A Quick Introduction to Spanish Freelance Cooperatives (Part 2)
As a freelancer, there are so many ways to go to make sure you are making the right choice to stay and work legally in Spain. Is joining a worker's cooperative the right one for you?
In the second part of our two-part freelancer series, guest contributor Mayya Husseini is back, this time breaking down the process of joining a workers cooperative, and providing tips on how to determine if it’s the right choice for you.
Freelancing in Spain: The Cooperative Conundrum
The cooperative model quickly gained popularity as the ultimate solution for freelancers’ main problem with declaring income, but it was quickly categorized by the Ministry of Finance (aka Hacienda) as “suspicious activity”. Despite this same model enjoying success and support from the government in other countries, the Spanish government began to investigate these “freelance cooperatives”, declaring their activity as fraudulent. In other words, freelancers found themselves operating in a legal grey area.
One of the major cooperatives of this kind, Factoo, was subject to a series of inspections on their members’ professional activities. What resulted was Factoo getting published in the media as “modern-day tax evasion”, according to Hacienda. Based on their case-by-case member investigations, they ended up discrediting Factoo’s worker cooperative legal status and fining some members up to €8,000, citing unpaid taxes.
While court proceedings were begun to defend Factoo’s legitimacy, the previously fined members were still left to pay their fines on their own until after the trial ended. For everyone involved, this quickly became a nightmare, especially due to the precarious situation that many of them found themselves in to begin with.
So where do cooperatives currently stand?
Today, cooperatives continue to be operational, but all of them have disassociated themselves from the term “freelance cooperative”, mainly to avoid any backlash from Hacienda. They continue to defend their necessity, and legal right to exist, especially in response to the country’s unfair legislation around self-employment tax requirements.
Where other countries determine Social Security payments on an individual basis according to the level of income, Spain has tiered their payment structure based on earnings and length of time freelancing.
What does that look like? Currently, first-time freelancers are offered a monthly fixed rate of €60 during the first year, with an incremental increase during the second year, before finally having to pay the full amount of €283.30 every month.
The Spanish government has made some efforts to improve their policies with some reforms, but they still have a long way to go.
As the debate between Hacienda and freelancers’ right to use the cooperative structure continues, many cooperatives are working hard to make legal progress. In doing so, they are becoming stricter with their own internal protocols, and formalizing their legal arguments to symbolize one of the few structures that can address this problem. Some of these cooperatives include:
- Free Autonomos – Leon-based co-op offering capacity building and guidance for member activities
- SMartib – an EU-supported structure present in other neighbouring countries
- SLB – language-sector specific with a strict member approval process
- Freelance SCM – audiovisual-sector specific, application approval required to join
Is joining a cooperative the right choice for everyone?
As a freelancer, joining a cooperative is probably best as a stepping stone on the way to establishing your own company. If you do decide to join one, it might be best to use it for what it actually is: a transitional and learning tool for people starting on their journey to full-time self-employment.
Keep in mind that before joining any cooperative, you need to do your own research to see what rights you have and ask all sorts of questions to be sure that it is the right option for you before signing any agreements. It’s all part of the journey to becoming self-employed and succeeding at it!
Mayya Husseini is a freelance content strategist based in Barcelona, and a sustainable food activist making waves around the world through foodisms.co.