Royal Decree Law 11/2020 of the past 31 March states that any company or self-employed person maydefer payment of Social Security contributions from April to July with a rate of six months. To this extent, any company or self-employed person may benefit regardless of size, turnover or number of employees.
This means that payments for the month of April will not be paid until September,and the same will happen in successive months, regardless of the degree of coronavirus condition suffered by a company or a self-employed person.
The postponement of Social Security contributions is carried out to generate liquidity in companies and businesses,and to try to alleviate the economic consequences caused by Covid-19.
However, three factors must be taken into account when deferring Social Security contributions.
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Deferral of Social Security contributions: three factors to consider
> Companies with or without aid
In the postponement of Social Security contributions, there will be differences between companies and self-employed persons who have benefited from extraordinary aid by Covid-19, and those that have not enjoyed any extraordinary benefit.
This means that, for example, treatment will vary for companies hosting an ERTE and self-employed persons who have received the extraordinary cessation of activity benefit.
> Degrees of quota deferral
There will also be differences depending on the degree ofdeferment of payments of Social Security contributions, which have been made available to businesses and self-employed by the Government itself.
- Exemption:it is not necessary to pay the fee, since the payment is assumed by the State. In this case, no rights are lost in the future.
- Deferral: the extension of the payment period, with a split into a temporary debt income division, will have a period of six months to make the partial payment. This is regulated in article 23 of the General Law on Social Security.
- Moratorium: this is a period that suspends legal proceedings against those companies or self-employed debtors when general circumstances make payment impossible, such as coronavirus.
In the situation we are in, the difference between deferral and moratorium is in the cost of each of them.
The Government has set interest rates of 0.5% for deferment,when these interest was usually between 3% and 3.75%. In addition, the deferment of payments will be split over the next six months.
On the other hand, the moratorium does not charge any interest on its exceptionality character, and the payment will be paid in a single payment six months later.
It should also be said that undertakings which are not eligible for the moratorium mayapply for a deferment, with an interest rate of 0.5% and the splitting of the refund.
> Differentiate between accrual and collection
The third factor to consider for the postponement of Social Security contributions is the difference between accrual and payment periods in companies.
For accrual periods, the last business day of the month will be charged the previous month. This means that august 31st will not be August, but July.
In short, as a relief measure against the coronavirus, companies or self-employed persons may defer the payment of Social Security contributions from April to July, with a rate of six months.