Direct payment system of Social Security contributions

Written on 2 Dec 2014

The new method will replace the current system for sending the social contributions documents and will be similar to the Income Tax drafts sent to taxpayers by the Tax Agency.

In recent years, contributions to the Social Security have normally been made under the so-called RED System. This system is a service offered by the Social Security General Treasury (TGSS) to companies, groups of companies and professionals. It aims to enable the exchange of information and documents between the TGSS and its users over the internet.

Until now, companies had to file the documents containing the corresponding settlement and contributions. Specifically, the TC1 report provided a summary of the totals for all Social Security bases, contributions, benefits, reductions, and discounts referring to employees included in each employer’s Social Security number.

In the last few years, the TGSS has been working on a new system for direct payment of Social Security contributions (Project Cret@), which will allow the TGSS to play an active role in the collection process, changing from a self-assessment model to an invoicing model, as well as providing more information about contributions to companies and workers, using a personalised and multichannel service model.

The prime objectives of the project are to minimise errors when the TGSS assumes the application of the rules on contributions, to check data prior to payment and improve transparency and relations with companies, based on an entirely electronic system, eliminating the need for proceedings in person and on paper.

This new system involves changes to the above mentioned current procedure for exchanging information and the processing, structure and format of the files which RED System users use to interact with the TGSS. The TGSS will file the corresponding contribution documents and invoice the companies, which will confirm if the information is correct or not.

Given the complexity of the project and the significant changes it involves, a Pilot is being carried out prior to its introduction, with a small and closed number of participants. Despite the final regulation is still being discussed by the Spanish Senate, the TGSS plans to implant the new system in December 2014.

The implementation of the direct settlement of fees system will be gradual, and will depend on the possibilities of the management and technical means available to the TGSS. The TGSS will dictate resolutions to inform the companies about their incorporation to the new system. This incorporation will occur the first day of the month following the notification to the company; however, it will be mandatory from the third calendar month following the incorporation. Until then, companies may use the previous self-assessment system.