Retorno cooperativo: shared out by activity, not by capital
This is the sentence that separates a cooperative from a limited company. Whoever has worked most or consumed most receives most, even if they put in less money.
The share of the distributable surplus that a cooperative pays out to its members in proportion to the cooperative activity each of them has carried out.
Article 58.4 of Ley 27/1999 leaves no room: the retorno is credited to the members in proportion to the cooperative activity carried out by each member. Not according to their contributions to share capital.
The available surplus — what is left after allocating to the mandatory reserve fund and the education and promotion fund, and after tax — can go to the retorno, to voluntary reserves or to a share for the workers.
An example with numbers
A workers' cooperative with €45,000 of available surplus and three members who contributed, respectively, 40%, 35% and 25% of the year's invoiced hours:
- Member A: €18,000 · Member B: €15,750 · Member C: €11,250
If member C had contributed three times as much capital as the other two put together, the split would be exactly the same. That is what makes a cooperative a cooperative.
How it is taxed
Ley 20/1990, on the tax regime of cooperatives, governs it. As a general rule the retorno is taxed in the member's hands as investment income and carries withholding, except in the cases that Act itself excludes — among them, where it is used to offset losses or is added to share capital.
In the cooperative itself, that same Act taxes cooperative results at 20% in protected cooperatives, and grants a 50% reduction in the gross tax liability to specially protected ones.
The mistake that comes up most
Sharing it out in proportion to capital contributed, as though it were a dividend. As well as breaching article 58.4, that kind of distribution can cost the cooperative its protected status and with it the whole favourable tax regime.
Where this carries on in Cairos: The day-to-day accounting of a cooperative.
Terms that go with this one
Almost no tax concept makes sense on its own. These three are the ones that most often turn up beside it.
Mandatory reserve fund
The non-distributable reserve to which a cooperative has to allocate a minimum percentage of its surplus each year.
IRPF and withholdingsNet income
What is left after deducting the tax-deductible expenses from the gross income of the activity, before applying any reductions.
IRPF and withholdingsIRPF withholding
The amount the payer holds back from an invoice or a salary and pays over to Hacienda on account of the IRPF of whoever is being paid.
This, handled without thinking about it
Cairos keeps the invoices, the record books and Hacienda's forms from the same data, so the theory on this page turns into boxes that are already filled in.
No card and no minimum term.