The new flat rate for self-employed workers will come into force in January 2018

This will mean an extension from six to twelve months in the payment of 50 euros per month

Other possible improvements include a reduction in the period of prior registration in the RETA in order to benefit and proportional payment of the fee in the case of part-time registration.

The legislative measure that extends the period of application of the flat rate for new self-employed workers from six to twelve months is expected to be approved this spring, which means that it would not come into force until January 2018. And although the Law on Urgent Measures for Urgent Employment, which includes the former, is still in the process of negotiating amendments, it is taken for granted that it will be approved unanimously.

There are two reasons behind the lack of immediacy. Firstly, the need to adapt the Social Security computer and management system, and secondly, the absence of a General State Budget. In this regard, the new accounts would be the framework chosen to begin the transfer of funding sources. That is, the conversion of some reductions, such as the Flat Rate, into bonuses, with the aim of having them charged to the SEPE (State Public Employment Service) and thus saving some 1.9 billion euros annually for the deficit-ridden coffers of Social Security. This is a point on which the Government would have the support of the PSOE and Unidos Podemos in light of the amendments presented by both groups to the Citizens' Bill.

The period during which the self-employed person cannot have been registered with the RETA could be reduced from five to two years

 

Beyond the date of entry into force, the truth is that the initial proposal formulated by Ciudadanos will be improved. Among the nuances is the reduction from five to two years of the period in which the self-employed person cannot have been registered in the RETA (General Regime for Self-Employed Workers), an initiative defended by the orange party. Likewise, and if another of the PP's proposals is applied, self-employed persons who register after the 1st of each month will only have to pay the proportional part of the number of days they have been registered.

Another measure that could be approved is proportional payment in the case of part-time employment.

The Socialists also defend the above-mentioned principle of proportionality, but in this case applied to part-time work. In other words, if the self-employed person works four hours, the fee he will have to pay will be only 25 euros, that is, the amount corresponding to half of the working day.

On the other hand, and if the new fifth final provision proposed by the Popular Group is approved, launching the remake of the Flat Rate will be a small matter, since it will have the rank of Royal Decree Law and will not have to go through any further procedures than those of a Council of Ministers.

300,000 new self-employed workers

In addition to being one of the measures most applauded by the self-employed, the Flat Rate is one of the most profitable measures for the Government. Since it was launched in February 2013, more than one million (1,007,290 until November, the last data published by Social Security) self-employed workers have registered with the RETA (Special Regime for Self-Employed Workers), of which almost a quarter have been under 30 years of age. In fact, it is no coincidence that autonomous communities such as Madrid, Asturias and Galicia have gone further and have anticipated the state initiative.

According to estimates by ATA (National Federation of Associations of Self-Employed Workers), from the moment the extension is approved, around 300,000 new self-employed workers will join the number of new workers that would normally be registered under normal conditions, many of them from the informal economy. This is why Lorenzo Amor has described the measure as the “most important” one included in the Law of Urgent Measures proposed by Ciudadanos.

As it stands, the new Flat Rate will allow self-employed workers who pay the minimum contribution base to benefit, during the first year of activity, from a reduced rate of 50 euros. For those who do so on a higher base, the reduction will be 80% on the chosen contribution base for common contingencies, that is, if this is 1,003 euros, the amount to be paid to Social Security will be approximately 60 euros per month compared to the ordinary 298.90 euros.

After twelve months from the start of activity, a reduction of 50% will be applied for the following six months, which will be reduced to 30% during the following two quarters, until two years have passed.