COVID-19: EMEIA Government Support Package - Spain - 17 April 2020

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COVID-19: EMEIA Government Support Package - Spain - 17 April 2020
COVID-19:
EMEIA
Government
Support Package –
Spain
17 April 2020
COVID-19: EMEIA Government Support Package - Spain - 17 April 2020
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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