Self-employed workers' cessation of activity benefit: a complete guide

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Throughout this guide, you will find all the important information compiled and clearly organized, so you know if you are entitled to this protection, what requirements apply, how to justify the termination of employment, what documentation to submit, what deadlines you cannot miss, and what to do if you are asked to correct your application. The aim is to help you process your benefit with as few complications as possible.

What is the benefit for cessation of activity for the self-employed?

The protection for cessation of activity is a specific coverage system for self-employed workers who are forced to completely cease their professional or business activity. It is a mandatory benefit that forms part of the Special Regime for Self-Employed Workers (RETA) and other special regimes.

Its purpose is to compensate for the loss of income suffered by the self-employed when they cannot continue with their business for reasons provided for in the regulations, and provided that the cessation is involuntary and duly accredited.

The cessation of activity can be total and permanent (when the activity is closed with no intention of resuming it in the short term) or total and temporary (when the interruption is limited in time and is due to very specific circumstances). Furthermore, the law contemplates the possibility of partial cessation of activity in certain cases.

The protection for cessation of activity includes: on the one hand, the collection of a monthly economic benefit , and on the other hand, the coverage of the contribution for common contingencies during the period in which the aid is received, with the managing body assuming that part of the contribution to Social Security.

This system can be used by self-employed workers integrated into the RETA , those in the Special System for Self-Employed Agricultural Workers (SETA) who have opted to contribute for cessation of activity, workers included in the Special Social Security Scheme for Seafarers and Economically Dependent Self-Employed Workers (TRADE), as well as other specific groups regulated by law.

Requirements to access the benefit for cessation of activity

To qualify for unemployment benefits for the self-employed, simply closing your business is not enough; you must also meet a series of formal and contribution requirements. Without these requirements, the mutual insurance company or the Social Institute of the Navy will deny your application.

Generally speaking, you must be registered with the relevant Social Security scheme on the date of cessation of activity and have requested deregistration from that scheme specifically for the reason of ceasing activity. The administrative deregistration and the reason given must match the cause claimed.

A minimum contribution period of 12 consecutive months immediately prior to the date of cessation is also required for this contingency, including the month in which the event giving rise to the benefit occurs. Furthermore, a minimum of 18 months must elapse between two ordinary unemployment benefits.

Another key requirement is to be in a legal situation of cessation of activity , that is, that the closure or interruption is due to one of the reasons accepted by law, and that this situation can be justified by documentation (accounts, resolutions, licenses, judgments, etc.).

You will also have to sign the commitment to activity , which implies being available to rejoin the labor market, participate in training, guidance, retraining or entrepreneurship promotion actions proposed by public services or the mutual insurance company.

If the termination of employment is permanent, you cannot have reached the standard contributory retirement age , unless you have not met the minimum contribution period required to receive a retirement pension. Furthermore, it is mandatory to be up-to- date with your Social Security contributions ; if there are any outstanding debts, the mutual insurance company will invite you to settle them within a specified timeframe.

Finally, you must not incur any of the incompatibilities set out in the General Social Security Law , and if you are a self-employed seaman with hired staff, you will have to prove compliance with all labor obligations with your workers before the right to the benefit is recognized.

Reasons that justify the cessation of activity of the self-employed

The law does not consider just any closure valid for receiving the benefit; there must be a clearly justified reason for the cessation of activity . In fact, the system is similar to unemployment benefits for salaried workers: payment is only received if the cessation of activity is involuntary and meets certain criteria.

The most common reasons for closure include economic, technical, organizational, or production- related factors that make it impossible to continue professional or business activity under minimally viable conditions. These circumstances must be documented with accounting and tax records.

For example, valid reasons for closure include business losses exceeding 10% of a full year's revenue (excluding the first year of operation), or court-ordered or administrative enforcement actions representing at least 30% of the previous year's revenue. A court declaration of insolvency that prevents the continuation of business operations also falls under this category.

Another major category of reasons is force majeure that necessitates a complete, permanent, or temporary closure. This includes extraordinary situations beyond the control of the self-employed individual that could not have been foreseen or avoided with reasonable diligence. It is essential that a competent authority recognize this force majeure and that the applicant submit a sworn statement indicating the date on which it occurred.

It is important to note that, for the purposes of this benefit, neither common illness nor a general economic crisis in the country are considered force majeure. The law requires a direct link between the external event and the inability to continue the activity.

The loss of an essential administrative license for carrying out the activity is also a valid reason for cessation , even if that loss results from administrative infractions or breaches attributable to the self-employed individual, provided they are not of a criminal nature. The key factor is that without that authorization, it is impossible to continue the activity.

Along with these reasons, there are other personal and corporate reasons that may justify the benefit: for example, the status of being a victim of gender violence or sexual violence, in which case an order of initiation, precautionary protection measures or a report from the Public Ministry that includes the evidence of violence must be provided.

This same category includes termination of activity resulting from a divorce or legal separation when the self-employed individual provided family support in the business of their spouse or partner, ceasing to do so following the breakup. In these cases, the termination must occur within six months of the court ruling or agreement for separation or divorce.

With regard to the partners of capital companies integrated into the RETA, there is a legal situation of cessation when they involuntarily abandon their functions as administrators or directors or stop providing their services, and there are also negative economic indicators such as losses of 10% in a full year or a reduction of net worth below two-thirds of the share capital.

Partial cessation of activity of the self-employed

In addition to complete closure, the regulations allow for a partial cessation of activity in some cases , a concept particularly relevant in situations of specific crises or drastic reductions in revenue. In these circumstances, a benefit of 50% of the regulatory base is available.

The most interesting feature is that the self-employed worker can remain registered in the RETA and is not obliged to completely close their business or activity, provided that they fall within the cases of partial cessation provided for in the General Social Security Law.

One of these situations occurs when, in a company with employees, there is a 60% reduction in working hours for the entire staff, or the temporary suspension of contracts for at least 60% of the workers, and a 75% drop in income compared to previous years is also proven.

For self-employed individuals without employees, there is also the option of partial cessation if they accumulate debts for a minimum amount of 150% of the ordinary income of the two previous fiscal quarters, and that income is at least 75% lower than that of the same period of the previous year, also falling below the Interprofessional Minimum Wage (or their contribution base, if this is lower).

A partial cessation due to force majeure is also contemplated when an interruption affects only one workplace or part of the activity, there is a declaration of emergency by the competent authority, there is a drop of at least 75% of income compared to the same period of the previous year and these fall below the SMI or the contribution base for which the self-employed person pays if this is lower.

Where and how do I apply for unemployment benefits?

To begin the process, the application must be submitted to the mutual insurance company collaborating with the Social Security system that covers your unemployment coverage or, if applicable, to the Social Institute of the Navy if you belong to the Special Scheme for Seafarers. These are the bodies that manage the benefit and grant or deny the right to it.

The standard deadline for applying for assistance is the last day of the month following the month in which the activity effectively ceases. When this deadline is met and all requirements are fulfilled, the right to the benefit begins the day after the activity effectively ceases.

If your application is submitted late but you still meet the other requirements, you will be able to receive the benefit, although the days between the date you should have applied and the date you actually submitted it will be deducted from the entitlement period . In other words, you lose entitlement days due to the delay.

The managing agency will cover your social security contributions for common contingencies for the duration of your benefit, provided you applied for the aid within the deadline. If you apply later, coverage will begin on the first day of the month following your application.

Currently, most mutual insurance companies allow you to submit your application online through their website . Usually, you simply need to click the "Apply" button, fill in your personal and business details, indicate the type of benefit you are requesting, the reason for termination of employment, and attach the required documentation in digital format (e.g., PDF).

The online form will ask you to enter your NIF/NIE or passport number, your Social Security number , the date of termination of employment, and other basic information. The system will then load the information held by the mutual insurance company and show you the documents you need to provide based on your specific case.

Once you have completed the form and attached all the files, you will need to submit the application . The system generates a reference number that identifies your file; you should save this information in case you need to make inquiries or submit additional documentation.

Documentation required to request cessation of activity

The mutual insurance company or the ISM will only be able to resolve your case if you provide the mandatory documentation and, where applicable, the additional documentation that depends on your professional situation and the reason given for the cessation of activity.

In all cases, you must submit a duly completed and signed official application . This must be accompanied by form 145 for Personal Income Tax (unless you are taxed in the Basque Country or Navarre), where you indicate your family situation for withholding purposes.

It is essential to prove ownership of the bank account where your benefit will be deposited. You can do this with a certificate of ownership issued by your bank, a receipt showing your personal details and account number (such as a self-employment or utility bill), a payslip that identifies you and shows the account, or the first page of your bank statement. If the bank statement was opened more than a year ago, a copy of the last transaction is usually required.

You will also need to provide your NIF, NIE or passport , proof of payment of self-employed contributions for the last two months and, if you have a deferral of contributions granted by the General Treasury of Social Security, the resolution granting said deferral.

In addition, you will need to provide proof of deregistration from the Economic Activities Tax (form 036 or 037) and proof of deregistration from the Special Regime for the Self-Employed (or from the REMAR Regime, in the case of maritime workers). These documents must be consistent with the cessation date you declare in the application.

Another requirement is to be registered as a job seeker with the relevant public employment service and to sign the SEPE's commitment to active participation , which is usually attached as a separate document. This commitment is linked to the obligation to participate in employability improvement activities.

In addition to the mandatory documentation, there are a series of specific annexes that depend on your tax classification and the type of activity: annexes for self-employed individuals under direct estimation, annexes for those under objective estimation or modules, annexes for family members collaborating, for self-employed workers (TRADE), for partners or directors of capital companies, for cooperative members, for the Special Agricultural System, and for the Special Maritime System. Each annex details the additional documentation (balance sheets, tax returns, contracts, corporate agreements, etc.) necessary to demonstrate the reason for cessation of activity.

How to process and how to correct the application

The application process is relatively simple if you have all the information ready. The most practical approach is to gather and scan all the necessary documents beforehand , so you can attach them all at once when you access the mutual insurance company's online form.

When you start the process, the system will usually ask you to select the type of benefit (full termination, partial termination, force majeure, etc.) and whether it's a new application or additional information about an existing case. Then you'll need to complete your identification details and the basic information about your termination.

Once you have uploaded your information, the application will show you a guide on which documents you should upload based on your profile and the reason for termination. You must attach them one by one, checking that they are legible and that no important pages are missing (for example, all pages of tax returns or company deeds).

If you were unable to sign certain documents with a digital certificate, the insurance company may require you to attach a copy of your ID or sign in person at an office. These details are usually explained in the application's instructions.

Once you've submitted your application, the website will provide you with an application reference number . You can use this code to check the status of your application, respond to information requests, and prove that you submitted it on time if there are any technical issues.

If the mutual insurance company detects that any documents are missing or that any of the information is incorrect, they will send you a notification requesting that you correct the application or provide additional documentation. In that case, you must return to the mutual insurance company's procedures section , enter your information, click on " Upload data ," and the system will locate your existing file.

The application itself will show you the option to add new information or documents , so you can complete what's missing. Once you've finished uploading the required files, you'll need to click "Submit" again so the managing body can continue reviewing your case.

You should bear in mind that if you do not comply with the request for rectification within the period indicated in the notification, the mutual insurance company may archive your application without addressing the substance of the matter, thus losing the opportunity to access the benefit until a new file is initiated, with the consequences that this has on the deadlines.

Communication of the right, amount, duration and calculation of the benefit

Once all the documentation has been reviewed, the mutual insurance company or the Social Institute of the Navy will issue a decision either granting or denying the benefit . If the benefit is granted, the decision will specify the start date, duration, and the contribution base used for the calculation.

Generally, the financial benefit for cessation of activity amounts to 70% of the regulatory base . This base is determined by calculating the average of the contribution bases for which the self-employed worker has contributed during the 12 continuous months immediately preceding the cessation.

In cases of partial temporary cessation due to force majeure or partial cessation for economic, technical, productive or organizational reasons, the percentage applied is reduced to 50% of the regulatory base, since the activity has not been totally interrupted.

The law establishes minimum and maximum limits linked to the current IPREM (Public Indicator of Multiple Effects Income). The maximum benefit amount cannot exceed 175% of the IPREM, unless you have one or more dependent children, in which case the limits rise to 200% or 225% of the IPREM, respectively. At the lower end, the benefit cannot be less than 107% of the IPREM if there are dependent children, or less than 80% if there are no dependent children, except for those who contribute based on a lower contribution base than the minimum, who do not receive a minimum benefit amount.

In cases of partial dismissals due to force majeure, these maximum and minimum limits do not apply either , so the amount is directly linked to the percentage on the regulatory base, without being subject to limits.

To make it clearer, imagine you've contributed to social security for the last 12 months at the minimum rate of €960,6 per month. The regulatory base would be the average of those bases, that is, €960,6. Applying 70%, the resulting benefit would be around €672,42 per month , to be received for the period corresponding to your months of contributions for cessation of activity.

Regarding the duration, the time contributed to social security in the 48 months prior to the legal termination of employment is taken into account, of which at least 12 must be continuous and immediately preceding. Based on this period, the law establishes a scale of benefit months.

As a guide, if you have contributed for 12 to 17 months , you will be entitled to 4 months of benefits; from 18 to 23 months, to 6 months; from 24 to 29 months, to 8 months; from 30 to 35 months, to 10 months; from 36 to 42 months, to 12 months; from 43 to 47 months, to 16 months; and if you have reached 48 months or more, you can receive the benefit for 24 months.

Historically, there have been somewhat different protective scales, with shorter coverage periods for certain contribution levels, but the current scheme is geared towards rewarding longer contributions with a longer duration of entitlement, up to a maximum of two years of benefits.

Suspension, resumption and termination of the benefit

While you're receiving unemployment benefits as a self-employed worker, situations may arise where the aid is temporarily suspended or permanently terminated. It's essential to understand these rules to avoid surprises and repayment obligations.

Among the causes of suspension are the imposition of sanctions for minor or serious infractions related to the provision, compliance with a prison sentence, the start of self-employment or employment for a period of less than 12 months, or temporary transfer abroad for a continuous period of less than 12 months to work, train or participate in cooperation projects.

Occasional departure abroad for a period not exceeding 30 calendar days once a year is also considered grounds for suspension, provided that you have previously communicated this circumstance and it has been authorized by the managing body of the benefit.

During the suspension, both the payment of the benefit and the social security contributions for common contingencies covered by the mutual insurance company are interrupted , and the interruption is carried out for full months. In general, the suspension does not reduce the total number of months of entitlement you had remaining, except in the case of a penalty.

Once the reason for the suspension has ended, you can request the resumption of benefits. To do so, you must provide documentary evidence that the situation that led to the suspension has ended and that you remain legally unemployed, without having resumed self-employment on a stable basis.

Regarding termination, the right to cessation of activity ends when the maximum duration of the benefit to which you were entitled is exhausted, when you start a job for others or self-employed of a duration equal to or greater than 12 months, when you are given a sanction that entails the definitive loss of the aid or for any of the general causes provided for in the Social Security regulations.

There is also the option to request a lump-sum payment of your benefit if you can prove that you will be starting a new business as a self-employed individual or that you will allocate 100% of your benefit to contribute share capital to a new business entity or one created within the previous 12 months, in which you will have effective control and work as a self-employed professional. To access this lump-sum payment, you must have at least six months of benefit payments remaining at the time of application.

When the mutual insurance company recognizes the right to cessation of activity, the enjoyment of the financial benefit begins the day after the leave of absence from the special scheme in which you were registered, unless the application deadlines or special situations imply a later start in accordance with the regulations.

This protection system, which has made Spain one of the few European countries with specific coverage for the self-employed who are forced to close their business, has been adapting over time to incorporate the particularities of sectors such as agriculture or maritime-fishing, even regulating cases of temporary cessation linked to closed seasons, damage to farms or outbreaks of livestock diseases.

Understanding in detail how this benefit works, what causes it covers, what documents it requires, and what deadlines the law sets is key so that, if one day you have to close your business, you can do so with the peace of mind of knowing that you have an economic and social security safety net that will help you reorganize your professional future without completely losing the protection of the system.