The reduced contribution in article 38 ter of Ley 20/2007, the Self-Employment Statute (what everyone calls the tarifa plana, or flat rate), is €86 a month for the first year, instead of the contribution that would follow from your earnings bracket. Over twelve months the difference comes to several hundred euros. And it is lost with surprising ease: not by earning a lot, but because of an old registration the person concerned no longer even remembered.
What it is, in one line
It is a reduced contribution for common and work-related contingencies for people making an initial registration in the RETA (the special social security scheme for the self-employed), or returning to it after a period without being registered. It amounts to €86 a month for the first twelve months, and does not depend on how much you invoice during that first year.
The condition that decides: not having been registered before
| Previous situation | Condition |
|---|---|
| You have never been registered in the RETA, or have not been in the two years immediately before | You qualify |
| You already had this reduced contribution in an earlier registration | The required period rises to three years without being registered |
| You were registered eighteen months ago | You do not qualify: not enough time has passed |
| You were registered for a single month eighteen months ago | Nor do you. The rules look at whether there was a registration, not at how long it lasted |
A month registered as a helper in the family business, two trial months in an activity that never took off, a registration someone processed for you eighteen months ago: any of those counts, and the Tesorería (the Social Security treasury) knows about it because it is in its own system. Before counting on the €86, the sensible thing is to request your informe de vida laboral, the Social Security record of your working life, and read it. It is free, it takes minutes and it saves you building a financial plan on a contribution you will not be granted.
The second-year extension
The reduced contribution can be extended for another twelve months, but that extension is not automatic: it depends on your net earnings during the first period staying below the threshold the rules set by reference to the salario mínimo interprofesional, the Spanish national minimum wage. And it has to be applied for.
| Year | What happens | What has to be done |
|---|---|---|
| First | €86 a month, with no earnings condition | Apply for it at registration |
| Second | Extension possible if earnings stayed below the threshold | Apply for it expressly, with the corresponding declaration |
| Third onwards | Ordinary contributions by bracket | Review the earnings forecast: contributions based on real earnings |
The practical consequence is that in the second year you need to run the numbers before applying for the extension, because the threshold is measured on earnings that have not yet been declared when you apply. And if it later turns out that it was exceeded, the reduction is lost with retrospective effect.
The groups with a longer period
The rules provide longer treatment for certain situations:
- People with a recognised degree of disability of 33 % or more.
- Victims of gender-based violence.
- Victims of terrorism.
For these groups, article 38 ter provides a longer duration of the reduced contribution, with its own pattern of periods and conditions. We do not reproduce the exact number of months here, because they are among the figures worth checking against the text in force before relying on them; what is worth knowing is that the extension exists, that it also has to be applied for, and that the evidence of the circumstance needs to be ready at the time of registration.
The self-employed company member
It is the most frequently asked question in this area: can someone who joins the RETA because they are a director or member of a company (an autónomo societario) get the reduced contribution? Here one has to be precise, and honest: there has been a restrictive administrative position, and there have been court decisions recognising the right in particular cases under the earlier rules. It is not a settled area.
What we can say without straying from the truth is that the application can be made, that the outcome depends on the view taken of the case and on the state of the question at that moment, and that we cannot guarantee it will be granted. Anyone building their cash-flow planning on the assumption that the contribution will be €86 is exposing themselves to a significant difference. The prudent course is to plan with the ordinary contribution and treat the reduction as a bonus if it comes.
Regardless of the reduced contribution, in calculating the net computable earnings of a self-employed company member the deduction for general expenses is 3 %, instead of the general percentage. It is a figure that affects the contribution bracket every year, not just the first, and it should not be confused with the debate about the flat rate.
How much is really saved, and for how long
It is worth putting the figure in context, because the flat rate is sometimes sold as if it solved the whole first year of a business. What it does is replace the bracket contribution with €86 a month for twelve months. The saving therefore depends on what that contribution would have been, and that contribution depends on your forecast earnings.
| Profile | Effect of the reduced contribution |
|---|---|
| Low earnings in the first year | The saving exists but is smaller: the ordinary contribution in the low bracket is already modest |
| High earnings from the first month | This is where it shows most, because the contribution being replaced is one of the highest |
| An activity that starts slowly | The monthly saving is small, but it comes when it is most needed: the first months are the ones with the tightest cash flow |
The other side is that twelve months go by quickly. The jump from the reduced contribution to the ordinary one is abrupt and, in many businesses, it coincides with the moment when the first income tax return with business earnings also has to be faced. It is worth planning for that step from the start rather than discovering it when the bill for month thirteen arrives.
What has to be done, and when
- Request your working-life record and check whether there were earlier registrations in the RETA, and when they ended.
- Check whether the reduction was ever used before: that tightens the condition to three years.
- Apply for it in the registration itself, ticking the relevant box. It is not granted automatically.
- Gather the evidence if you belong to one of the groups with a longer period.
- Put in the diary the end of the first period, so as to decide on the extension in good time.
What the reduced contribution does not change
- It does not affect the tax office. Your census obligations, your VAT and your income tax are exactly the same. The full registration is covered in registering step by step.
- It does not release you from filing returns even if you invoice nothing.
- It does affect your bases, and therefore the amount of any benefits calculated on the period in which you paid the reduced contribution.
- It does not simply stack with other reliefs on the same contribution. If you are coming from unemployment benefit, the ways of combining the two have their own rules: the three routes.
Becoming self-employed again after years away
There is a profile that fits better than it thinks: someone who was self-employed long ago, stopped, and is coming back now. The rules do not require an initial registration in absolute terms, only that you have not been registered in the RETA in the two years immediately before (three if you already had the reduction). Someone who stopped six years ago qualifies without difficulty, and yet many do not even ask, because they assume the reduction is only for people starting for the first time.
The nuance to check in these cases is the second one: if a reduced contribution was used during that old registration (the one in force then or the current one) the required period gets longer. And that is not always remembered, because a third party may have handled it. Once again, the working-life record and, if needed, the breakdown of contribution bases settle the question in an afternoon, before committing to anything.
If it is refused, or if you lose it
A refusal is notified and can be challenged through the relevant administrative route, with its deadlines. A loss further down the line (because the earnings threshold was exceeded during the extension, or because an earlier registration turned up that had not been taken into account) results in a claim for the difference in contributions for the period affected. In both cases, the first step is to read the decision and check the specific fact it relies on, which is sometimes a wrongly dated registration in the system itself.
We are tax lawyers and we handle the registration, the contributions and the tax side together, which is where the knock-on effects show. If you would like us to check whether you qualify before you register, tell us in the self-employed registration form; the page for this area is registering as self-employed. What we will not do is assure you of a grant that does not depend on us.