The company was dedicated to billing on behalf of self-employed workers, who saved themselves from registering with Social Security.
Although the initial purpose was to cover the gap in the legislation for the billing of sporadic jobs by individuals, it has finally been used by self-employed workers.
The Ministry of Employment has acted forcefully with false self-employed cooperatives, companies that act as intermediaries to allow self-employed workers to issue invoices for their work without contributing as self-employed. It does so with a sanction for the most popular and the largest of this type of firm: Fidelis Factu, S. Coop., commercially known as Factoo. It is forced to dissolve, because Employment considers it proven that its activity is not that of a true cooperative.
Factoo's work is known in the world of work as a “billing cooperative.” In exchange for a commission, it acts as an intermediary between professionals with Social Security and the Treasury to invoice their work. In this way, the employee does not register as self-employed and pays less taxes, because he is billed as if he were a worker in a cooperative, to which he can only be associated for a few days. The Ministry's decision has been forceful: to disqualify Factoo, as reported by Empleo in a statement this Thursday. It means the dissolution of the company as a cooperative based on article 116 of the Cooperative Law, although the company may complain, according to Administration sources.
“The case has been looked at with a magnifying glass. It is not normal for a cooperative to be disqualified, but the report is clear,” Ministry sources said. “The company does not carry out any cooperative activity,” these sources add. The investigation, which began in February, was carried out by the Labor Inspection of Valencia, where Factoo has its headquarters.
The report considers numerous serious violations proven, such as the existence of simulated partners. That is, self-employed workers and not real partners, as they appeared. “They are self-employed workers dedicated to any activity,” says the Employment statement. “It is an irregular use [of the cooperative figure] that can be considered fraud,” the Administration argues. The report also highlights that in the two years that Factoo has been active it has registered more than 5,000 members - according to the company it exceeds 16,000. Furthermore, they were only registered for a few days, which represents an anomalous connection, since the professionals of an associated work cooperative have, in principle, an indefinite employment relationship.
The forcefulness of the decision is also supported by the favorable report of the State Attorney's Office, which concludes that the cooperative's infringement is proven and the requirements for disqualification are met.
Sanctions for workers
The labor inspection, which considers serious infractions serious, was not limited only to sanctioning the company. What's more, the inspection began after opening an investigation into some of the workers who invoiced through the cooperative. “There were individual sanctions, with cases of high billings, not 300 or 400 euros,” Ministry sources explained.
According to the savings calculation that Factoo presents on its website, of every 1,000 gross euros invoiced, the associate only pays 56.5 euros to Social Security, 59.5 for management expenses and around 20 euros as personal income tax withholding. On the other hand, whoever made this same invoice when registered as self-employed would pay 267 euros to Social Security - in the first six months of being self-employed with the flat rate it would only be 50 euros -, 50 euros for the management costs, and 190 euros for Personal income tax, a withholding of 19%.
THIS IS HOW THE SANCTIONED COMPANY WORKED
Alleged cooperative. The company that Employment forces to dissolve is promoted as an “associated labor cooperative” and under the premise “pay only for the time you work.” It is offered as an intermediary for those who carry out self-employed activities, so that, instead of registering as self-employed, they invoice their activities through Factoo. Thus, he assures, they will avoid expenses in Social Security and taxes.
Membership fee. Factoo users have to register on their website and pay a membership fee of 30 euros to be cooperative members. This amount is fully refunded upon unsubscription if they have made at least ten invoices or deposited more than 1,500 euros. Otherwise, only 10 euros will be returned.
Issuance of invoices. Cooperative users can issue invoices to their clients through that cooperative, without having to register as self-employed or establish a company. The invoices, however, are issued in the name of Factoo, which will be in charge of collecting for the services offered with the commitment to settle the partner within a maximum of three days from collection.
Savings promise. Factoo says that the savings for users would be around 30% of their gross billing.
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