A case in Spain reminded us of the importance of formally ending the activity of self-employed workers after retirement. A Spanish pensioner will have to return more than 10 thousand euros to the National Social Security Institute (INSS) for having continued to be registered in the self-employed workers’ regime (RETA), the equivalent of a self-employed worker in Portugal, despite not carrying out any activity. The Madrid Superior Court of Justice confirmed that this situation is incompatible with receiving the full pension.
The court ruled in favor of Social Security, considering that the pensioner, identified as Belarmino, unduly received the entire retirement pension while he remained registered with RETA. According to the General Social Security Law, this overlap is prohibited, except in cases of “active retirement”, which allows 50% of the pension to be accumulated with professional activity, according to the Spanish digital newspaper Noticias Trabajo.
According to the sentence, the retiree had retired in 2014 under the general regime, but re-registered as self-employed in November 2021, communicating the start of an activity to RETA. From that moment on, he continued to receive his full pension, which led Social Security to suspend payment and demand a refund of 9,465.15 euros, an amount that later rose to 10,027.66 euros with interest and corrections.
Failed notification and publication in the BOE
The INSS tried to notify the retiree of the decision, but the letter was returned with the indication “unknown”. In view of this, Social Security resorted to publication in the Official State Gazette (BOE), as provided for by law. Months later, the retiree tried to regularize his situation, requesting to join the “active retirement” modality, which would make it possible to make half of his pension compatible with independent activity.
However, Social Security understood that the previous months constituted a period of undue collection, as the retiree had never formally requested this modality. Belarmino then filed an administrative complaint, alleging that he had never worked and that the INSS itself should have automatically processed his dismissal from the self-employed regime.
Incompatibility between pension and RETA registration
After several instances, the case reached the Superior Court of Justice of Madrid, which upheld the initial decision. The Chamber confirmed that the INSS “acted in accordance with the law by suspending the pension and demanding the return of amounts unduly received”, remembering that the simple fact of remaining discharged from RETA is enough to constitute incompatibility, even without there having been actual work.
The sentence also emphasizes that what is essential is the administrative situation and not the practical activity. In other words, to maintain the right to a full pension, the retiree must be formally disconnected from any professional regime. The absence of an official discharge from RETA therefore implies the temporary loss of the right to receive the full pension, according to the same source.
“Not working” is not enough: you have to officially leave
The court reinforces that the retiree’s mistake was to think that it was enough not to do any work to continue receiving the full pension. However, the legislation is clear: compatibility only exists in specific situations and upon express request. Mere inactivity is not enough.
In the words of the sentence itself, “there was no defenselessness, since the appellant had the opportunity to access the administrative file and present allegations”. The court further adds that “defects in the notification do not annul the administrative act, as no material prejudice or defenselessness has been demonstrated”.
A warning to other retirees
With this decision, the Superior Court of Justice of Madrid made it clear that pensioners must ensure that they are effectively discharged from RETA or the equivalent regime, otherwise they run the risk of having to return significant amounts. The sentence also serves as a warning for similar situations in which retired people remain registered due to inertia or ignorance of the rules.
The incompatibility between retirement and active registration in professional schemes is, therefore, a matter of legal formality, and ignoring it can be expensive, according to .
What if it happened in Portugal?
In Portugal, the law follows the same logic. Article 78 of Decree-Law No. 187/2007, of May 10, which approves the Legal Regime of Old-Age Pensions of the General Social Security Regime, establishes that “the old-age pension is incompatible with the exercise of an activity covered by a mandatory social protection regime, unless otherwise provided by law”.
This means that a Portuguese retiree who continues to be registered as a self-employed worker (even without issuing receipts or having income) may be in a situation of incompatibility with the pension. As long as registration remains active with Finance and Social Security, the pensioner is legally considered active, which may lead to the suspension of the pension and the obligation to return the amounts received during that period.
Furthermore, article 63 of the Code of Contributory Regimes of the Social Security Pension System (Law no. 110/2009, of 16 September) reinforces that anyone who carries out professional activity is subject to mandatory classification, regardless of whether the actual income is zero. Therefore, the simple fact of appearing as an “active” in the Social Security databases is enough to generate contributory obligations and potential incompatibilities.
Exception: the partial accumulation regime
There is, however, an exception similar to the Spanish one. The partial accumulation regime allows the retiree to make part of the pension compatible with the exercise of professional activity, as long as the situation is communicated and authorized by Social Security. In these cases, the pensioner receives only a fraction of the pension (normally 50%), maintaining active registration and the corresponding discounts.
If the pensioner does not make this communication and continues to receive the full pension, the amounts will be considered undue and will have to be returned, as provided for in article 187 of Law no.
Procedure in case of detection
In practice, Portuguese Social Security automatically cross-checks data with the Tax Authority. If it detects that a pensioner is registered as a self-employed worker and continues to receive the full pension, it initiates a process to replace amounts unduly paid. The retiree is notified to comment, being able to justify an administrative error or provide proof of cessation of activity.
If you do not do so, Social Security will suspend the pension and demand the return of the amounts corresponding to the period of incompatibility, also applying default interest on the amounts in question.
Case in practice
If the Belarmino case had occurred in Portugal, the outcome would be identical. Maintaining registration as a self-employed worker, even without any income, constitutes a situation of incompatibility with receiving the full old-age pension.
The only way to avoid problems is to formally cancel your activity in Finance and Social Security as soon as you reach retirement or, alternatively, expressly communicate to Social Security your intention to continue carrying out professional activity under the partial accumulation regime. Ignoring this formality can be expensive, with the return of thousands of euros and the temporary suspension of the pension.
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