False Freelancers

A dependent self-employed worker (TRADE) conducts economic activities for a single client, receiving at least 75% of their income from them. They must register their contract with the State Public Employment Service and comply with tax and social security obligations.

Introduction

Delve into the world of dependent self-employed workers, known as TRADE, and unravel the distinctions from ‘Falsos Autónomos’. Learn about their obligations, contract requirements, and frequently asked questions surrounding this unique professional status in Spain.


Dependent self-employed workers (trade)

In this article we analyse what it means to be a legal economically dependent self-employed worker and the most relevant characteristics as compared to the so-called “Falsos Autónomos”.

1. What is a dependent self-employed worker (trade)?

A “TRabajador Autónomo DEpendiente” (TRADE) is a self-employed worker who conducts their economic or professional activity for a single company or a has a single client from whom they receive at least 75% of their income.

This is a controversial figure that is related to the so-called false freelancer (those who are hired in this modality as a way for the contracting company to avoid an employment contract, thus saving on social security contributions).

The difference between a false freelancer and a TRADE is that the first is in essence a hidden employment relationship and the latter is a mercantile relationship. In order to qualify as TRADE, the following conditions must be met:

  • Does not have employees nor outsources his activity
  • Provides different services as regular employees
  • Disposes of own resources independent of his client
  • Organizes his activity according to his own criteria
  • Is paid according to the fees he himself determines
  • Is paid as a result of his activities and assumes the risk

If these conditions are not met, the contract can be declared void and the company can be obliged to hire the person as a regular employee, apart from paying pending social security contributions and possible fines for fraud.

2. What are the obligations for a trade?

The TRADE must pay and declare their taxes (IRPF and VAT) in their quarterly and annual declarations just like any other self-employed person. In addition, they must pay the monthly self-employed contribution to the Social Security (RETA). This is no different from an ordinary “Autónomo”.

3. How to establish a trade?

The first thing that has to be done is to inform the client that they are in this situation and that they must formalise a written contract. The client may demand proof of the status as economically dependent self-employed, either on the date the contract is signed or at any other time during the contractual relationship, provided that at least six months have passed since the last proof was provided. To determine this accreditation, the last income tax return or a certificate of income issued by the tax authorities may be requested.

The contract must be registered at the corresponding office of the State Public Employment Service (SEPE) within ten working days of its signing, and the client must be notified of this registration within five working days.

Once the period of fifteen working days has elapsed from the signing of the contract without the dependent self-employed worker having notified the registration of the contract, it will be the client who must register the contract with the State Public Employment Service within the following ten working days.

The steps to register are the same as for a self-employed person. The only difference is that the TRADE must present the contract signed in writing with the main client to the “Servicio de Empleo Público Estatal”.

4. The trade contract

The duration of the contract will be as long as the parties agree, and a contract termination date may be fixed or refer to the completion of the specific service. If is not, it will be presumed, unless there is evidence to the contrary, that the contract takes effect from the date of its formalization and that it has been agreed for an indefinite period.

Specific clauses that should be included in a TRADE contract are for example annual rest periods, representatives in the company, compensation for damages when the contract is breached, right to sign agreements of professional interest and access to the social jurisdiction.

5. Frequently asked questions

Can a TRADE depend on more than one client? No, this status can only apply to one client, with whom you have a signed contract and that represents at least 75% of your turnover.

Which self-employed cannot be considered TRADE? Self-employed who own commercial and industrial establishments or premises and offices open to the public cannot be considered TRADE. Neither can professionals who exercise their profession jointly with others in a corporate regime or under any other legal form allowed by law.

Does the TRADE have the obligation to invoice and to charge VAT? Yes, like the rest of the self-employed, the TRADE has the same obligations in this respect as the rest of the self-employed.

Is it compulsory to invoice monthly? The Law in relation to the invoicing of the TRADE only states that “he/she will receive an economic consideration according to the result of the activity in accordance with the agreement with the company”, therefore can agree with his/her client or company the invoice frequency.

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The information contained herein is of a general nature, and subject to changes. Applicability to your specific situation should be determined through consultation with our tax or legal advisors.