The Benefit for cessation of activity of Self-employed persons is provided for in article 17 of RDL-8/2020. This is understood to be an extraordinary benefit.
Below we explain what it consists of and how to proceed in the case of self-employed workers affected by the declaration of the State of Alarm.
Extraordinary benefit for cessation of activity by Self-employed
The purpose of this benefit is to cover the end of the activity of the Self-Employed. Caused by a situation that is in any case involuntary and that must always be duly justified in order to access the corresponding economic benefit
Periods and validity of the benefit for cessation of activity by self-employed
The validity is limited to one month from the entry into force of Royal Decree 463/2020, which has declared the state of alarm for the management of the crisis caused by Covid-19.
In any case, if the state of alarm is extended beyond the month, the service will end on the last day of the month in which the state of alarm ends.
Who can access the service?
Self-employed workers or those who are self-employed:
- whose activities have been suspended by the declaration of the alarm state. According to the annex to RD 463/2020
- or otherwise, when the turnover in the month prior to that for which the benefit is requested is reduced by at least 75% in relation to the average turnover for the previous six-month period.
- According to sources at Mutual Insurance Companies, both professional and corporate freelancers may apply for this benefit. Whose activity has been forced to cease temporarily, not being necessary to have coverage for cessation of activity as a self-employed worker to access the benefit, and likewise not being necessary to proceed to the cancellation of their activity (Model 036 or 037).
Can self-employed people with dependents also apply?
Yes, those who have workers under their charge and have had to close down due to the declaration of the state of alarm or have suffered a reduction in their turnover of at least 75%. They can present a TERF (ERET in Spanish) for their workers and request this extraordinary benefit.
What are the requirements?
- To be affiliated to and registered with Social Security on the date of the declaration of the state of alarm (14/03/2020).
Only if their activity has not been suspended due to the declaration of the state of alarm, they must accredit the reduction of their invoicing in the month previous to the one in which the benefit is requested by at least 75% in relation to the average invoicing of the previous semester.
- Be up to date with the payment of Social Security contributions. However, if on the date of the suspension of the activity or the reduction in invoicing this requirement is not met, the managing body will invite the self-employed worker to pay the contributions due within a non-renewable period of 30 calendar days. The regularization of the overdraft, once accredited, will produce full effects for the acquisition of the right to protection.
Therefore, unlike the ordinary benefit of the Cessation of Activity, a contribution period of 12 months is not required to access the benefit.
Do I have to cancel my registration with the Tax and Social Security authorities?
No. The self-employed person must continue to register with the Tax Authorities (forms 036 or 037). You must also register with the General Treasury of the Social Security in order to apply the provisions of Article 17 of RDL 8/2020. Important, you will be exempt from paying contributions during this period.
What happens if you cancel your subscription and want to apply for the benefit?
You must continue to register, otherwise the exceptional regulations of RDL 8/2020 will no longer apply to you. You must apply for and accredit any of the reasons for the ordinary benefit of Cessation of Activity included and regulated in the General Law of Social Security.
Does the self-employed worker have to pay contributions while receiving the benefit?
No. This period is understood as contributing according to Article 17 of RDL 8/2020
Does the time of perception that is recognized as consumed count for possible new applications for the benefit in the future?
No, this benefit period will not reduce the benefit periods for cessation of activity to which the beneficiary may be entitled in the future.
If they have ceased their activity, do they have to give up the bonuses they enjoy, such as the flat rate?
No, in this sense, the decree indicates that the time that this extraordinary benefit is received will count as effectively contributed. Therefore, self-employed workers who are receiving this aid may apply for it. And they will not lose the bonuses conditioned to the maintenance of the activity, as it is the case of the mentioned Flat Rate.
What happens to self-employed people who are obliged to continue providing service, such as taxi drivers?
These workers will be entitled to the benefit if they can prove that their turnover has fallen by at least 75%. There is no problem in reconciling the benefit and the activity.
How much does the Self-Employed earn?
- It will be determined by applying 70% to the regulatory base. Calculated in the same way as for the ordinary benefit for the cessation of activity. In other words, the average of the bases for which contributions were made during the twelve continuous months immediately preceding.
- As the 12-month contribution period is not required to qualify for the benefit, when this period is not accredited the amount of the benefit will always be equivalent to 70% of the minimum contribution base of the Self-Employed or Sea Workers’ Scheme. That is, 70% of 944.35€= 661.04€.
How long will the benefit last?
As indicated above, the benefit will last for one month. It will be extended until the last day of the month in which the alarm condition ends in the event that the situation is extended beyond the established month.
In addition, the time it is paid will be understood to be the period of contribution and will not reduce the periods of benefit for cessation of activity to which you may be entitled in the future.
On what date does entitlement to the benefit arise?
The worker who meets the requirements will be entitled to receive the benefit with effect from 14 March 2020, the date on which RD 463/2020, which was declared by the State of Alarms, came into force.
Since when can the benefit be requested?
- In the case of the self-employed whose business has been forced to close due to the declaration of the state of alarm, from 14 March.
- In the case of those who have to present documentation accrediting the fall in monthly turnover, from the moment they are able to present said documentation.
What documentation should be presented?
Those whose activity is among those suspended by RD 463/2020:
- Benefit application (on line).
- Form 145 of data to the payer.
- Photocopy of DNI/NIE/Passport.
- Bank account number, IBAN code.
- The last two receipts for the contribution.
- Family book in the case of dependent children.
In addition to this documentation, those whose activity has not been suspended must accredit the reduction of their invoicing by providing the following documentation (subject to variation)
- Model 130. The 4 quarters of 2019
- Model 131. From the last quarter of 2019
- Profit and loss account broken down by month for the whole of 2019
- Profit and loss account broken down by month for January, February and March 2020
How will the loss of turnover of the tax payer by module be recognized?
Social Security is studying how to adapt this benefit for the self-employed who are not obliged to issue invoices for modular contributions.
Will the payment be made by discounting the income tax?
Only if the applicant indicates a type of voluntary income tax on the form.
Is it compatible with other Social Security benefits?
The payment of the benefit for cessation of activity of self-employed workers will be incompatible with any other benefit from the Social Security system.
In Arrabe Integra we are at your disposal to assist you in all the procedures that you need.