The Single Payment or Unemployment Capitalization can be applied by people who are unemployed and interested in starting their own business. It allows all or part of the outstanding amount of unemployment benefit (contributory level) to be paid in a single payment.
1. Who can apply for the single unemployment payment?
Recipients of the contributory unemployment benefit who meet the following requirements:
- Not having started economic activity or being registered with Social Security.
- Have pending receipt of at least three monthly payments.
- Not having benefited from another single payment in the previous four years.
- Evidence of registration as a stable self-employed person or incorporation as a working member of a cooperative, labour or commercial company. Start the activity within a maximum period of one month from the date of approval of the single payment.
- Not having contested the dismissal that gave rise to the unemployment situation. In these cases, capitalisation cannot be requested until the contestation file has been resolved.
The approval of Royal Decree 1975/2008 of November 28 on urgent measures in economic, fiscal, employment and housing matters eliminated the rule that restricted the single payment for the self-employed to those who could prove a degree of disability equal to or greater than 33%.
2. What types of unemployment capitalization are available to the self-employed?
- Single payment (100%): those who make an investment can finance it with up to 100% of the unemployment benefit they have left to receive. If you only need a part, for example, 50%, the rest will be received through the compensation of the monthly self-employed contributions actually paid. These percentages came into force with the Law to Promote Self-Employment, as previously the percentage was 60% and only reached 100% in the case of young people.
- Monthly payments: those who do not make an investment may use 100% of their outstanding benefit to offset their monthly self-employed contributions.
Since October 10 2015, working partners of newly created companies (as long as they have effective control of the company) can also use capitalization for contributions to the share capital, to cover the costs of incorporation instead of having to use 100% of the capitalisation to pay contributions.
Care must be taken when drawing up the report as the SEPE does not allow capitalization to finance investments that are not financed through share capital or the aforementioned items and this in turn leads to limited companies with share capital considerably higher than the usual minimum of 3,000 euros.
3. The single unemployment payment for young people
Currently, men up to 30 years old and women up to 35 years old can request 100% for the single payment of the investment. Previously, the limit on the single payment for young people was 80%, leaving the remaining 20% to compensate for self-employment fees.
Since the approval of Royal Decree-Law 4/2013 on measures to support entrepreneurs and stimulate growth and job creation, this 100% capitalization can be used for the investment necessary to develop the activity.
The investment covered includes the amount of tax charges for the start of the activity, or to make a contribution to the share capital of a newly constituted commercial entity or established within a maximum period of twelve months prior to the contribution.
It can also be used to cover the costs of establishing and starting up an entity, as well as paying fees and specific advisory, training and information services related to the activity to be undertaken.
4. The single unemployment payment for people with special conditions
People with a disability greater than or equal to 33% can request 100% of the contributory benefit in a single payment.
5. The single unemployment payment for worker-members of worker-owned companies and cooperatives
As long as they join on a stable basis, members of cooperatives and worker-owned companies can choose between:
- A single payment of the amount to be disbursed as a contribution to the share capital.
- If this amount is less than the benefit pending receipt, the rest may be used to compensate the monthly contributions of self-employed workers.
- Request 100% of the benefit pending collection to compensate for the monthly contributions of self-employed workers.
6. Where to apply for the single payment?
In the corresponding Oficina de Empleo o Dirección Provincial de la Entidad Gestora (Employment Office or Provincial Directorate) of the Managing Entity: the previous INEM, now Servicio Público de Empleo Estatal {State Public Employment Service (SEPE)}, and can be applied for either at the time of processing the unemployment benefit to be capitalized or at any time thereafter. It can be applied for at the same time as the unemployment benefit.
You must submit the application together with a report on the activity you are going to carry out and, in the case of investments, detailing the investments you are going to make. You must use amounts without VAT, as the VAT paid on the investment is not eligible for subsidy.
7. Personal income tax (IRPF) exemption of 100% of the single payment
100% of the amounts received as unemployment capitalization or single payment are exempt from personal income tax.
Previously, the limit was set at 15,500 euros. Both the current and the previous total exemptions are conditional on maintaining the activity for five years.
With the limit of 15,500 euros and in order to avoid a very high income in the case of capitalising for investment, an amount proportional to the percentage of the benefit that would have been received in the case of not opting for capitalisation was allowed to be imputed each year.
Download the Template of an explanatory report for single payment or capitalization
