15.05.2020

Practice Areas: Employment

COVID-19 | Extraordinary support granted to self-employed workers and managing partners

A) Financial support for self-employed workers

The first extraordinary measure to support the self-employed with a reduction in economic activity created by the Government in the context of the fight against the Covid-19 crisis was intended only for self-employed workers who could demonstrate that their business activity or their respective sector had come to a standstill. Consequently, self-employed workers with a decline in business were left automatically out of this measure.

Meanwhile, Decree-Law 12-A/2020 of 6 April was published, extending the scope of this measure to self-employed workers whose activity had not come to a complete stop, but whose revenue had declined abruptly by at least 40%.

 

Eligibility criteria

The extraordinary financial incentive due to the reduction in economic activity applies to self-employed workers:

  • covered only by the arrangement concerning self-employed workers who are not pensioners; and
  • who have made contributions to social security for at least 3 consecutive months or for six non-consecutive months over a minimum period of 12 months; and
  • when one of the following situations are met:
  1. a)     proven complete interruption of their activity or their respective sector; or
  2. b)     sudden and steep decline in revenue by at least 40%.

 

The decrease in earnings (of at least 40%) is assessed over a period of thirty days prior to the date of the application filed with the social security, compared with:

  • the monthly average of the two months before that period; or
  • the same period a year earlier; or
  • the average for that period for individuals who started their activity less than 12 months ago.

 

If the worker applies for assistance because his activity came to a complete standstill, the self-employed worker shall deliver a sworn statement, or a statement of the certified accountant who prepares the accounts of the self-employed worker.

 

If the application is for the decline in revenue, the worker must submit his statement and a statement of the certified accountant attesting to such fact.

 

Amount of assistance

The amount of the assistance is based on the reference figure corresponding to the average income recorded over the 12 months immediately prior to the submission of the application.

If the reference income is:

  • below 1.5 IAS (€ 658.22): the benefit corresponds to the income amount registered as the contribution base, with a maximum value of one IAS (€ 438.81);
  • at or above 1.5 IAS: the benefit corresponds to two thirds of the income amount registered as the contribution base, with a maximum value of the minimum monthly wage (€ 635.00);

 

If the claim is filed for decline in revenue, the amount of the financial support is multiplied by the respective fall in revenue (expressed as a percentage).

 

Additionally, the workers covered by the financial support are entitled to defer the payment of contributions due in the months in which they receive the support.

Payment of the deferred contributions shall be made from the second month after the end of the support and may be paid within a maximum of 12 months in the form of equal monthly instalments.

 

Duration of the support

The assistance shall be granted for one month, but may be extended every month up to six months.

 

Payment of the support

The financial support is paid the month after the application is filed with the social security services.

It should be noted that this assistance may not be combined with other financial support granted by the Government in the context of the Covid-19 crisis, nor does it confer the right to exemption from the payment of social security contributions.

 

  1. B) Deferral of social contributions made by self-employed workers (who are not covered by the financial support measure)

 

The Government adopted DL 10-F/2020 of 26 March that provides for the deferral of the payment of social security contributions for self-employed workers not covered by the financial support measure.

 

The measure defers the payments of the social security contributions due in April, May and June.

 

Self-employed workers may make these payments as follows:

  • One-third of social security contributions must be paid in the month they are due;
  • The remaining two-thirds must be paid in equal and consecutive non-interest bearing instalments in the months of July, August and September 2020.

 

This measure relaxes the timeframe for contribution payments, but does not constitute a waiver of the responsibility of the worker to make the full payment of contributions due.

 

  1. C) Financial support to managing-partners

 

The extraordinary measures adopted initially by the Government in connection with the Covid-19 pandemic did not extend to managing partners.


Only after 6 April were managing-partners included in the extraordinary measure to support the self-employed workers whose business activity declined (under DL 12-A/2020 of 6 April).

 

Eligibility criteria

The extraordinary financial incentive due to the reduction in economic activity applies to managing partners who:

  • do not have employees;
  • are covered exclusively by social security schemes in that capacity; and
  • whose electronic invoicing in the previous year amounted to less than EUR 60,000.00; and
  • when one of the following situations are met:
  1. proven complete interruption of their activity or their respective sector; or
  2. sudden and steep decline in revenue by at least 40%.

 

The same reference periods applicable to the self-employed must be observed for assessing the decline in revenue (by at least 40%).

 

The managing partners are equally obliged to provide a declaration attesting to their situation (total cessation of business or decline in invoicing by at least 40%) on the same terms as self-employed workers.

 

This financial measure also covers, mutatis mutandis, the members of the governing bodies of foundations, associations or cooperatives performing equivalent functions to managing partners.

 

Amount of assistance

The amount of assistance granted to managing partners is obtained in the same way, and within the same limits, as the assistance to self-employed workers (as mentioned above).

However, the reference income for managing partners is as follows:

  • the base remuneration reported in March 2020 concerning February 2020; or
  • where no base remuneration was reported in that month, the value of the social support index.

 

Additionally, the managing partners covered by the financial support are entitled to defer the payment of contributions due in the months in which they receive the support.

Payment of the deferred contributions shall be made from the second month after the end of the support and may be paid within a maximum of 12 months in the form of equal monthly instalments.

The reporting obligation and the payment of the contributions are maintained even if the managing partner terminates his duties in the entity.

 

Duration of the assistance

The assistance shall be granted for one month, but may be extended every month up to six months.

 

Payment of the assistance

The assistance is paid the month after the application is submitted to the social security services.

It should be noted that this assistance may not be combined with other financial support granted by the Government in the context of the Covid-19 crisis, nor does it confer the right to exemption from the payment of social security contributions.

 

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