Managing Special Collectives

This chapter provides an overview of special collectives management and discusses how to:

• Manage displaced people and expatriates.

• Manage scholarship holders.

• Manage pre-retired employees.

• Manage professionals.

Understanding Special Collectives Management

Special collectives are groups of people that require different payroll treatment because they have a special labor relation with the company for which they work. Companies consider the cost related to these people as personnel expenses. Global Payroll for Spain considers individuals in the following groups to be special collectives:

• Displaced persons and expatriates

• Scholarship holders

• Pre-retired

• Professionals

Global Payroll for Spain provides functionality to manage the relationship between companies and these groups. This includes functionality to manage payments, social security contributions, taxation, and reporting for each of the special collective types.

Managing Displaced People and Expatriates

This section provides an overview of displaced and expatriate employee management and discusses how to:

• Maintain displaced and expatriate employees.

• Maintain IRNR tax review information.

• Review accumulated IRNR tax data.

• Create the Model 216 file.

• Create the Model 296 file.

Understanding Displaced and Expatriate Employee Management

Displaced and expatriate employees are workers that are transferred to another country for a period of time. These types of workers can include foreign people working in Spain and Spanish people working abroad. Specifically, a displaced employee is an employee who is temporarily transferred to another country to attend to company business for a period of time less than or equal to one year. An expatriate employee is an employee who is transferred to another country to attend to company business for a period of time greater than one year.

Global Payroll for Spain provides functionality to manage displaced and expatriate employees. This functionality includes management of social security contributions, taxes, and affected legal documents. Because an employee’s payroll conditions can change when affected by transnational geographic mobility, Global Payroll for Spain provides solutions for various payroll conditions.

Global Payroll for Spain also provides the IRPF Tax Data Review ESP component that enables you to view tax data that the payroll process generates for displaced employees that are considered resident workers. The system includes these employees in common tax reports, Model 111/110 and Model 190 reports, and pension plan reporting functionality for creating the Model 345 report. For those displaced employees who are considered non-resident workers for taxes purposes, the system calculates IRNR. You can use the IRNR Tax Data Review ESP component to review this IRNR data. The official reports that affect these employees are Model 216 and Model 296.

See Also

Calculating Taxes

Reviewing Accumulated IRPF Tax Data

Generating the Model 345 File Report

Pages Used to Manage Non-Employee Payees

Maintaining Displaced and Expatriate Employees

To manage displaced and expatriate employees:

1. Define the withholding percentage for non-residents for each fiscal territory in the Non-resident Withholding field on the Calculation Data page of the Fiscal Territories ESP component.

   See Reviewing Fiscal Territory Calculations.

2. Set up transnational mobility details for the employee on the Transnational Mobility page of the Maintain Tax Data ESP component.

   See Setting Up Transnational Mobility.

3. Assign the appropriate earning and deduction elements to the employee through the Assign Elements By Payee page.

   See Reviewing Delivered Earning and Deduction Elements.

4. Run the payroll process.

5. Review the IRNR tax data for non-residents through the IRNR Tax Review page and make adjustments if necessary.

   If the displaced employee is considered a resident for taxes purposes, you need to use the IRPF Tax data review page.

6. Create the IRNR tax document Model 216 for non-residents monthly or quarterly using the Create 216 Model File ESP page (or corresponding Model 111/110 for residents).

7. Create the IRNR tax document Model 296 for non-residents annually using the Create 296 Model File ESP page (or corresponding Model 190 for residents).

See Also

Reviewing Monthly IRPF Tax Data

Maintaining IRNR Tax Review Information

Access the IRNR Tax Review page.

When you run the payroll process it stores the required statutory IRNR tax report information for non-residents in the GPES_EXPT_RSLT table. You can use this page to view and adjust the IRNR tax data for specific employees. The report generation processes consider the values on this page when you generate the Model 216 report, the Model 296 report, and the Tax Deduction report.

Note. If the displaced person is considered a resident, the payroll process calculates regular IRPF taxes. You report IRPF taxes through the Model 110, Model 111, and Model 190 reports.

Search Criteria

Upon entering the page, select the company, fiscal territory, year, and month for which you want to view or adjust IRNR tax data. Enter the employee ID to narrow the search results. Click the Search button to retrieve the employees based on the search criteria. The system displays employees with IRNR tax data that meet your search criteria.

Earned Income

Use the fields on this tab to review IRNR tax-related data for non-residents. This tab shows the information that the payroll process generates for each employee that meets your search criteria. You cannot edit the information on this tab.

Adjust

Use the fields on this tab to adjust IRNR tax data for an employee. This tab shows the same fields as the Earned Income tab but the fields are editable. The system differentiates between the data that the payroll process generates and the data that you enter manually.

Reviewing Accumulated IRNR Tax Data

Access the IRNR Tax Data Review ESP - Accumulated Values page.

Review the sum of each of the IRNR tax data values for the selected calendar year from January 1 through the selected month. The system displays the data by employee, key, and subkey. If you are viewing accumulated data for December, the December data will be the same as the fiscal year data that gets included in the Model 296 file.

Note. You cannot make adjustments to accumulated values. You can only make adjustments for specific months, and this in turn affects the accumulated values.

Creating the Model 216 File

Access the Create 216 Model File ESP page.

Enter the report parameters. Then click Run to execute the GPES_TAX_216 Application Engine process to generate the Model 216 file report for non-resident income tax reporting. The process retrieves data for the affected employees from the GPES_EXPT_RSLT table. The report includes the summarized deductions for affected employees within a period of one month or three months, depending on your runtime parameters.

For the state territory the process generates a flat file that you can electronically import into the official program provided by the tax authorities. For historical territories the process generates a free format file that contains a readable summary of the information that you need to report. You can then use this file as a reference when entering reporting data on the official website of the historical territory. The file name that the process generates for historical territories is the file name that you specify plus the letter S at the end.

Report Request Parameters

Sender Data

Use this group box to enter contact data for the company that is sending the information.

See Also

Calculating Taxes

Generating the Model 345 File Report

Creating the Model 296 File

Access the Create 296 Model File ESP page.

Enter the report parameters. Then click Run to execute the GPES_TAX_296 Application Engine process to generate the Model 296 file report for non-resident income tax reporting. The process retrieves data for the affected employees from the GPES_EXPT_RSLT table.

The process generates a flat file that you can electronically import into the official program provided by the tax authorities. The process uses different formats for the file depending on the selected fiscal territory.

Report Request Parameters

Sender Data

Companies can manage their own tax reporting or give that responsibility to another company. In cases where one company is sending information for other companies, use this group box to enter contact data for the company that is sending the information. Then use the Contact Data tab in the Companies to Process group box to enter the contact information specific to each company. If you are sending data for your own company only, leave this group box blank and enter contact information only in the Contact Data tab.

Companies to Process - Reporting Type

Companies to Process - Contact Data

Use this tab to enter the contact information for each of the companies for which you are sending the model file.

Reviewing Delivered Earning and Deduction Elements

This section describes the earning elements and deduction elements that are delivered as part of the special collective management functionality.

Note. The PeopleSoft system delivers a query that you can run to view the names of all delivered elements designed for Spain. Instructions for running the query are provided in thePeopleSoft Enterprise Global Payroll 9.0 PeopleBook.

Earning Elements

This table describes the delivered earning elements associated the management of displaced employees:

Deduction Elements

This table describes the delivered deduction elements associated with special collective management:

See Also

Understanding How to View Delivered Elements

Managing Scholarship Holders

This section provides an overview of scholarship holder management and discusses how to:

• Manage fellowship scholarship holders.

• Review delivered earnings elements.

Understanding Scholarship Holder Management

A scholarship holder is a person who works at a company to acquire experience and professional training under a special labor relation with the company. Scholarship holders can work for a company with a research fellowship, without a research fellowship, or through a separate entity such as an educational center or foundation.

Scholarship holders with fellowships have a unique contractual relation with the company and require special treatment with respect to IRPF taxes and social security contributions. The amounts companies pay to fellowship scholarship holders are not considered salary and are free of IRPF taxation. However, companies must declare this information in IRPF tax reports. Global Payroll for Spain enables you to declare this mandatory information in the Model 110 report, Model 111 report, Model 190 report, and Tax Deduction report. Regarding social security contributions, Global Payroll for Spain provides the necessary contribution ID as part of the social security scheme to account for fellowship scholarship holders. The scheme ID is 0111 and the social security contribution ID is 008. It is maintained on the Contribution page of the Social Security Scheme Table component. It is necessary to identify this employee as an Intern in the Empl Class field on the Job Information page.

To manage scholarship holders without fellowships, you can set up these persons as normal employees with a special contract type of practice or training. There is no additional setup or processing required.

In the last case, to manage scholarship holders from a separate entity, you can handle these persons the same way that you would handle persons that another company provides as professionals.

Pages Used Manage Fellowship Scholarship Holders

Managing Fellowship Scholarship Holders

To manage fellowship scholarship holders:

1. Set the Empl Class (employee class) field value to Intern on the Job Information page.

2. Set the Soc. Sec. Risk Code (social security risk code) field value to 119 on the Job Information page.

3. Set the Special Labor Relationship field value to Fellow Scholarship Holder on the Job Information page.

4. Enter values for the rate code BECAIN (scholarship holder) on the Compensation page.

5. Set the Scheme ID field value to 0111 on the Contract Status/Content page.

6. Set the Social Security Contribution field value to 008 (fellowship scholarship holder) on the Contract Status/Content page.

7. To override compensation entered through the rate code BECAIN in step 4 or to enter additional compensation for scholarship holders, assign the earning BECA INVESTGCN on the Assign Elements By Payee page.

8. To enter expenses for the scholarship holder, assign the earning GASTOS BECA on the Assign Elements By Payee page.

9. Process payroll.

10. Generate the affected reports monthly, quarterly, or yearly as required.

Reviewing Delivered Earnings Elements

This table describes the earning elements that are delivered as part of the scholarship holder functionality:

These elements are automatically segmented and prorated when one is assigned to a payee on the Element Assignment by Payee or Payee Assignment by Element pages. The assignment period must cover only a portion of the pay period and you must have defined the corresponding segmentation trigger.

See Also

Segmentation Triggers with Earning and Deduction Assignments

Managing Pre-retired Employees

Pre-retired employees are employees who have partially or completely ended their labor relations with a company but voluntarily maintain a special contractual relation with the company until legal retirement termination.

This section provides an overview of pre-retirement, an overview of gradual and flexible retirement, and discusses how to:

• Assign pre-retirement.

• Assign gradual and flexible retirement.

• Review delivered earnings and deductions.

Understanding Pre-retirement

Pre-retirement is when employees who have not fulfilled the requirements for normal or anticipated retirement make an agreement with the company. Because pre-retired employees are not active in the company, the company does not have to pay social security for them.

An employee and a company can agree to a pre-retirement plan. These agreements are specific to each particular employee. Global Payroll for Spain includes functionality to manage the following pre-retirement plan scenarios:

• The company terminates the employee but pays the employee the agreed upon amount until the employee reaches the retirement age of 65.

• The company agrees to pay a supplemental amount to the employee as a supplemental unemployment benefit or subsidy.

• The employee continues to contribute to social security to maintain privileges, and the company reimburses the employee for this amount.

Companies can classify these amounts as regular or non-regular income depending on each particular situation. Global Payroll for Spain provides payroll elements for each of these three scenarios for both regular pay and non-regular pay. These elements store the agreed amount to pay to the pre-retired employee, taking the agreed upon amount from the Compensation page. As regular income, employees pay IRPF taxes as they normally do. As non-regular income, the payroll system applies a reduction of 40% to the IRPF tax base.

Understanding Gradual and Flexible Retirement

Gradual and flexible retirement offers employees a way to make the transition from working life to retirement by reducing the employee labor contract from full-time to part-time. As employees fulfill all conditions for retirement or pre-retirement, these employees continue working with a part-time contract and reduced salary as long as they still receive a pension subsidy. This reduction in hours can be between 25% and 85%, thus reducing the employee’s salary by the same percentage. This enables the employee to continue receiving a partial retirement pension for the remaining working years until retirement age. Gradual and flexible retirement is regulated by law and promoted by government with special treatment of contributions to social security for employer and employee (reductions, exoneration of quotas, etc) depending on the age of employee.

Employees have two options:

• Partial Retirement: The employee can initiate partial retirement simultaneously with a part-time contract after the employee is 60 years old.

  For partial retirement before an employee reaches 65 years of age, the company establishes a relief contract with another employee in order to cover the percentage of work affected by the partial retirement.

• Flexible retirement: When the employee starts receiving their retirement pension, the employee can work on a part-time contract basis with the retirement pension reduced according to the percentage of hours worked.

In cases where there is an extension of working life, companies can benefit from some social security contribution reductions that they must assign to eligible employees. These extensions of working life pertain to (a) employees over 65 with at least 35 contributing years or (b) employees over 60 with at least 5 seniority years.

Employees Over 65 with 35 Contributed Years

Employees older than 65 years old are exempt from contributing to social security except for the temporary disability part within the common contingencies. The social security agency defines this part to be 0.28% for the employee and 1.42% for the employer over the common contingencies base.

Companies must report this situation to the social security agency using the FAN file. Specifically, the company must report the employee and employer contributions as if there were no reductions and also report the employee and employer reductions.

Global Payroll for Spain provides the necessary contribution ID as part of the social security scheme to account for active employees age 65 or older. The scheme ID is 0111 and the social security contribution ID is 007. It is maintained on the Contribution page of the Social Security Scheme Table component.

In addition to the social security contribution ID for employees who are age 65 or older, you need to define a reduction ID that defines the correct reduction amount on the Reduction Data page of the Reductions ESP component.

To calculate the reduction percentage you must use the following equation:

Total Common Contingency Percentage - (Employee Common Contingency Percentage + Employer Common Contingency Percentage) / Total Common Contingency Percentage = Percentage to Reduce

Thus using the values stated above from the social security agency, the Percentage to Reduce value for common contingency is:

28.3% - (0.28% + 1.42%) / 28.3% = 93.992932

The payroll process and FAN file generation process take into account the new contribution data and reduction data for active employees with part-time status who are age 65 or older. The FAN file generation process also accounts for the reductions in social security contributions.

Employees Over 60 with 5 Seniority Years

For employees over age 60 or greater with 5 seniority years in the company, the employer can reduce the quota to pay to social security. Employers can apply this reduction to common contingencies contributions except in the case of temporary disability. The current percentage reduction is 50% for the first 12-month period and increases by 10% at the beginning of each subsequent 12-month period until reaching 100%.

You need to define a reduction ID to manage this type of reduction to social security contributions through the Reduction Data page of the Reductions ESP component.

To determine the Percentage to Reduce value for the each period of common contingencies without including temporary disability, you must use the following equations:

(Common Contingencies Percentage – Temporary Disability Percentage) * Reduction Percentage = Reduced Common Contingencies Percentage

Reduced Common Contingencies Percentage / Common Contingencies Percentage = Percentage to Reduce

For example:

Common Contingencies = 23.6%

Temporary Disability = 1.42%

Reduction Percentage = 50%

(23.6% - 1.42%) * 50% = 11.09%

11.09 % / 23.6% = 46.991525%

You must perform these calculations for each common contingency period within the reduction ID. The payroll process and FAN file generation process take into account the contribution data and reduction data. These processes also account for the reductions in social security contributions.

Pages Used to Manage Pre-retired Employees

Assigning Pre-retirement

To manage pre-retirement:

1. Terminate the employee with pay by assigning the Termination With Pay value in the Action/Reason field on the Work Location page of the Job Data component.

2. Assign the agreed upon compensation amount to the employee in the Pay Components group box on the Compensation page. Select the rate code, compensation rate, currency and frequency of the compensation. For pre-retired regular income, select the PREJUB, PJCOSS, and PJDSEM rate codes. For pre-retired non-regular income, select the PJJUBI, PJCSSI, and PJDSMI rate codes.

   Or, assign the employee the required payroll elements for pre-retired regular income or non-regular income using the Element Assignment By Payee page. For pre-retired regular income, assign the employee the following payroll elements: PREJUBILACN earning (equivalent to rate code PREJUB), DEV SS PREJ earning (equivalent to rate code PJCOSS), and BNF DESEMP deduction (equivalent to rate code PJDESM). For pre-retired non-regular income, assign the employee the following payroll elements: PREJUBILACN I earning (equivalent to rate code PJJUBI), DEV SS PREJ I earning (equivalent to rate code PJCSSI), and BNF DESEMP deduction (equivalent to rate code PJDSMI).

3. Calculate payroll.

   The payroll process calculates the regular income payment as: PREJUBILACN + DEV SS PREJ - BNF DESEMP. The process pays this amount as regular income and pays taxes normally. Contributions to social security are zero.

   The payroll process calculates the non-regular income payment as: PREJUBILACN I + DEV SS PREJ I - BNF DESEMP I. The process pays this amount as non-regular income and reduces the tax base by 40%. Contributions to social security are zero.

4. Generate the affected reports monthly, quarterly, or yearly as required.

Assigning Gradual and Flexible Retirement

To assign an employee gradual or flexible retirement:

1. Access the Job Data Component.

   Select Workforce Administration, Job Information, Job Data, Job Information.

2. Reduce the employee’s contract from full-time to part-time by setting the Full/Part field value to Part Time.

   This effectively reduces the employee’s salary by the same percentage.

3. Reduce the contribution to social security by assigning the employee to the necessary Social Security Contribution and Reduction IDs on the Contract Status/Content page (Workforce Administration, Job Information, Contract Administration, Update Contracts).

   Your selections for these fields depend on whether the employ is over 65 years old with at least 35 contributing years or the employee is over 60 years old with at least 5 seniority years.

4. Calculate payroll.

   If the employee is over 65 with at least 35 contributing years and you assign the corresponding reduction, the payroll process reduces the social security contributions for both the employee and the employer, paying only for temporary disability. The percentage for the employee is 0.28% and the percentage for the employer is 1.42%, as defined by currently applicable laws.

   If the employee is over 60 with at least 5 years seniority, the payroll process reduces the social security contribution percentage for the employer according to the period in which the employee falls within the Reduction ID definition.

5. Generate the affected reports monthly, quarterly, or yearly as required.

Reviewing Delivered Earning and Deduction Elements

This section describes the earning elements and deduction elements that are delivered as part of the pre-retirement functionality.

Note. The PeopleSoft system delivers a query that you can run to view the names of all delivered elements designed for Spain. Instructions for running the query are provided in thePeopleSoft Enterprise Global Payroll 9.0 PeopleBook.

Earning Elements

This table describes the delivered earning elements associated with pre-retirement:

Deduction Elements

This table describes the delivered deduction elements associated with pre-retirement:

See Also

Understanding How to View Delivered Elements

Managing Professionals

This section provides an overview of the professionals management business process and discusses how to:

• Manage data for professionals.

• Maintain perception keys.

• Maintain IRPF tax review information.

Understanding the Professionals Management Business Process

Professionals are persons who provide a company a service without a labor contract. Professionals are contingent workers, not employees. Global Payroll for Spain assumes that you do not process their payments through payroll. Instead, the professional provides the company with a bill. The company must pay the professional’s bill and withhold a percentage of IRPF tax from the amount paid to the professional. The withholding percentage for IRPF taxes depends on the perception key and subkey that defines the services offered by the professional. The company does not have to contribute to social security for the professional.

Through the IRPF Tax Review ESP component you can enter the amount paid to the professional and the withholding amount applied. You can also specify the perception key and subkey to identify the work that the professional provides. The report generation processes consider the values that you enter on this page when you generate the Model 110 report, the Model 111 report, the Model 190 report, the individual professional’s Tax Deduction report, and the Tax Deduction report.

Pages Used to Manage Professionals

Managing Data for Professionals

To manage data for professionals:

1. Maintain perception key and subkey values through the Perception Keys ESP component.

2. Add the professional into the system through the Add a Person component, identifying the person’s organizational relationship as a professional by selecting the Contingent Worker check box on the Organizational Relationships page.

   A professional is contingent worker or a person who provides services to the organization and who does not have a legal employee relationship with the organization.

   See Creating Organizational Relationships and Maintaining Checklists.

3. Enter the perception key, subkey, amount paid, and withholding amounts for the professional for a specific fiscal territory and month on the IRPF Tax Review page.

4. Generate the affected reports monthly, quarterly, or yearly as required.

Maintaining Perception Keys

Access the Perception Keys ESP page.

Model File and Key	The system displays the selected model file and perception key combination.
Description	Enter or maintain the description of the perception key for the specified model file.
Subkey and Description	Enter or maintain the perception subkey value and its related description.

Delivered Perception Keys

PeopleSoft delivers as system data the following perception key and subkey data for the 190, 296, and 345 tax models:

Maintaining IRPF Tax Review Information

Access the IRPF Tax Review page.

Search Criteria

Upon entering the page select the company, fiscal territory, year, and month for which you want to enter data for professionals. To search for professionals only, select the Contingent Worker value in the Org Relation (organization relationship) field. Enter the employee ID to narrow the search results. These filters facilitate budget management and tracing of professional services within a company. Click the Search button to retrieve the professionals based on the search criteria. The system displays a grid with fields relevant only to professionals.

Detail of Payees - Adjust

Use this tab to enter amounts for the professional for the selected fiscal period and month. This tab shows the same fields as the earned Income tab but the fields are editable. The system differentiates between the data that the payroll process generates and the data that you enter manually.

See Also

Viewing IRPF Tax Calculation Results