Nuria Beltrán is an engineer at a company in Bilbao on a full-time permanent contract. For months people have been asking her for technical reports on private solar installations, and she wants to invoice them on her own account, about ten hours a week, from January. She expects to bring in around 18,000 € a year from that activity. She is worried about three things: whether she can do it without leaving her job, whether she will pay Social Security twice, and how her income tax return will change.
She can. Having a salary and being self-employed at the same time is called pluriactividad (holding activities under more than one scheme), and the law expressly provides for it. What changes is that each activity contributes under its own scheme, and that the tax side requires more order than when there was only the salary.
Two registrations under two schemes
The salary is subject to contributions under the General Scheme, paid by the company and the worker. The self-employed activity requires registration in the RETA (the Spanish Social Security scheme for the self-employed), because article 305 of the General Social Security Act includes anyone who carries on an economic activity for profit habitually, personally and directly. Already being covered through the salary does not exempt you from that second registration.
Article 46.3 of the affiliation regulations provides that, if the self-employed person carries on several self-employed activities, their registration in the RETA is a single one. But that refers to several activities of one's own; the salary stays in the General Scheme. Nuria will therefore have two simultaneous registrations under two different schemes.
| Activity | Scheme | Who pays the contribution |
|---|---|---|
| Employment at the company | General | The company, withholding the worker's share from the payslip |
| Technical reports | RETA | Nuria, by monthly direct debit |
RETA contributions are not reduced because you have a salary
In the RETA, Nuria contributes on her net earnings from the activity, like any self-employed person. The forecast of 18,000 € of income, less expenses, will determine the bracket. What she earns at the company is not added in to choose her RETA bracket: article 308 counts earnings from economic activities for which she does not have to be registered as an employee. The full mechanism of brackets and regularisation is in how much the contribution is.
If it is her first registration in the RETA, she can also ask for the reduced contribution for starting an activity. Article 38 ter of the Self-Employed Workers' Statute Act does not exclude people who have a salary; the requirements are the same as for anyone else and are set out in the tarifa plana (the flat-rate contribution).
The refund of the excess for common contingencies
Contributing under two schemes can mean that the total contributed for common contingencies exceeds a threshold. For that case, article 313 of the General Social Security Act gives the self-employed person in pluriactividad the right to a refund of 50 % of the amount by which their contributions for common contingencies exceed the figure set each year by the State Budget Act.
The total includes RETA contributions for common contingencies and, under the General Scheme, both the employer's contribution and the worker's. The refund has a cap: it cannot exceed 50 % of the contributions paid into the RETA for common contingencies.
An example with round figures, to see how the two limits work. Suppose that, with everything added together, Nuria exceeds that year's threshold by 1,000 €, and that in the RETA she has paid 1,500 € for common contingencies:
- Excess over the threshold: 1,000 €.
- Half the excess: 500 €.
- Cap, half of what was paid for common contingencies in the RETA: 1,500 × 50 % = 750 €.
- The lower of the two amounts applies: 500 €.
We do not give the threshold figure here because it is set by each year's Budget Act. What matters is that, under the same article, the Tesorería (the Social Security treasury) pays the refund within a maximum of four months from the annual regularisation under article 308, unless information is needed from the person concerned. With average salaries and a small activity the threshold may not be reached; with high salaries, it commonly is.
The refund under article 313 is partial and arrives after the regularisation. During the year you pay both contributions in full. There is no way of reducing the monthly RETA contribution by arguing that the company already contributes for you, and it is not advisable to choose a bracket below your earnings in the expectation of that refund: a badly chosen bracket is regularised anyway.
What to check in your employment contract before you start
Compatibility from the Social Security point of view says nothing about your contract. Before invoicing the first report, Nuria should read whether her contract or the collective agreement contains a full-time dedication clause, a non-competition clause during the employment relationship or an obligation to report other activities. If her private clients could also be clients of her company, the conflict of interest is obvious. This is not a tax matter, but it is the one that most often complicates pluriactividad.
What changes in IRPF
For tax purposes, the salary produces employment income and the activity produces income from economic activities. Both are added together in the general base of the same return under IRPF (Spanish personal income tax). As a result:
- Nuria will have to file an income tax return, because receiving income from economic activities changes the rules on who must file.
- Her invoices for professional services will carry withholding. Article 95 of the IRPF Regulations provides for 15 % as a general rule and 7 % in the year of starting and the following two, provided she did not carry on a professional activity in the previous year. If she invoices private individuals, they do not withhold.
- If at least 70 % of her professional income in the previous year was subject to withholding, article 109 of the Regulations exempts her from the instalment payment on Modelo 130; in the first year, the percentage for the quarter itself is looked at. If she invoices mainly private individuals, she will have to file it.
- For VAT, in principle, she will charge 21 % to her clients and file the quarterly Modelo 303, unless her activity is exempt.
The salary raises the marginal rate at which what she earns as a self-employed person is taxed. If her salary already puts her in a high band of the scale, every euro of profit from the reports will be taxed at that rate, and withholding at 7 % or 15 % will probably fall short. It is worth planning for that adjustment in the income tax return rather than discovering it in June.
Nuria's figures in her first year
With income of 18,000 € and 2,500 € of expenses (measuring equipment, software and travel), her earnings from the activity before contributions would be 15,500 €. The RETA contributions, which are a deductible expense, would have to be subtracted from that figure. The resulting earnings are added to her salary in the return, and that is where the real rate can be seen.
We cannot give the exact RETA contribution without knowing the bracket and the year's rates, but the order of the operations is always the same: first estimate the earnings, then choose the bracket, then check whether, added to the salary, there may be a refund for pluriactividad.
The guide on pluriactividad covers part-time work and changes of situation during the year, which must be notified to the Tesorería as a change of details.
What has to be notified, and to whom
- To Hacienda (the Spanish tax office), the tax registration on Modelo 036 before you start, with the heading that matches the real activity. On choosing it, see what the IAE heading is.
- To the Tesorería, registration in the RETA, with the earnings forecast. The pluriactividad situation is reflected in the registration details.
- To the company, whatever your contract or collective agreement requires.
You can explain your situation, with your type of contract and the activity you want to add, in the self-employed registration form.
Pluriactividad means keeping two sets of accounts in your head and a single return. At Salama Tax we deal with the tax side of your own activity, from the tax registration to the quarterly forms, and leave ready the calculation that later lets you check whether a refund for pluriactividad is due.