How can you do so legally?
A couple of years ago we looked into this matter for one of our members. The member had been alerted to the possibility of registering as a member / ´socio´ of an ´invoicing cooperative´, with the cooperative sending invoices to clients and taking care of the contributions to the ´Seguridad Social´ and the withholding of IRPF retentions. A big advantage for those that do not have to pay the hefty Autonomo contributions or the monthly fee for a gestor’ to take care of IVA declarations. The registration as ‘autonomo’ etc. Said member wondered about the legality of this.
We then found that the calculations some of the Cooperations produced compare favourably when set off against the ‘autonomo’ contributions were not very realistic If you would apply the same IRPF retentions as a client would deduct from the invoice of an Autonomo for example. Apart from that, the phenomenon of cooperatives of workers is not new in Spanish society, used sometimes by performing artists, in a large orchestra for example, or, more frequently, with dayworkers in the agricultural sector or businesses offering cleaning services, journalists, translators. In the case of an ´invoicing cooperative´ you don´t have to find a group of like-minded people to start a cooperative, the groups are already there and you can join.
Now, 2 years later, you can find cooperatives for almost any profession, sometimes limited to ´specialist groups´ like (performing) artists, but more often covering a wide range of professions, some even offering special ´modules´ for clubs, students or ONG´s and operating nation wide.
How does it work?
I´ll describe how it works with the cooperative FACTOO as I´ve registered there myself, but the system is similar for all coops. Just Google ´cooperativa de trabajo´.
– You pay to become a ´socio´/member of a cooperative of your choice. Some offer a refund of your membership if you decide to leave after a certain number of invoices have been sent through the cooperative, or once you have invoiced over a certain amount.
– You sign a contract confirming your membership, you need to provice ID details, NIE number, bank details, email contact. All online.
– You prepare the invoices that need to be sent, yourself, so you need your client´s fiscal information, address etc.
– You make a ´pro forma´ invoice for the work you are going to do for client X – that invoice will be given a unique letter/number combination – e.g. Y123
– You inform the coop on what days or what hours you will be working for client X, that cover the work you will be invoicing on invoice Y123. They will take care of the corresponding ´alta/baja´ with the ‘Seguridad Social’ and pay the contributions due. You will receive SMS messages from the ‘Seguridad Social’ to confirm each alta and baja.
– You also tell the coop what percentage of IRPF retentions they need to withhold from the invoice, minimally 2% (the minimum for temporary contracts). To compare: a client would be obliged to withhold 7% IRPF retention on an invoice from a newly registered ‘autonomo’ (first 3 years) to 15% (registered for more than 3 years). The coop will pay these amounts to the Tax Agency and they will appear as ´retenciones´ (retentions9 on your Renta Declaration. Naturally, if you tell them to withhold only 2% but in practice you will work more or less full-time that year and you invoice more than 11.700 euros/year, you will have to pay extra once you file your RENTA declaration ove the same period. But the choice is yours.
– You also need to inform the coop when you are going to send the invoice, within what window it needs to be paid, etc.
– Once the work has been done and the invoice is ready to be sent, you can close it, the coop admin will check everything is in order and if so, will lock the invoice. Now it is ready to printed and sent by you to your client. Note that once locked, it can only be opened again, if you´ve made a mistake, at a cost to you.
– You give or send the client the invoice, the client pays the Cooperative, the cooperative pays you, deducting the social security contributions, the IRPF retentions, admin costs, a percentage of ´corporation tax´ that is charged to all members of the coop, and where applicable, costs for professional liability insurance and/or ´prevención de riesgos laborales´ certification. The latter meaning that if you work in a profession where all workers should accredit having followed a course to prevent accidents at work, the coop will make sure you receive the relevant information and will provice the necessary certification if so required by a client. Not all coops offer this service, so if it´s applicable to your line of work and you don´t have the required certification yet, make sure you choose one that does.
Some coops charge a monthly fee, others only an admin fee or admin percentage per realised invoice. Coops need to pay ´Impuestos de Sociedades´(corporate tax) to the Tax Agency and all members should pay their part of that. Some coops will specify this tax as a separate amount to pay, others pay for it out of the members contribution or admin fee.
What does the facturation coop not do for you?
Make sure the invoice you send is being paid. You´re responsible for that.
What about my RENTA tax declaration?
If you are obliged to file an annual tax return, the invoicing coop will supply you with a certificate, stating the IRPF retentions paid to Hacienda in your name, so you can include them on your declaration.
Can I work through an invoicing coop while receiving paro/unemployment benefits?
Yes you can, but you need to inform INEM/SEPE about this, either in person, by phone or online if you have a digital certificate installed on your computer. Each invoicing coop will have its own procedure, so check with them as well. INEM/SEPE will deduct any days the invoicing coop registered you ´de alta´ from your unemployment benefits in the relevant month. Not in all cases while you are receiving ´unemployment subsidio´ though, as this is income related and you might exceed the limits.
Advantages: hardly any paperwork compared to registering as Autonomo. No costs if no income. No IVA declarations. The Coop has its own accountancy department where you can ask any questions, in the case of FACTOO with an online chat module with very fast responses by email. Transparency for your client, you can even hand him/her a copy of your contract with the Coop so they can read the obligations the Coop has towards you with regards to paying SS contributions and IRPF retentions for example.
Any contributions made to the ´Seguridad Social´ will add up towards your entitlement to a pension and unemployment benefits.
Disadvantages: your client probably won´t know how this ‘invoicing coop´ works, whether it´s legal, why he/she should not retain any IRPF percentages from your invoice, etc. So you will have to be willing to educate them and possibly even their gestor/accountant.
And you have to keep track of your total income in a tax year, and adjust the IRPF % accordingly, so you won´t be caught out by an extra amount to pay when you´re filing your RENTA tax return.
While registering as Autonomo will entitle you to access to the Spanish public healthcare system, registering as a member of an ´invoicing cooperative´ contrary to registering as a member of a regular workers cooperative, will not, as there is no guaranteed continuity re your contributions towards the ´Seguridad Social´, no possibility to set up a direct debit as no work in a particular month will mean no invoices to send, so no contributions to be made either. Only a continued ´alta´ will entitle you to access to healthcare.
SUMMARY: Would I advise this method to others? Yes I would, in the following cases:
Update: One of the cooperatives have now set up a system specifically for artists (singers, bands etc)
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