The Supreme Court establishes that retired pensioners who carry out self-employed work cannot be forced to register in the Special Regime for Self-Employed Workers if their annual net income does not exceed the interprofessional minimum wage. The court explains that, when making this calculation, the tax-deductible expenses must be deducted, which means that it is not enough to look at what the self-employed person earns, but rather at what they actually have left once the costs of the activity have been subtracted.
If we look at what 213.4 of the General Social Security Law says (which can be consulted in this BOE), this allows retirees to make their pension compatible with small-scale self-employment, without the obligation to contribute. The Supreme Court explains that this provision is not only a rule on benefits, but also directly conditions registration in the RETA, since if the pensioner situation exists and the net income does not exceed the SMI threshold, the General Treasury of Social Security cannot impose the classification, regardless of whether the activity can be considered habitual.
The ruling STS 641/2026 (It can be consulted at this link of the Judicial Branch) describes the situation of Gustavo, a resident of Navarra who since 1997 has been combining his work as a Volkswagen employee with small tire repairs on his own in a workshop he owns. When in 2019 he accessed the partial retirementand later to the total in 2021 (he began to collect 100% of his pension), the Labor Inspection activated a process that ended with his ex officio registration in the RETA from July 1, 2018. Gustavo appealed, arguing that his earnings had never exceeded the interprofessional minimum wage and that the activity he carried out could not be considered habitual in the terms required by law.
Since the General Treasury of Social Security denied it and they did not agree with him, he went to the Superior Court of Justice of Navarra, which also dismissed his claim. Finally, he decided to go to the Supreme Court, where he ruled in favor of the self-employed, debating whether charging less than the SMI automatically excludes habituation, and whether this calculation should be made on gross or net income.
Retired or active worker, the Supreme Court’s response is not the same
The Supreme Court explains that between July 1, 2018 and June 18, 2019, while Gustavo was still working at Volkswagen, it is appropriate to analyze whether his repairs were a “regular” activity. The court confirms that they were, since he had been in business for 26 years, used premises he owned and generated gross income of more than 29,000 euros in 2018. For these reasons, the court considers that at that initial stage his registration as self-employed was fully justified.
However, everything changes completely when Gustavo agrees to partial retirement. From that moment on, article 213.4 of the TRLGSS applies, which establishes that “the classification and registration in the RETA of the retirement pensioner does not apply when the factual assumption provided therein occurs, that is, that he receives a contributory retirement pension and performs self-employed work whose total annual income does not exceed the minimum interprofessional salary, calculated annually.” In this new pensioner situation, the court clarifies that “it is not appropriate to analyze whether or not the habituality requirement is met”, which prevents the Treasury from imposing registration even if the activity is constant.
Finally, the Supreme Court agrees with Gustavo in that, to compare his earnings with the SMI, the real benefits must be looked at and not just what was invoiced. The court relies on the law to confirm that “deductible expenses will be excluded in accordance with said tax legislation.”
Thus, the ruling establishes as a doctrine that “annual income must be computed in accordance with the parameters established by tax legislation and in net terms, that is, excluding deductible expenses from the full income.” For this reason, the Supreme Court annuls the registration since he retired until August 2022, forcing Social Security to return the contributions paid.