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The advantages of the new self-employment law

It is no secret that self-employed professionals are one of the groups most concerned with tax reforms. The numerous formalities necessary to start an entrepreneurial project and the huge expenses that accompany it at every stage of the work are some of the main obstacles faced by these workers.

On June 29th, the Employment Committee of the Congress of Deputies unanimously approved the Urgent Reform to Freelance Work law. The initiative, as presented by citizens, will also help those who wish to work in a real estate company like Engel & Völkers.

The first notable aspect of this new law is the extension of the colloquially called 'flat rate' for entrepreneurs, by virtue of which the self-employed only have to pay 50 euros per month towards social security contributions. This fee is only payable for the first 6 months of self-employment. With the new law, it extends up to the first year of business activity. From then on, contributions are gradually increased until reaching the minimum rate of (267.03 euros, in 2017).

Another new addition to this law is that women will enjoy the 'flat rate' in addition to their maternity leave pay. 

Madrid - Nueva ley de autonomos

Foto: © Engel & Völkers Madrid

Administrative rationalisation is another very interesting point in this new law. This means the self-employed can claim social security payments with accordance to price inflation. A similar measure is the possibility of modifying the contribution base up to four times in a year. Both aspects will make it possible to adjust fiscal payments that are closer to the true income of the professional. In the real estate sector, the self-employed professionals tend to earn a varied income throughout the year. Being able to adjust the contribution base to the profitability of the business will avoid paying too much to the government.

Finally, another block of measures that soften the penalties on this group of professionals include: if a self-employed person is late in paying the social security fee, the applied surcharge will go from 20% to 10% during the first month of activity. If the fee has been quoted to a greater extent than it should have been done based on income, the government will refund the excess without the need to claim this amount. In the deductions section, these increase up to 26.67 euros per day in terms of subsistence allowance and maintenance. Without doubt, this is a very reasonable change to the law for self-employed real estate professionals.

Engel & Völkers

Génova, 27 - 5th floor
28004 Madrid
+34 91 277 45 00

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