Law Approving Urgent Reforms For Self Employed Workers comes into force

The Law on Self-Employment Measures  intended to make life easier for the self-employed  passed unanimously in Congress and has now passed in the Senate without change. Some measures take effect the day after their publication in the BOE  on the 25 October 2017 while some do not come into force until January 1st 2018.

Some of the most welcome measures in the  “Ley de Reformas Urgentes del Trabajo Autónomo” are :

Measures for start-ups

As from the 1st January 2018 the flat rate of 50 euros per month social security for the first year of trading is extended for newly self-employed people or those who have not been self employed within the last two years. If a self employed person was enjoying this reduced rate and ceases trading they can return to this scheme after three years.

Social security payments are also reduced in the second year of trading. For the period 12-18 months the payments  are reduced by 50% of the full rate and for the period 18 – 24 months of trading by 30% of the full amount.

There are also subsidies applied for entrepreneurs with disabilities.

Fiscal Measures – Effective 1st January 2018

 Interest/fines on late payments of Social Security contributions are reduced by half, from 20% to 10% in the first month.

The self-employed that work from home can deduct 30% of the cost of utilities, such as water, electricity and telephones as business expenditure.

26.67 euros per day for expenditure on food in Spanish territory or  48 euros per day abroad can be deducted against income tax PROVIDED it  directly relates to the activity concerned.

Social Security Contribution levels – enters into force in January 2018

The self-employed will now pay pro rata contributions for the number of days they have traded in the month they cease trading not for the whole month regardless of termination date as before.

The self-employed can  stop trading and resume again up to three times in the same year to reflect actual working situations in some sectors.

The self-employed may change their social security contribution base (within allowed minimum and maximum levels) up to four times in the same year  to reflect actual income.

A self-employed person can claim 100% of their state pension and still continue trading if they have at least one employee in their charge.

Self-employed parents will be exempt from paying social security contributions during the period of their maternity / paternity leave, adoption, foster care, and so on.