have had to say goodbye to their dreams and hard work as the current climate has made it impossible for them to maintain their businesses afloat. This is also true for thousands of workers who have lost their jobs but the difference is they at least the right to unemployment benefits until they manage to find other employment, sadly, this in not the case for those who are self-employed.