The Labour Office inspects hundreds of Factoo partners to demand self-employment contributions.
Social Security sends letters to clients of the billing platform notifying them of automatic registrations to claim overdue amounts and interest.
Many members of cooperatives that offer services to invoice third parties without having to register as self-employed for carrying out sporadic work are being inspected by the General Treasury of Social Security, which considers that they have maintained a self-employed activity during the periods in which these invoices have been issued, without being registered in the Special Regime for Self-Employed Workers.
As a result, the TGSS proceeds, depending on the case, to automatically register and deregister you on the dates in question. This is the first step in claiming back payments, which can amount to several thousand euros.
These companies offer unemployed people the possibility of invoicing third parties for occasional work, without having to register as self-employed. It is the company that is responsible for invoicing the client in exchange for a commission to the worker, and also for managing registrations and deregistrations with Social Security.
Everything seemed to be working properly until the General Treasury of Social Security, after examining the accounting and tax documentation, decided to act and sent letters to those affected informing the worker of the facts and claiming the amounts in the form of overdue contributions, plus interest.
The TGSS is demanding payment of overdue amounts plus interest from those affected, although it is not applying any penalties as it considers that they have been deceived by the billing companies.
However, in most cases, the corresponding penalties (600 euros for each month that someone does not register as self-employed) will not be applied, as the Treasury considers that they have been deceived by the billing companies.
The Labour Department is investigating this alleged fraud in this type of cooperative, considering that they disguise as false employees what should be self-employed and that, in reality, they act as billing companies, something that their promoters deny.
The Labour Inspectorate is reluctant to discuss the investigation, "as with any other ongoing investigation." The Ministry of Employment offers little information about it for reasons of confidentiality, although it admits that the letters received by Fernando "are a consequence of the inspection action."
Factoo, in the spotlight
Since last November, the Labour Office has been inspecting one of the billing companies, Factoo, which claims that its activity is legal and that it continues to operate normally. However, according to an inspection report, Factoo's "illegal activity" has a "fraudulent purpose" and, in fact, the inspection does not even believe that it is a cooperative.
The inspection considers that they were in fact self-employed and that they did not pay contributions as such because they intervened "in the relationship with their clients, for billing purposes, with FIDELIS FACTU, SOCIEDAD. COOPERATIVA [i.e. Factoo]". Furthermore, for the inspection, Factoo is an "instrumental company, whose illicit activity - from the perspective of the legal relationship of Social Security - is materialized in the simulation of dependent employment relationships (in the form of partner-workers) for the purpose of processing periods of registration in the General Social Security Regime of workers who, in reality, are self-employed workers, thus enabling these 'worker partners' to fail to comply with their obligations to register and contribute to the Special Regime for Self-Employed Workers (RETA)".
According to the same document, Factoo works as follows. Self-employed professionals carry out a job and contact Factoo so that the cooperative can issue the invoice for that work. To do this, Factoo asks the professional to sign an adhesion contract or association document - with which "the simulation of the professional's incorporation as a 'working partner' materializes" - and to pay an entry fee. Once this is done, Factoo registers the worker in the General Social Security Regime "for a few days", issues the invoice to the client and, subsequently, a settlement to the professional in which "the payment of the Social Security expense and other amounts for its processing" are deducted.
That is to say, according to the minutes, the workers - who "need to issue invoices to their clients and comply with tax obligations" - seek to avoid facing the latter. And this is where Factoo comes into play, "a false cooperative" - according to the document - which is "the instrument put at the service of this non-compliance" and which is offered in an "aggressive" advertising campaign "in which the message is always to invoice without being self-employed."
"In reality, the partner is a client of Factoo, and the service provided by this company is the invoice submitted and, therefore, used instrumentally to avoid compliance with tax obligations and registration and contribution to the RETA of these workers," is stated in the liquidation minutes, which make it clear that the registration in the General Regime of the partners is "improper."
This practice, for the labor inspectorate, "in addition to its fraudulent purpose" is "contrary to legal regulations and the social function provided for Associated Work Cooperatives," which is how Factoo presents itself, and which is included in article 80 of Law 27/99.
The document states that Factoo is not actually a cooperative, it is "a consultancy/agency that is dedicated to billing and collecting on behalf of its clients, whom it calls associates (…) The business consists of that, creating a fiction of a cooperative."
Meanwhile, in the resolution of the General Treasury of Social Security It is reported that the worker is registered with the RETA and it is noted that the worker "has been carrying out (...) a self-employed activity for profit on a regular, personal and direct basis without having registered or paid contributions to the RETA as he is registered with the company FIDELIS FACTU, SDAD COOP, which has been requested to be disqualified as a cooperative, so that the people who appear as cooperative members and with periods of registration as employees in the aforementioned company are in fact self-employed workers (...)".
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