The State Public Employment Service (SEPE) cannot require you to return the unemployment benefit that you have collected at once, known as unemployment capitalization, for having invested it after a period of one month. In this sense, the court explains that although the regulations establish a deadline to start the activity, the essential thing is that the money has been allocated to the self-employment project for which it was approved.
The Superior Court of Justice of Madrid states that a mere delay does not convert the aid into an undue payment, especially if it can be demonstrated that there was no intention of fraud and that the purpose of the benefit (promoting employment) has been fulfilled.
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The SEPE demands that a man return the 11,701.83 euros that he collected at once for unemployment and the court annuls it because the delay in the investment of the single payment does not imply improper collection
The law does not require that the investment must be made within that period, but rather that the amount be used for the activity for which it was granted. Furthermore, the standard allows it to be proven that the activity is “in the initiation phase,” which makes the interpretation of the strict deadline more flexible.
A real example in which a man avoids paying almost 12,000 euros
This has happened to a man who will not have to return the 11,701.83 euros that the State Public Employment Service (SEPE) demanded of him after suddenly collecting unemployment benefits to become self-employed. Although the organization considered that it had failed to comply with the one-month deadline to invest the money and declared the collection improper, the Superior Court of Justice of Madrid annulled this decision because the delay in the investment of the single payment does not imply an irregular collection.
The ruling explains that the man requested the capitalization of unemployment in September 2020 with the intention of investing it in a commercial company. The SEPE approved his request, recognizing a single payment of 11,701.83 euros, with the obligation to justify within a month that the amount had been allocated to the authorized project.
Now and where the problem comes is that the contribution did not materialize until seven months after the payment and for that reason, the SEPE, based on article 7 of Royal Decree 1044/1985, considered that the money had not been used within the established period, so it notified the obligation to return the entire aid as it was considered an improper charge.
In court, both the Social Court number 43 of Madrid and later the Superior Court of Justice of Madrid ruled in favor of the worker. The TSJ of Madrid explained that article 7 of Royal Decree 1044/1985 does not impose that the investment must necessarily be made in one month, but rather that the benefit must be used for the activity for which it was granted. Furthermore, the beneficiary documented that the money was used to increase the capital of the company, becoming the holder of 75% of the share capital and, with it, effective control of the company.
Thus, the court determined that, given that the purpose of the aid was fulfilled and there was no fraud, the delay in the investment does not make the perception improper. For all this, this man will not have to return the 11,701.83 euros he received for his self-employment project.