Self-employed or employee: who must pay social security in a Spanish SL

Who must register as self-employed in a Spanish SL: the law does not make it clear

How many shareholders of a limited company have to register with the RETA (Spain's self-employed social security scheme)? The question, seemingly simple, gets tangled up when the percentage of capital, family cohabitation and the role of director come into play. A specific case: three shareholders, two of them capitalist brothers and one worker who acts as director. Is it enough for the one who works to pay contributions? The answer depends on who you ask.

Effective control and the 25% of capital

The rules do not speak of exact percentages, but of effective control. Owning more than 25% of the capital does not by itself oblige you to register as self-employed; what does is being a working shareholder with control. The director, even without reaching that 25%, must also pay contributions as self-employed if they perform management functions. In the case of two shareholders, one with 85% and another with 15% who manages the company, only the latter would have to register. The majority capitalist, if they do not work in the company, is not obliged to.

Family ties and cohabitation change the rule

Things get complicated when the shareholders are relatives. If the two capitalist brothers together hold more than 50% of the company, even if they do not work there, Social Security may consider that effective control exists and demand they register as self-employed. And if they also live together, the criterion tightens: control is presumed and they can be forced to pay into the RETA. Cohabitation, not kinship, is the factor that tips the balance.

The bureaucracy: binding rulings that do not exist

The problem is not only interpreting the law, but applying it. In Social Security offices, every official gives a different version. People request binding rulings that do not exist at the Treasury; only the Tax Agency issues them, and only for taxes. The contribution guide warns that its information "is for information purposes only and is in no case binding". The result: the entrepreneur is left alone facing the criterion of the official on duty.

The case of the non-shareholder director

If a limited company appoints joint directors who are not shareholders and are unpaid, must they register as self-employed? The answer is yes. A non-shareholder director who performs management functions is obliged to pay into the RETA, even if they receive no remuneration. The law does not distinguish between shareholders and non-shareholders when requiring the director to register as self-employed.

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The conclusion is uncomfortable: there is no clear rule, and the interpretation depends on the office. The irony is that, in order to save costs, many end up paying more than they expected.