COVID-19: EMEIA Government Support Package - Spain - 17 April 2020
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2 COVID-19: EMEIA EY Government Support Package With the ultimate objective of preventing the initially cyclical situation from transforming into a permanent or structural impact on the Spanish economy due to a vicious circle of falling demand and production, similar to that which occurred in 2008 and 2009, the Spanish Government has adopted a series of measures. These measures are in addition to those adopted at an European level and aim to respond to the exceptional economic circumstances we are experiencing. Outside the imposition of civil restrictions, the measures can be grouped into six main areas which are being delivered via different distinct channels. Areas being addressed: These aims are primarily being delivered through: 1. Providing liquidity ► The banking system in terms of financing 2. Public procurement and contract law schemes that have been announced; 3. Impact on public contracts and contract Law ► The national Spanish tax system, local town tax 4. Labour measures adopted systems, Autonomous Regional tax system and 5. Different tax measures general interpretation of the tax legislation; and 6. Miscellaneous measures: limitations on making ► Modification of the various parts of the tax foreign investments in Spain and bankruptcy legislation affected by the measures. 21 April 2020 COVID-19: EMEIA EY Government Support Package – Spain
3 Spanish Government announced responses Financing & Liquidity Public Law Corporate and Contract Real Estate Law Public Guarantees: provision of Public contracts: amendments to Board of directors & Shareholders Meetings / Leases for dwelling: guarantees of up to €100 bn to terms and conditions to alleviate financial statements forced renewal and rent secure funding granted by financial COVID 19 effects by: deferral/reduction ► Approved alternative governance procedures institutions to companies and self- ► Providing compensation for related to Board of Directors and employed workers. Leases for other use additional costs incurred on Shareholders Meetings than dwelling: not contracts that cannot be fulfilled ► Deadline to draw up and approve financial affected by regulation or have to be suspended because ICO & CESCE: increase in the net debt statements is suspended but by circumstances of the COVID-19 situation i.e. limit established by the ICO (Official increase of the retribution of the ► Other measures: suspension of the Credit Institute) of €10 bn and an Mortgages: forced contractor; and shareholders’ right of separation; Suspension of insurance cover facility of €2 bn deferrals the term to call the shareholders general (Spanish Export Credit Agency – ► Extension of terms or amendment meeting in case of mandatory dissolution CESCE). of economic terms of concession Eviction proceedings: cause. If the dissolution cause took place during contracts i.e. public contracts. Suspension the state of alert period, the directors will not be liable for the company’s debts assumed SGIPYME Loans and Public Loans: during this period amendment of repayment schedules of certain loans. ► Consumers protection measures Tax Tax compliance procedures Local tax measures: ► Automatic extension of deadlines for tax ► The period running from March 18th to April 30th, 2020 Measures are passed at local/ procedures relating to non-self assessed / non-periodical will not count towards calculations of the statute municipal level as deferral on payments taxes of limitation or expiration of tax enquiry periods. However, or many kind of fiscal benefits ► Automatic extension of deadlines of self-assessed / some measures that might have been expected have not Madrid has put in place a 25% periodical taxes for SMEs and self employed workers with been enacted: reduction of Business (“IAE”) and a turnover of less than EUR 600k in 2019 (not applicable to ► Deadlines for filing of self-assessed taxes and payments of Property Tax (“IBI”) and a moratorium tax consolidated groups for CIT or VAT purposes) taxes by companies with EUR 6 million turnover (or more) for other taxes as construction tax, ► Deferral of up to 6 months and up to EUR 30k on payments have not been extended. real estate tax and any kind of local of self-assessed / periodical taxes by levies ► No measures have been introduced to allow more flexibility companies with turnover of less than EUR 6m in 2019 in payment by installments, postponement of payment Tax measures adopted in Basque of tax liabilities or suspend / render guarantees (exceptions country and Navarra and Canary for SMEs and self employed workers referred above). Islands. 21 April 2020 COVID-19: EMEIA EY Government Support Package – Spain
4 Spanish Government announced responses Employment law Employment measures: ERTE: Measures to protect employment: Measures to protect employment: ► Various measures have been adopted ► Companies can implement short ► Companies cannot carry out objective ► The Government has introduced in order to face the social and term layoffs or reduce the dismissals derived from COVID-19, obligations for non-essential economic impact of COVID-19 that employee’s working hours (referred which could result in the consideration employees who cannot work remotely the employing companies shall as ERTEs). of the dismissal as unfair, in principle. to take paid leave during the period implement. The most significant of ► The suspension of temporary contracts from 30 March to 9 April 2020 state ► Companies making temporary lay- these measures include: (i) the derived from COVID-19, will interrupt of alarm period. This is a compulsory offs under the ERTE regime should implementation of teleworking, (ii) the period subscribed and will resume measure that the companies should request unemployment benefits on reductions on working hours with the as soon as the COVID-19 suspension is implement. The lost working hours behalf of the workers within 5 days purpose of balancing work and family lifted for the remaining period. through the paid leave must be from the request of the ERTE. life, and (iii) implementation of recovered by the employees in the Unemployment benefits should subsidies for self-employed. period following the state of alarm but become payable from the date of before the end of the year, subject to ► Employees affected and suffering the force majeure or from the date advance agreement with Workers’ from COVID-19 are considered to be of notification by the company to representatives. on temporary disability leave due to notifies the labor authority of the an accident at work. ERTE decision. Employment Law - Fixed costs and grants Other Areas ERTE due to force majeure: 2. Companies with over 50 ERTE due to objective grounds: Foreign investments employees are exempt from ► Companies with an ERTE due to ► During the period in which the Investors resident outside the EU or the European paying 75% of the Social force majeure in force, do not have ERTE is in force, the company Free Trade Association, among others, need to be Security contributions for to pay salaries to temporarily “laid is still obliged to pay 100% of authorized prior to transactions that involve their employees (i.e., off” staff. the Company’s Social acquiring a 10% or control stake in Spanish players contributions are reduced to Security contributions for of strategic sectors. ► Social Security special measures 25% of normal levels). their employees. adopted for temporarily “laid off” Bankruptcy ► Unemployment benefit: the staff: ► Unemployment benefit: the affected employee is entitled to The legal mandate to file for bankruptcy (i.e., affected employee is entitled 1. Companies with less than 50 unemployment benefit even entities under insolvency situation must request the to an unemployment benefit, employees are exempt from where no minimum contributions declaration of bankruptcy within a two-months term even where no minim paying Social Security to the Social Security have been as from the date where the insolvency contributions to Social contributions for their made. circumstances concur) is suspended during the state Security have been made. employees. of alert. 21 April 2020 COVID-19: EMEIA EY Government Support Package – Spain
5 Liquidity and financing: Public Guarantees Line Spanish Government Which transactions are covered? Who is eligible? What is the term of the approved Royal Decree-law The guarantees may be requested to Eligibility criteria has been published guarantee? 8/2020, of 17 March, on secure either new financing and includes companies and self- The term of the guarantee will be the urgent extraordinary transactions or the renewal of previous employed workers: same as the term of the loan granted by measures to deal with the financing transactions entered after 17 the financial institution up to a limit of ► With a registered office in Spain; March 2020 with credit entities, five years. economic and social impact financial credit institutions, electronic ► affected by the economic effects of of COVID-19. money entities and payment entities to COVID-19; The Government approved a fund the borrower’s financial needs for, ► that were not in a payment default What is the percentage of the among others, salary payments, public guarantee line of up invoices, working capital or other situation on 31 December 2019 financing covered by the to €100 bn to secure (according to the Bank of Spain’s liquidity needs, and payment of taxes files); and guarantee? funding granted by financial and other financial obligations. not subject to insolvency The guarantees will secure 80% of new institutions to companies ► loans and renewals of transactions and self-employed workers, proceedings on 17 March 2020. How is it accessed? requested by self-employed workers and to fund their tax and SMEs. 50% of the first tranche is addressed to financial payment self-employed workers and SMEs (Small Which loans can benefit from For the rest of the companies, the obligations, payment of Medium Enterprises) and the remaining this guarantee line? guarantee will cover, respectively, 70% invoices and salaries, and 50% is reserved to large companies. Loans up to €1.5 m (across a single or a of the new loans granted and 60% of the general liquidity and 100% of the second tranche is reserved series of financing transactions renewals. for self-employed workers and SMEs. working capital needs. transactions) shall be subject to “de In all situations the losses are borne ► Companies and self-employed minimis” aid regulation as per EU proportionally and under the same Two tranches of €20 bn workers have until 30 September regulation NO 1407/2013. conditions by the State and the each have already been 2020 to apply for the guarantees. financing entity. For loans above €1.5 m maturing after activated. ► To that end, they should contact the 31 December 2020, the overall amount financial institutions with which the of loans per beneficiary shall not exceed: For more information ICO has signed the corresponding collaboration agreements. Currently ► Double of annual wage bill for 2019; Gonzalo Martín de Nicolás Presa there is no standard form which 25% total turnover in 2019; Gonzalo.Martindenicolas@es.ey.com would apply to all institutions. ► Tel: +34 91 572 73 79 ► Both tranches are distributed among ► Justified liquidity needs for 18 each financial institution according months (SMEs) or 12 months (large Last updated 10th April 2020 to their market share at the end of companies). 2019. COVID-19: EMEIA EY Government Support Package – Spain
6 Liquidity and financing: ICO & CESCE The Spanish Government Increase in the net debt limit Who is eligible for the insurance Small Medium Enterprises (SME) has approved the following established for the ICO by €10 cover (CESCE)? An SME is a company (i) with less than measures: bn Eligibility criteria has been published 250 employees and (ii) with an annual The purpose being to facilitate and includes (i) Spanish SMEs, and (ii) total turnover which does not exceed ► increase in the net debt €50 m and/or an annual balance sheet additional liquidity to companies (in larger companies which are not listed limit established for the (anticipated to be defined as listed on a total which does not exceed €43 m. particular SMEs and self-employed ICO (Official Credit workers) through increased ICO Facility Stock Exchange), provided that the Institute) by €10 bn to Lines with the intermediation of companies: facilitate the granting of financial institutions both in the short ► are international companies or are in What are the features for the financing to companies and the long term. the process of becoming insurance cover (CESCE)? and self-employed international, meeting at least one of the following requirements: (i) The main features for the insurance workers; and, cover are among others: companies in which the international ► an insurance cover Insurance cover facility of €2 bn business represents at least one ► The new facility will be arranged in facility of €2 bn (Spanish (CESCE). third (33%) of the turnover pursuant two tranches of €1 bn. The second Export Credit Agency – to the latest available financial tranche will be made available once ► An insurance cover facility of €2 bn information, or (ii) companies which the satisfactory implementation of CESCE-). was approved for export working are regular exporters (those the first tranche has been confirmed. capital loans which: (i) must be used companies which have regularly The first tranche was made available for new financing needs, and not for exported during the last four years on the 6 April. situations existing prior to the pursuant to the criteria established COVID-19 crisis; and (ii) do not need by the Trade Department); and, ► The coverage percentage of credit to be directly connected to risk will not exceed the limits international agreements (we ► as a result of the impact of the foreseen within the EU regulations understand this to be payment COVID-19 crisis on their business on State aid. obligations arising from international activities, face liquidity problems or export agreements). limitations on accessing financing. Eligible companies must not be subject For more information ► The insurance cover facility will be provided by the Spanish Export to insolvency or pre-insolvency Gonzalo Martín de Nicolás Presa Credit Agency (CESCE). proceedings, and must not have payment defaults against public-sector Gonzalo.Martindenicolas@es.ey.co ► The insurance cover facility will have companies or outstanding debts with m a term of six months from 18 March the public administration recorded Tel: +34 91 572 73 79 Last updated 8th April 2020 2020. before 31 December 2019. COVID-19: EMEIA EY Government Support Package – Spain
7 Liquidity and financing: SGIPYME Loans On 31 March 2020, the Who is eligible? How is it accessed? Authorization Government approved The beneficiaries of certain financing The requests must be accepted or The requests, which must be duly several urgent and programmes of the General Secretary of justified, can be filed during thirty (30) denied by the SGIPYME within six (6) complementary measures Industry and SMEs at the Ministry of months following the declaration of the months (if not answered it shall be to deal with the economic Industry, Energy and Tourism state of alarm. understood as denied). (SGIPYME) for industrial projects (i.e. and social impact of COVID- The requests must include: reindustrialization, automotive sector, 19 and, in particular, the industry competitiveness, R&D, etc) can ► a report justifying the difficulty to refinancing of loans granted request amendments to the facility’s comply with the current repayment For more information by the General Secretary of repayment schedule, provided that the schedule due to the COVID-19 crisis. Gonzalo Martín de Nicolás Presa Industry and SMEs at the COVID-19 crisis has caused to the This report shall include a provisional beneficiary: (i) inactivity periods; (ii) balance sheet and profit and loss Gonzalo.Martindenicolas@es.ey.co Ministry of Industry, Energy reduction in its sales volume; or (iii) account, just prior to the COVID-19 m and Tourism (SGIPYME). supply interruptions in the value chain. crisis and a qualitative and Tel: +34 91 572 73 79 Borrowers who (i) are not up to date on quantitative explanation of how the tax and social security payment crisis has affected the business obligations, or (ii) are in default in the including a financial assessment, as payment of aids or loans with the well as an action plan to mitigate the administration, or (iii) have not filed effects; their annual accounts, cannot benefit of ► if the period given to perform the this measure. investments had not finished, a technical and economic report justifying the investments carried out What does it cover? against the loan; and The amendments to the repayment ► a statement of compliance declaring schedule may consist of: that the company is up to date with its tax and social security obligations, ► extension of the maturity date; does not have outstanding debts ► extension of the maximum grace from loans or aids with the public period; or, sector and has fulfilled its obligation to file the annual accounts within the ► other amendments which maintain Commercial Registry. the level of intensity of the public aid Last updated 8th April 2020 and the level of risk. COVID-19: EMEIA EY Government Support Package – Spain
8 Liquidity and financing: Public Loans On 31 March 2020, the What does it cover? How is it accessed? Authorization Government approved the Borrowers of credits or loans granted By filing an application with the relevant From the submission request, the deferment of the repayment by Autonomous Communities public administration before the end of maximum term for the resolution of the schedule of loans granted (Comunidades Autónomas) and Local the voluntary payment period. procedure and its notification is one (1) by the public sector to Corporations (Entidades Locales) may month (if no reply is received, it is The application shall include: request the deferment of the payment assumed that the response is negative). companies and self- of the principal and/or interest to be i. a report attesting the lack of employed workers affected resources or difficulties to face the satisfied for the rest of 2020. Any by the COVID-19. payment of maturities as a Other aspects financing transaction other than loans consequence of COVID-19 crisis; in market terms will be excluded. From the application request until ii. a statement declaring that the fifteen (15) days after its resolution, The request will entail the amendment company (a) is up to date with its the early termination events of the repayment schedule, tax and social security obligations, regarding the non-payment of the maintaining the maximum term of the (b) has no outstanding debts from loan, and the deferred installments instalments of the loan, will be aids or loans with the public inapplicable. could be split. administration and, (c) has fulfilled The deferred installments will only its obligation to file the annual In the event that the loans have been accrue the interest rate previously accounts within the Commercial granted within the framework of agreed, but no additional financial Registry; and collaboration agreements with costs or expenses may arise in iii. a statement declaring that the financial institutions, any deferment connection with such deferral. permitted intensity levels of the or amendment will be made as agreed public aid and the remainder EU with said entities. regulations on public aids are Who is eligible? respected. Companies which do not belong to the For more information public sector and self-employed Gonzalo Martín de Nicolás Presa workers may benefit from this measure, provided that the COVID-19 Gonzalo.Martindenicolas@es.ey.co crisis has caused to the beneficiary: (i) m inactivity periods; (ii) reduction in its Tel: +34 91 572 73 79 sales volume; or (iii) supply interruptions in the value chain. Last updated 8th April 2020 COVID-19: EMEIA EY Government Support Package – Spain
7 Public Law: Public contracts Several measures have Who is eligible? What does it cover? Practicalities been implemented Certain contractors whose contract In general terms, contractors are Companies will need to be able to regarding certain public cannot be fulfilled during the current entitled to request compensation for support the amount of damages contracts in force that are state of alert have the right to request the following expenses incurred in claimed. affected by Coronavirus or the suspension of the contract and the relation to contracts which have been In most cases, the contractor authority right to be compensated for several suspended or cannot be fulfilled during by the consequences of the economic damages caused. These are the state of alert period initiated March must issue a decision within five days of state of alert period the request being made. In general summarized in the next column. 14: (initiated 14 March). terms, if said resolution is not issued in In some other cases, contractors may ► Salary costs. this period, it is implicitly rejected. In general terms, request an extension of the contract. ► Maintenance of definitive guarantee. contractors have the right In the event of concession contracts ► Rental costs and/or costs of to request the suspension (entered into by a public administration machinery, facilities and equipment For more information of the contract (or to and a private company) (of works or that cannot be assigned to other Félix Plasencia Sánchez request an extension of services) affected by state of alert, the uses. contractor may request compensation Felix.PlasenciaSanchez@es.ey.com term of the contract) and to to restore the economic balance and ► Insurance policies. be compensated for several Tel: +34 91 572 73 79 restore eventual damages caused by In some cases, the compensation is costs if the execution of the this situation. limited to salary costs plus 10% of the contract is interrupted. contract price. This is in respect of works contracts that cannot be ended Who is eligible? during the period of the state of alert. In concession contracts, the law may How is it accessed? provide for the term of the contract to ► Full details contained in Royal be extended or for the economic terms Decree-law 8/2020. of the contract to be changed. The contract terms will need to be updated ► Companies must request to confirm this. compensation (there is currently no formal format), from the contractor authority (public authority). Last updated 8th April 2020 COVID-19: EMEIA EY Government Support Package – Spain
10 Public Law: Regulated industries Regarding regulated Basic supplies Practical considerations: For more information: industries, the measures Energy and water supplies may not be cut Energy, water and electronic Félix Plasencia Sánchez introduced basically aim to off to households during the state of alert. communications players will have Felix.PlasenciaSanchez@es.ey.com (i) guarantee essential Electronic communications services may higher working capital needs during the state of alert. (+34) 91 5727379 supplies, (ii) alleviate not be cut off during the state of alert. financial burdens of Prices of gas will not be automatically individuals and (iii) prevent updated according with their regime, players from taking unless it reduces those prices. advantage of the Self-employed and companies will be confinement situation. assisted by other three measures: ► Self-employed who have had to stop their activity or have reduced their turnover dramatically, will be eligible for a 25% reduction of the power supply regulated price (“bono social”) for a period of 6 months. ► Changes to contracted capacity or contract suspension in energy supplies will be available at no cost. ► Energy supply bills issued during the state of alert may be paid in 6 monthly instalments after that situation end (only for self-employed and not big companies). Last updated 8th April 2020 COVID-19: EMEIA EY Government Support Package – Spain
11 Public Law: Regulated industries (cont'd) Regarding regulated Gambling Practical considerations: For more information: industries, the measures Sales efforts and promotions are forbidden Gambling players will find difficulties to Félix Plasencia Sánchez introduced basically aim to during the state of alert. grow their business during the state of Felix.PlasenciaSanchez@es.ey.com (i) guarantee essential TV commercials are only allowed from 1 alert. (+34) 91 5727379 supplies, (ii) alleviate am to 5 am. Media players will lose out. financial burdens of Email commercials are forbidden. individuals and (iii) prevent players from taking Practical considerations. advantage of the Gambling industry players will find confinement situation. difficulties to grow their business during the state of alert. Last updated 8th April 2020 COVID-19: EMEIA EY Government Support Package – Spain
12 Contract Law Potential suspension or termination Contracts of the agreements depending on For more information whether or not the obligations can In general terms, no specific All kind of private agreements. be fulfilled. It needs to be analyzed Francisco Silvan measures have been passed Specific provisions for lease, financial and on a case-by-case basis. Francisco.Silvanrodriguez@es.ey.c regarding the impact of the users agreements have been passed. om Covid-19 crisis on private Tel: +34 629 789 482 agreements What does it cover? Practicalities Under general Spanish As a general measure relating to private All kind of relevant contracts need to be contract law, however, there agreements, the statute of limitation and carefully reviewed to assess any impact expiration of any action or rights have of the crisis. may be the possibility for been suspended during the state of alarm. All written communications with the suspension or termination of such private agreements Although it has not been clarified as yet, this counterparties need to be promptly measure could be interpreted as only being analyzed. as a consequence of the applicable to claims relating to rights under a If the agreement cannot be properly crisis contract (for example, the term to claim fulfilled due to the crisis, a damages under an SPA). renegotiation of conditions Other than the above, there are no specific (particularly, terms and deadlines) measures on potential suspension, might be advisable to avoid renegotiation or termination of existing controversies. agreements. Good faith and proportionality The Pacta sunt servanda principle generally principles need to be considered. applies and therefore parties need to honor Application of force majeure what has been agreed in the contract, provisions and the “rebus sic stantibus” including the allocation of risk. doctrine needs to be analyzed on a Potential application of the force majeure case-by-case basis. provisions (legal and/or contractual) and the Any unilateral suspension or “rebus sic stantibus” doctrine (allowing a termination of agreements must be contract to become void because of a promptly analyzed to mitigate any fundamental change of circumstances) . litigation risk. Last updated 8th April 2020 COVID-19: EMEIA EY Government Support Package – Spain
13 Contract Law (Users and consumers) Who is eligible Practicalities For more information Users and consumers have Contracts for the sale of goods and the Sale and services contracts need to be Francisco Silvan the right to terminate sale supply of services, including ongoing reviewed as well as the cause-effect Francisco.Silvanrodriguez@es.ey.co services. relationship to asses the impossibility to and services contracts, perform its terms as a consequence of m including ongoing services, What does it cover? the outbreak of COVID-19. Tel: +34 629 789 482 without penalty provided Good faith is key to reach an agreement The right of users and consumers (not the terms of the contract on a revised proposal of the contract. businesses) to terminate sale and services become impossible to agreements, including ongoing services, The revised proposal needs to be perform as a consequence provided that the terms of the contract considered carefully and could consist of the measures put in place become impossible to perform as a in (i) the performance of the service at by the Spanish government consequence of the measures put in place. a later time or (ii) a voucher to be used during the state of alarm. The exercise of the right is also subject to within a certain period from the end of the failure to reach an agreement on a the state of alarm. revised proposal for the performance of the If the contract is terminated and the contract. Such revised proposal may sums are to be returned to the include, among others, the offer of user/consumer, the amount (principal substitute vouchers. and expenses), manner and term of If such revised agreement is not reached return need to be calculated. within 60 days, the users/consumers can, Proportionality and reasonableness within 14 days, terminate the agreement criteria to be generally applied. without incurring a penalty. In such a case, the business could be obliged to return the sums paid by the consumer or user, except for the expenses incurred, duly itemized and provided to the consumer. There are specific provisions related to: (i) Contracts for the supply of ongoing services and (ii) Package travel contracts canceled in the context of COVID-19. Last updated 8th April 2020 COVID-19: EMEIA EY Government Support Package – Spain
14 Real Estate Law Several measures have been Contracts How is it accessed? Practicalities (Contract Law) adopted in the real estate Lease agreements, for dwelling, and for Regarding individuals, the vulnerable All kind of relevant contracts need to sector concerning lease other use than dwelling (the latter not situation specifically caused by COVID- be carefully reviewed to assess any agreements, mortgage loans affected by regulation but by 19 must be evidenced. impact of the crisis. circumstances). and eviction proceedings. Full details contained in Royal Decrees- All previous written communication Mortgage loans entered into for (i) dwelling’s laws 8/2020 and 11/2020. with the counterparties needs to be Lease agreements: acquisition to live; (ii) dwelling’s acquisition analyzed. to lease; and (iii) asset’s acquisition for Do measures affect commercial Dwelling lease: (i) 6 months’ If the agreement cannot be properly business development. extension, mandatory for the leases? fulfilled due to the crisis, a lessor when term concludes Who is eligible? Measures adopted by Government renegotiation of conditions within April 1, 2020 and the exclusively affect urban leases for dwelling. (particularly, rent payment and term) Lease for dwelling related measures - is advisable to avoid controversies. two months following the Lessees in vulnerable situation caused by There are no specific measures on potential termination of the state of COVID-19. suspension, renegotiation or termination of Good faith and proportionality principles need to be considered. alarm; (ii) rent Mortgage loans deferral - Individuals in the existing lease agreements for use other deferral/reduction, mandatory than dwelling. Any unilateral suspension of vulnerable situation caused by COVID-19 for “large dwelling’s holders”, who have entered into a mortgage for As stated, on “Contract Law” section, Pacta agreements must be previously dwelling’s acquisition. sunt servanda principle generally applies analyzed to mitigate the litigation optional for smallholders. risks. and therefore parties need to honor what Individuals who have entered into a Lease for other use than has been agreed in the contract, including mortgage for dwelling’s acquisition which is dwelling: potential tacit leased to an individual who is not paying the the risks allocation. What’s still to come? modification of the agreement. rent because of COVID-19. Force majeure provisions shall only apply if Potentially, measures regarding leases agreed on the agreement. Up to this date, Mortgage loans: Payment Companies or professionals who have legal force majeure, which may imply referred to commercial premises, deferral for individuals and entered into a mortgage on a real estate which may not open to the public. termination, does not apply to leases when asset intended for their activity, when they companies affected by the the obligation affected by the crisis is of suffer a fall in turnover of at least 40% or a crisis. substantial loss of income. monetary nature. For more information Eviction: eviction proceedings Potential application of “rebus sic Ignacio Sáenz de Santa María Eviction suspension - lessees in a vulnerable stantibus” doctrine to temporarily modify derived from lack of payment of situation caused by COVID-19, may request the agreement. Potential rent deferral or Ignacio.SaenzGarcía@es.ey.com the rent may be suspended. suspension of eviction foreseen to be reduction but no termination. Needs to be Tel: +34 626 753 853 executed once ended state of alarm and analyzed on a case-by-case basis. resumed procedure deadlines. No dwelling alternative shall be evidenced. COVID-19: EMEIA EY Government Support Package – Spain
15 Tax – Deadlines extensions The above mentioned extensions, would VAT quota is included in the Who is eligible?•The measures also apply to the payment of regional or return corresponding to the period General flexibility tax The measures would apply to all the local tax liabilities. in which the document with measures individual and corporate (except the the assessment made by extensions referred to Custom the authorities is received. In general terms, deadline processes) tax payers (globally) with tax Practical considerations The recipient of the import extensions for certain tax liabilities in Spain. goods should qualify as SMEs The relevant deadline is extended until (those whose turnover in the payments or procedures will (i) April 30 where the initial deadline fell How is it accessed? previous year does not automatically apply without due on or before March 18th 2020 and exceed €6,010,121.04) in Financial need to follow a specific In general terms, deadline extensions (ii) May 20th 2020 “at a minimum” Year 2019. where the deadline is set after March application procedure. will automatically apply to deadlines after 14 March, without the need to 18th. This will be determined on a case follow a specific application procedure. by case basis. Generally, the deadlines are extended to A line of credit guaranteed by the State For more information: 30 April or 20 May depending on may be used to pay self-assessed taxes whether the notification was made (see slide 5). Maximino I. Linares Gil before 18 March. Flexibility in Customs processes. Maximino.LinaresGil@es.ey.com What does it cover? The period running from March 14th to +(34) 915 727 123 Payment of tax liabilities derived from tax April 30th, 2020 is not computed for assessments made by the tax authorities the purposes of determining the statute (i.e., as opposed to self assessment which of limitation or expiration periods of any is not covered) right or action foreseen in the tax regulations. Payment of tax liabilities where the deferral or payment by instalments has been approved. Extensions apply to tax assessments made by the tax authorities. Deadlines in tax procedures that are currently underway in relation to the application of taxes, penalties, audits (information requests and deadlines to Last updated 15th April 2020 provide information, attachments or filing of writ of allegations). COVID-19: EMEIA EY Government Support Package – Spain
16 Cash flow support: Payment tax deferrals Automatic extension of State Tax payments Measures implemented in For more information: deadlines of self-assessed / Autonomous regions Nuria Redondo Martinez periodical taxes (i.e., CIT, The deadline of self-assessed / VAT, WHT) for small and periodical taxes (i.e., CIT, VAT, Nuria.RedondoMartinez@es.ey.com medium sized businesses WHT) which deadline ends by May 20th In general terms, in most Autonomous of small and medium sized businesses (+34) 91 5727339 and self employed workers Communities an extension to payment and self employed workers with deadlines of 1 month or 3 months from with a turnover of less than a turnover of less than EUR 600.000 the end of the State of Alarm has been EUR 600.000 in 2019 until Jose Gabriel Martinez Paños in 2019 has been automatically granted in relation to taxes over which May 20th (not applicable to extended until May 20th (please note they have devolved responsibility, which JoseGabriel.MartinezPanos@es.ey.com tax consolidated groups for that this is not applicable to CIT or VAT purposes) include Transfer Tax and Stamp Duty (+34) 91 5727624 tax consolidated groups for CIT or (ITP y AJD), and Inheritance and Gift tax VAT purposes regardless of their (ISD). turnover) Deferral of tax payments Regarding Canary Islands, please refer may be requested by Entities with a net turnover lower than to slide 14. companies with turnover of EUR 6 million in 2019 may defer the less than EUR 6 million in payment of tax liabilities up to a total 2019. of €30,000 in the period running from March 13th to May 30th, 2020. The Practical considerations taxes covered by this deferral are The period for filing tax Corporate Income Tax (CIT) interim The deferral or State tax payments is payments, payments of amounts for a maximum of 6 months. In returns related to CIT, VAT, withheld and VAT. addition, delay interest does not WHT, etc. (i.e., all taxes accrue during the first 3 months of this which are self-assessed and Deferral of customs duties– higher extension period. fall due on a periodical than €100- in the period running from basis) has not been April 2th to May 30th, 2020 is also This is NOT an automatic deferral. It modified and the payment allowed under the above mentioned will have to be requested to the STA at of the relevant tax liabilities circumstances. This extension will not the moment of the customs clearance. cannot be postponed for be applicable to the VAT levied on the The guarantee already accepted by the entities with a turnover in import of goods when the VAT quota Customs Authorities for the customs 2019 higher than EUR 6 is included in the return corresponding clearance could be valid for the million. to the period in which the document deferral of the customs duties. with the assessment made by the authorities is received. Last updated 15th April 2020 COVID-19: EMEIA EY Government Support Package – Spain
17 Cash flow support: Other tax measures Measures implemented in Practical considerations For more information Local tax measures are Madrid affecting local taxes The option for the reduction in the Juan Carpizo (local taxes) being implemented by Property Tax (IBI) or for the reduction Property assets located in Madrid and Juan.CarpizoBergareche@es.ey.com various different Spanish in the Business Activities Tax (IAE) must allocated to commercial, hotel and town halls. be filed before June 15th, 2020 and is (+34) 648588508 leisure activities are entitled to a 25% If you need further details reduction in Property tax (IBI) in 2020. subject to conditions on maintaining the in places other than Madrid, workforce during the tax period. Certain activities (leisure, travel please do not hesitate to agencies, commercial, etc.) are entitled The activities (commercial, hotel and contact us. to a 25% reduction of Business leisure activities in case of IBI) must Activities Tax (IAE) in 2020. have been previously declared as being of special interest or municipal utility One month moratorium on charges to filing some sort previously local tax on motor vehicles (Impuesto sobre Vehículos de Tracción Mecánica), municipal fees on ATM and on entrance/parking. Last updated 8th April 2020 COVID-19: EMEIA EY Government Support Package – Spain
18 Cash flow support: Other tax measures (cont’d) Measures implemented in Guipuzcoa For more information Some additional measures Basque Country Deadline to file Personal Income Tax Jose Francisco Arrasate Roldan have also been Biscay return is extended up to July 29th, 2020. implemented in specific JoseFrancisco.ArrasateRoldan@es.ey.c Deadline to file and pay in taxes that Self-assessments due for February 2020 Spanish regions om are self assessed and fall due in have had their deadlines extended until April 27, 2020. For individuals and small (+34) 94 4872977 February (i.e., VAT, WHT, etc.) is extended until April 14th, 2020. For and micro sized companies, deadline for (+34) 628737441 individuals and small and micro sized all self assessments is extended until June companies deadline for all self 1st. assessments is extended until June 1st. Delay interest will not accrue on ongoing tax audit procedures between March 16th Payment of tax liabilities that fall due and June 1st 2020. starting March 16th is extended for a 15 day period. All pending deferred payments corresponding from March 2020 Individuals and small and micro sized onwards are delayed one month, without companies may defer tax payments interest for late payment during the period falling due between March 16 and between March 25th and April 25th. June 1st, 2020 with no need to provide guarantee. The waiver of guarantees for the deferral of tax due requests is raised from 60,000 Delay interests will not accrue on euros to 300,000 euros for deferral of ongoing tax audit procedures between payments. March16th and June 1st. No guarantees or public auctions will be All pending deferred payments executed from March 14th until June 1st from March 2020 onwards are delayed one month, without interest for late payment during the period between March 25th and April 25th. Last updated 8th April 2020 COVID-19: EMEIA EY Government Support Package – Spain
19 Cash flow support: Other tax measures (cont’d) Measures implemented in Practical considerations For more information Some additional measures Basque Country (cont´d) In Biscay, tax payment deferrals for Jose Francisco Arrasate Roldan have also been individuals and small and micro sized implemented in specific Alava companies: (i) the payment will be JoseFrancisco.ArrasateRoldan@es. Spanish regions Deadline to file Personal Income Tax deferred for a period of three months ey.com return is extended until October from the end of the voluntary period, (+34) 94 4872977 2020. and shall thereafter be paid in six equal Self-assessments due for February monthly instalments; (ii) In order to (+34) 628737441 2020 and March 2020 have had their benefit from the deferral, a specific deadlines extended to 12 calendar application form (available in the days and 25 calendar days, webpage of the Tax Authorities) must be respectively, from the conclusion of submitted upon the competent Tax the State of Alarm and first quarter Authorities by electronic means within returns are extended until June 1 the deadline for the tax payment. 2020. The rest of measures for the three Delay interest will not accrue on Basque Territories (Biscay, Alava and ongoing tax audit procedures Guipuzcoa) will automatically apply between March 14th and June 1st without need of following a specific 2020. application procedure. All pending deferred payments from March 2020 onwards re delayed one month, without interests for late payment. Last updated 8th April 2020 COVID-19: EMEIA EY Government Support Package – Spain
20 Cash flow support: Other tax measures (cont’d) Measures implemented in Deferral of payments of withheld Personal To be eligible for such a deferral, the Income Tax (PIT) and CIT as well as rates taxpayer must be up to date with all Navarra applying to raffles, bets and luck games is tax liabilities during all the deferral Some additional measures have also been also allowed in these cases. period. Deadline to file self-assessment tax implemented in specific returns and pay tax liabilities of VAT, Spanish regions withheld amounts of PIT and CIT Measures implemented in Navarra This is NOT an automatic deferral. It and non-resident income tax for the will have to be requested to the STA first quarter of 2020 (i.e., quarterly Stamp duty exemption has been through the official form and before filings) are extended until June 1, 2020 granted for public deeds of novation of ending the ordinary voluntary and tax return corresponding to loans and mortgage loans under RDL deadline. The request for these February month, as well as March and 8/2020. deferrals will be made through the April informative tax returns are official form, which can only be extended to April 30th, 2020. submitted through the telematic Deadline of payment of tax Practical considerations services. liabilities derived from tax assessments Due to the automatic extension of made by the tax authorities is extended payments due under deferral For more information until (i) April 30th where the initial agreements, delay interest does not Maite Yoldi Elcid deadline fell due on or before March accrue during the period elapsed from 14th, 2020 and (ii) to June 1st, 2020 “at April 5th to May 5th. Maite.YoldiElcid@es.ey.com a minimum” for tax liabilities notified (+34) 94 8179373 after 14th March. The extraordinary deferral for entities with a net turnover lower than EUR 6 m (+34) 699312988 Payments due under deferral is for up to 7 months (with a three- agreements are extended for one month grace period), and delay month. interest will not accrue throughout the duration of the deferral. No payment in Entities with a net turnover lower than advance or guarantee is required in EUR 6 m in 2019 may defer the relation to any amount deferred and the payment of tax liabilities in the period amount that can be deferred is not running from March 14th to June 1st, capped at any maximum. 2020. Last updated 8th April 2020 COVID-19: EMEIA EY Government Support Package – Spain
21 Cash flow support: Other tax measures (cont’d) Some additional measures Measures implemented in Inheritance and Gift Tax (“mortis causa”): For more information have also been Canary Islands 2 months extension when the tax return implemented in specific deadline is during the State of Alarm Julio Mendez Calderín Spanish regions First quarter IGIC (canarian VAT) return period. These extensions are for filing Julio.MendezCalderin@es.ey.com is extended until June 1, 2020. In the and payment. (+34) 92 8214112 case of taxpayers that use bank Flexibility measures approved for State domiciliation payment the extended taxes (see slide 9) are also applicable for (+34) 696480248 date will be the 27th of May. Canary taxes and taxes managed by the Canarian Government. Import IGIC subject to the deferral payment system which date of payment finalizes within the 23rd of March and Practical considerations the 30th of April will be postponed for 30 days. This extension is only for The extended deadlines for filling and/or payment. payment are automatically applied. There is no need to ask for the extension. Transfer tax and Stamp Duty and In the case of the IGIC tax returns, Inheritance and Gift Tax (“inter vivos” extension is applicable only to taxpayers transactions) extensions: a) taxable that submit tax returns on a quarterly events that have taken place during the basis. Therefore, it is not applicable to State of Alarm period: 2 months taxpayers that submit tax returns on a extension; b) taxable events that have monthly basis. taken place prior to the declaration of the State of Alarm but with tax return Import taxes are not affected by the deadline during the State of Alarm payment extension and flexibility period: 1 month from the conclusion of measures. the State of Alarm. These extensions are for filing and payment. Last updated 8th April 2020 COVID-19: EMEIA EY Government Support Package – Spain
22 Employment Support: Coronavirus Job Retention Scheme Various employment Which are the measures to ii. The date to be considered for iii. The employer is not obliged to support measures have protect employment? these purposes is the date the pay salaries to employees but been introduced, subject employee is quarantined or falls must continue to make the The Government is extending flexibility ill, although the relevant medical mandatory Social Security to certain conditions measures in the frame of short lay offs certificate may be issued after contributions in respect of As per stated in the Royal to facilitate the conciliation of that date. these employees. However, employees through smart-working. companies with over 50 Decree 8/2020 of March Moreover a right of the employees to employees will have a 75% 17th, related to urgent reduction in these charges adapt the timetable and reduce the Have the ERTEs (short lay offs) extraordinary measures to (increased to 100% in employees working hours has been been made more flexible? address the economic and established. companies with less than 50 social impact of COVID- Due to force majeure: employees). Subsidies for self- employed workers 19, the employment An ERTE due to force majeure may be iv. Once the ERTE is concluded, that discontinue their business benefits set out in this applied whenever they are caused by a employee’s basic employment activities are now available. slide are conditional on loss of activity directly caused COVID- rights in the terms enjoyed 19 crisis, and in the terms of the Royal prior to the implementation of the maintenance by the How are employees affected by Decree 463/2020, though which some the short lay–off are guaranteed Company of the workforce COVID-19 protected? activities were prohibited. On the (salary, seniority…etc.). throughout the 6 months Employees in quarantine due to COVID- submission of an ERTE application, the following reinstatement of 19, including quarantine during the Labour Authority will have to issue its ordinary activity. carrier phase, qualify for temporary resolution within a 5 day period. disability due to accident at work: Main consequences of the ERTE: It should be noted that i. The employee is entitled to a i. Employees must not render the force majeure ERTEs subsidy equal to 75% of his/her employment services for the ERTE (short – lay – offs) regulatory base (“base regime to be applicable. reguladora”) from the date the measures relating to Employees will have the right to leave due to isolation reasons is ii. unemployment benefits declared; accessed by all receive an unemployment subsidy and Social Security employees or self employed even where they have not made contributions are workers that are registered for the minimum contributions to the Social Security purposes Social Security to access these applicable only during the benefits. (irrespective of the applicable COVID-19 period (state of Social Security regime). alarm and possible extensions). Last updated 8th April 2020 COVID-19: EMEIA EY Government Support Package – Spain
23 Employment Support: Coronavirus Job Retention Scheme The duration of these measures due to force majeure arising from COVID-19 will not last What measures have been adopted longer than the state of alarm adopted by the for the tourism and related sectors? Government related to the COVID-19 pandemic Companies operating in the tourism, and its possible extensions. commercial and leisure sectors that: (i) Please note that the employment measures continue to operate during February, March, adopted as a consequence of this regulation will April, May and June, 2020; and, (ii) do not be subject to the condition that the Company reduce their workforce of fixed seasonal retains the workforce throughout the 6 months employees, are granted a 50% reduction on following the reinstatement of ordinary activity. the company’s Social Security contributions for these employees during this period. Due to objective grounds: ERTEs due to objective grounds can be implemented whenever they are not directly For more information based on a loss of activity derived from COVID- 19 crisis, but on economical, technical, Raúl García organizational and production grounds related Raulluis.garciagonzalez@es.ey.com to such circumstance. Tel: +34 915 725 110 An ERTE due to objective causes, can be implemented on the same terms as force Gracia Rivas majeure ERTEs with the exception that (i) Gracia.rivashernandez@es.ey.com Companies are not entitled to Social Security Tel: +34 915 725 817 contribution savings and (ii) a consultation period reduced to 7 days is required (in comparison to the common procedure of implementing a short – lay off, out of the COVID-19 frame. Last updated 8th April 2020 COVID-19: EMEIA EY Government Support Package – Spain
24 Employment support: Recoverable paid leave Employees who may continue In any case, the recovery must comply As foreseen in the Royal Who is eligible? ► rendering their activities as usual by with: (i) minimum rest periods, (ii) notice Decree Law 10/2020, Public and private companies and remote working or by using any other period of at least 5 days, and (iii) annual March 29, the Government institutions, whose activities have not been mechanism which does not require maximum working time restrictions has established that the paralyzed by the declaration of the state of their physical presence. established on the applicable Collective companies shall implement alert but are not essential. Therefore, this Bargaining Agreement. Additionally, the measure will not apply to: rights related to conciliation of personal, on the employees a paid work and family life must be observed. leave, between March 30th ► Employees who provide services in and April 9th, 2020 (both essential sectors (listed in the annex of How is this scheme implemented inclusive) for employees the royal decree-law, related to and what are the conditions? Exceptions: minimum essential essential goods and services, such as providing services at public market supply, home delivery food This is a compulsory measure that the activity. and private companies and services, manufacturing activities eligible companies shall implement. Companies that have to implement this institutions, whose necessary to provide the essential Workers have the right to receive the recoverable paid leave may, if necessary, services, etc. remuneration that would have been due establish a minimum number of activities have not been to them if they had been providing employees or the shifts that are strictly paralyzed by the declaration ► Employees who provide services in necessary to keep the indispensable divisions or lines of production of the ordinary employment services. of the state of alert but are activity running. These activities and this essential activities listed in the The employer may require working hours not essential and cannot be mentioned annex. minimum number of employees or shifts lost to be made good by the employee will be based on the system applied by the provided remotely. The between the day following the end of the ► Employees hired by (i) companies that company on a normal weekend or on reason of this is to further alarm state and December 31st, 2020. have applied for or are implementing a public holidays. reduce the mobility of the temporary suspension of contracts and This “working hour recovery” must be population. Time taken off (ii) companies that have been negotiated by the employer in a For more information work due to this paid leave authorized to carry out a temporary consultation period of a maximum of 7 days with the workers’ representatives. Raúl García must be recovered by the suspension of contracts while the employee in the period recoverable paid leave is in force. If no agreement is reached, the company Raulluis.garciagonzalez@es.ey.com will notify the employees and the Tel: +34 915 725 110 following the state of alarm. ► Employees who are on temporary disability or whose contracts have been representatives within 7 days from the Gracia Rivas suspended for any of the other reasons end of the consultation period of its the established in the law (i.e. maternity, decision regarding this working hour Gracia.rivashernandez@es.ey.com leave of absence due to child care, recovery. Tel: +34 915 725 817 etc.). Last updated 8th April 2020 COVID-19: EMEIA EY Government Support Package – Spain
25 Employment support: Other measures implemented The Government has Unemployment benefits Temporary contracts Dismissals approved additional Employees affected by an ERTE derived The suspension of temporary Companies cannot carry out dismissals unemployment benefits, from the COVID-19 are able to access contracts as a result of an ERTE or terminations of employment contract measures related to unemployment benefits, even where derived from COVID-19 will “stop the that justify the temporary suspension of contractors under they have not made the minimum clock” on the term of the contract contracts or reduction of working hours Social Security contributions to access such that the contract period is not based on force majeure or on objective temporary employment deemed to elapse whilst the contract grounds (economic, technical, these benefits. contracts and restrictions is suspended. In other words, if a organizational and production) derived on dismissals of employees ► Application: shall be made by the temporary contract is suspended for from COVID-19 (ERTEs). The causes company by electronic means and in to reduce the effects of the form determined by the National 3 months as a result of the COVID-19 that justify the ERTEs on these grounds, COVID-19 through the Royal pandemic, the contract will be are explained in slide 22. Public Service of Employment. deemed to be “paused” such that Decree Law 9/2020, of any remaining term left at the time In this sense, Companies cannot dismiss ► It will be made on behalf of the March 27 employees where they could workers, within 5 days from the of invoking the 3 month suspension legitimately have suspended contracts request of the temporary is resumed once the 3 month or reduced hours instead on the basis of employment regulation file in the suspension is over and the overall force majeure grounds or on objective cases of force majeure, or from the period of performance under the grounds (economic, technical, date on which the company notifies contract including performance both organizational and production) derived the labor authority of its decision in before and after the suspension from COVID-19. the cases of objective reasons. sums to the same total period as the original contract term. ► Date of effect: from the date that For more information the force majeure that justified the ERTE occurs or in case the ERTE is Raúl García made based on objective grounds, Raulluis.garciagonzalez@es.ey.com from the date the company notifies the labor authority of its decision. Tel: +34 915 725 110 ► Penalties: in the event of undue benefits received because of Gracia Rivas irregularities of the company in the unemployment benefit application, Gracia.rivashernandez@es.ey.com penalties can be imposed to the Tel: +34 915 725 817 Company. Last updated 8th April 2020 COVID-19: EMEIA EY Government Support Package – Spain
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