🧾 New Supreme Court ruling: compatibility between pension and self-employment on low income

More and more retired people want to remain active professionally, doing small jobs or freelance work. Until now, there were doubts as to whether it was possible to do so. without losing the retirement pension. A new Supreme Court ruling has shed light on this issue, providing important clarification: 👉 the limit of the Minimum Interprofessional Wage (SMI) shall be calculated on the basis of net yields, and not to gross income.

⚖️ What does the law say?

The article 213.4 of the General Social Security Law (LGSS) states that:

“Receipt of a retirement pension shall be compatible with self-employment, the total annual income of which does not exceed the annual minimum wage. Those who carry out such economic activities shall not be obliged to pay social security contributions”.”

This means that it is possible to receive a full pension and remain self-employed, provided that the net annual income does not exceed the current SMI.

💼 Pension-compatible activities

Until now, the usual interpretation of the rules has been that if the pensioner has a premises, office or establishment open to the public, , was understood to develop a usual economic activity, , and therefore had to registering with the Special Regime for Self-Employed Workers (RETA) and quote.

However, the new judgment of the Supreme Court clarifies that Article 213.4 of the LGSS makes no reference to the existence of an establishment or to habitual residence.

Therefore, what is relevant is not whether or not there is premises, but rather the economic volume of the activity: 👉 while the annual net income does not exceed the Minimum Interprofessional Wage (SMI)., , the retired person can combine full pension payments with such occasional or sporadic work, with no obligation to contribute to the RETA.

🧮 Income vs. net returns: what's the difference?

Until now there was confusion as to whether the SMI limit applied to gross income or to actual profits. The Supreme Court has clarified that the calculation should be made on the basis of the NET YIELD, i.e:

Total Income - Deductible Expenses = Net Income

This is especially relevant for professionals who, although they invoice more than the SMI, have associated expenses (office rent, materials, transport, etc.) that reduce their real profit below the threshold. (office rent, materials, transport, etc.) that reduce the real profit below the threshold.

📑 Tax obligations

Although Social Security does not require contributions in such cases, there are tax obligations that must be complied with:

• Registration with the Inland Revenue using the model 036 o 037, in the census of entrepreneurs, professionals and withholders.
• Personal income tax return, The income is taxed under the heading of income from economic activities.
• VAT returns, if the activity is subject to tax (issuing a VAT invoice where applicable).
• Withholding and invoicing just like any other self-employed person, even if the activity is occasional.

In short: no social security contributions are paid, but tax is payable to the tax authorities.

🧠 Practical example

Imagine a pensioner who offers nutritional advice or does one-off technical work and makes €8,000 a year in profit (after subtracting expenses). In this case, could keep his full pension payment, as their NET YIELD do not exceed Annual SMI.

📣 Conclusion

The new interpretation of the Supreme Court is an important step for thousands of pensioners who want to remain professionally active without losing their pension. From now on, the limit of SMI shall be applied to net income., This gives greater flexibility and legal certainty.

👉 If the net income is lower than the SMI, no need to be self-employed, , but do comply with the corresponding tax obligations.

💬 Do you need help declaring your income as a self-employed pensioner?

At PG FISCAL we help you to:

• Assess whether you can combine your pension with your professional activity.
• Correctly calculate your net yields.
• Comply with all tax obligations without overpaying.

📅 Request a free consultation: 👉 https://pgfiscal.com/en/contacto/

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