Covid-19 - Summary of Measures

SPAIN

Friday March 13th

We attach the first steps taken until last Friday, March 13, to help companies in the wake of the Coronavirus.

We are awaiting the adoption of new measures tomorrow, which we will continue to report on.

Fiscal Scope

In a public appearance by the President of the Government of Spain, on 03.12.2020 the main measures in this area were announced:

Deferral of tax debts

Possibility of requesting deferrals and installments of tax debts under the following conditions:

• The extraordinary period of deferment will be six months.
• No interest will be accrued for late payment during the first three months of the deferment.
• Postponement corresponding to all those declarations-settlements and self-assessments whose filing and submission period ends from 03/13/2020 and until 05/30/2020, both inclusive.
• It will be a necessary requirement for the granting of the postponement that the debtor is a person or entity with a volume of operations not exceeding 6,010,121.04 euros in 2019.
• Extraordinary tax debts may be deferred (which except for this exception could not be) related
• Those corresponding to tax obligations that must be met by the withholding agent or the person required to make payments on account.
• Those derived from taxes that must be legally passed on unless it is duly justified that the fees paid have not been effectively paid.
• Those corresponding to tax obligations that the obligor must make in installments of Corporation Tax.

Other transitional support measures for companies

Repayment of loans granted by the General Secretariat for Industry and Small and Medium Enterprises

Possibility of requesting the "extraordinary postponement of the repayment schedule" of the payment of principal and / or interest of the current annuity, for the beneficiaries of this type of loan; under the following conditions:

• That the health crisis caused by COVID-19 has originated in said beneficiaries periods of inactivity, reduction in the volume of sales or interruptions in supply in the value chain that make it difficult or impossible to attend to its payment.
• Its expiration date must be less than 6 months from 13.03.2020.

The request must always be made before the end of the payment period in the voluntary period and must be expressly estimated by the body that issued the concession resolution.

Furthermore, it is established that modifications to the calendar may NOT be authorized in the following cases:

• That there is no sufficiently accredited affectation that justifies this modification.
• That the company is not up to date with its tax obligations and with Social Security.
• That the company has debts for repayment of aid or loans with the Administration.
• That the company has not fulfilled its obligations of presentation of accounts before the Mercantile Registry.
• That the maturity of the debt is the consequence of a refund due to default or resignation.
• That in the case of projects that are within the investment justification period, there is not a sufficient degree of progress and that does not guarantee compliance with the objectives set forth in the concession resolution.

March 18th 2020

Please find enclosed the latest regulations included in the R.D. 465/2020 and Royal Decree-Law 8/2020 published on March 18, 2020 that we include in this email and that we will update to keep you informed of the legislative measures in the fiscal area that are being decided.

Suspension of time limits in the tax field

Remember that, due to the publication in the Official State Gazette of Royal Decree 463/2020 of March 14th declaring the state of alarm for the management of the crisis situation caused by COVID19, the procedural deadlines and statutes of limitations and expiration, in addition to the deadlines for processing the procedures of public sector entities, and, consequently, the deadlines for carrying out procedures with the tax administration have been suspended.

In this sense, we must review two very important developments in relation to the regulations published on 03/18/2020:

FIRST.- Deadlines related to the presentation of tax returns and self-liquidations.

The suspension of the terms and the interruption of the aforementioned administrative periods will not apply to the tax periods subject to special regulations, nor will it affect, in particular, the periods for the presentation of tax returns and self-liquidations.

SECOND.- Suspension of tax deadlines.

We must remember that the measures of this RD-law will remain in force for a period of one month from its entry into force (until 04/18/2020) without prejudice to its extension and those measures provided for that have a specified period duration; where they will be attached to it.

This article 33 allows the extension until April 30th or May 20th, 2020, according to the following:

Extension of deadlines until 4/30/2020 of related procedures that have not been completed by 3/18/2020

• For the payment of the tax debt settled by the Administration and of tax debts under pressure.
• Expiration of the terms and fractions of the deferment and installment agreements granted.
• Related to the development of auctions and adjudication of goods.
• To meet the requirements, seizure proceedings and requests for information with tax significance.
• To make allegations before acts:
  • Opening of said procedures or hearing.
  • Dictations in tax application procedures.
  • Penalties or declaration of nullity.
  • Refund of undue income.
  • Rectification of material errors and revocation.
• To meet the requirements and requests for information made by the General Directorate of Cadaster that are in the period of reply to the entry into force of this Royal Decree-Law 8/2020 (3/3/2020).
• In the administrative procedures of compulsion, the guarantees that fall on real estate will not be executed from 03/18/2020 until April 30th, 2020.

Extension of deadlines until 5/20/2020 (unless the one granted by the general rule is greater)

This extension until 5/20/2020 will be effective for all the points related in the previous section of the same note when they have been communicated from the entry into force of Royal Decree-Law 8/2020, that is, 18 / 3/2020.

The period from 03/18/2020 to 04/30/2020 will not count for the purposes of the maximum duration of the procedures for the application of taxes, penalties and revision processed by the State Agency of the Tax Administration, although during said period the Administration may promote, order and carry out the essential procedures.

Nor shall this period be computed in relation to the limitation periods of article 66 of the LGT or for the purposes of the expiration periods.

To point out that for the sole purpose of calculating the limitation periods, in the appeal for reversal and in the economic-administrative procedures, the resolutions that end them will be understood as notified when an attempt to notify the resolution is accredited between 18.03.2020 and April 30th, 2020.

The term to file economic-administrative appeals or claims against tax acts, as well as to resort administratively to the resolutions issued in the economic-administrative procedures, will not start until the end of said period, or until the notification has been made if this latter would have occurred after that time.

Notwithstanding the deadline extensions indicated above, if the taxpayer responds to the request or request for information with tax significance or presents his allegations, the process would be considered completed

Deferrals and installments

On the other hand, in a public appearance by the President of the Government of Spain, dated 03.12.2020, the main measures in this area were announced:

Deferral of tax debts

Possibility of requesting deferrals and installments of tax debts under the following conditions:

• The extraordinary period of deferment will be six months.
• No interest will be accrued for late payment during the first three months of the deferment.
• Postponement corresponding to all those declarations-settlements and self-assessments whose filing and entry term ends from 03/13/2020 and until 05/30/2020, both inclusive.
• It will be a necessary requirement for the granting of the postponement that the debtor is a person or entity with a volume turnover not exceeding 6,010,121.04 euros in 2019.
• Extraordinary tax debts that may be deferred relate to:
  • Those corresponding to tax obligations that must be met by the withholding agent or the person required to make payments on account.
  • Those derived from taxes that must be legally passed on unless it is duly justified that the fees paid have not been effectively paid.
  • Those corresponding to tax obligations that the obligor must make in installments of Corporation Tax.

In this way, from 13.03.2020 and until 05.30.2020, both days inclusive, small companies and selfemployed workers who so wish may defer payment of up to 30,000.- Euros in taxes for six months, with three months of lack of interests. We will already indicate what is the appropriate procedure to request this type of deferrals and installments.

March 20th 2020

At Clarkson Hyde we want to support companies with information about the main lines of financing that are being made available to Spanish SMEs to try to alleviate the effects of the COVID-19 crisis.

Remember that we can help you in its processing and obtaining and that we will update this information.

Line of guarantees for companies

Royal Decree Law 8/2020 has articulated a Line of guarantees for companies and the self-employed with the aim of mitigating the economic effects of COVID-19 and the expansion of the ICO's net debt limit. In these cases, the State acts as guarantor of the company or autonomous against banks and institutions.

The Ministry of Economic Affairs and Digital Transformation will grant guarantees to the financing granted by credit institutions and other financial credit, payment or electronic money establishments to meet their needs derived, among others, from:

• Invoice payment.
• Need for working capital.
• Maturities of financial or tax obligations.
• Other liquidity needs.

Extraordinary insurance coverage line

An extraordinary line of insurance coverage is also in place with a duration of 6 months from 18.03.2020, for internationalized companies or companies in the process of internationalization that meet the requirements established in article 31 of Royal Decree Law 8/2020.

Also noteworthy, although we already knew this possibility in the past few days, the repayment of loans granted by the General Secretariat for Industry and Small and Medium-sized Enterprises.

There is the possibility of requesting the "extraordinary postponement of the repayment schedule" of the payment of principal and / or interest of the current annuity, for the beneficiaries of this type of loan; under the following conditions:

• That the health crisis caused by COVID-19 has originated in said beneficiaries periods of inactivity, reduction in the volume of sales or interruptions in supply in the value chain that make it difficult or impossible to attend to its payment.
• Its expiration date must be less than 6 months from 13.03.2020.
• The request must always be made before the end of the payment period in the voluntary period and must be expressly estimated by the body that issued the concession resolution.

Furthermore, it is established that modifications to the calendar may NOT be authorized in the following cases:

• • That there is no sufficiently accredited affectation that justifies this modification.
• That the company is not up to date with its tax obligations and with Social Security.
• That the company has debts for repayment of aid or loans with the Administration.
• That the company has not fulfilled its obligations of presentation of accounts before the Mercantile Registry.
• That the maturity of the debt is the consequence of a refund due to default or resignation.
• That in the case of projects that are within the investment justification period, there is not a sufficient degree of progress and that does not guarantee compliance with the objectives set forth in the concession resolution.

Official Credit Institute (ICO)

The ICO has launched a financing line of Euros 400 million for companies and freelancers that operate within the tourism, transport and hospitality sector. This exceptional financing is an extension of the Thomas Cook financing line that can benefit all companies and self-employed workers with tax domicile in Spain that are included in the economic sectors of passenger transport, accommodation and catering.

Institut Català de Finances (ICF)

The ICF has established an extraordinary line of credit to provide liquidity to companies in Catalonia, channeled through banks and guaranteed by the Institut Català de Finances (ICF) and Avalis.

Its main objective is to provide liquidity to companies. This credit line will have a budget of Euros 1,000 million. 75% of the risk will be assumed by the Generalitat. It includes a series of restrictions related to the reduction of the workforce and amortization of other loans that the company already has.

Amounts

Avalis Guarantee: for 75% of the loans between € 100,000 and up to € 1M.

ICF guarantee: for 75% of the loans from € 1M and up to € 2.5M.

Duration

Up to 4 years with a grace period of up to 1 year.

Interest and fees

On the part of financial institutions, limitation of the price to EURIBOR to 12 months plus a maximum differential of 2.5%.

Administration and Risk Commission (CAiR) of 1% on the amount of the formalized guarantee. No opening or study commission.

April 3rd 2020

We attached a summary of some of the latest measures that the Government has taken to deal with the Covid-19 crisis.

1. Moratorium on social security contributions

Social Security is empowered to grant moratoriums of 6 months, without interest, to companies and workers who request it and comply with the requirements and conditions that will be established by Ministerial Order.

The moratorium in the cases that are granted will affect the payment of their contributions to Social Security and for concepts of joint collection, whose accrual period, in the case of companies, is between the months of April and June 2020 and, in the case of self-employed workers between May and July 2020, provided that the activities they carry out have not been suspended due to the state of alarm.

2. Deferment of payment of debts with Social Security

Companies and self-employed workers included in any Social Security system, as long as they have no other deferment in force, may request the deferment in the payment of their debts with Social Security whose regulatory term of entry takes place between the months April and June 2020, under the terms and conditions established in the Social Security regulations, with an interest of 0.5% being applicable. These requests for deferment must be made before the first ten calendar days of the regulatory entry period have elapsed, that is, during the first ten days of the months of April to June.

3. Maintenance of employment

It deepens in the application of the job maintenance requirement, clarifying that it will be valued in attention to the specific characteristics of the different sectors and the applicable labour regulations, taking into account, in particular, the specificities of those companies that present a high variability or seasonality of employment or a direct relationship with specific events or shows, as happens, among others, in the field of performing, musical, cinematographic and audio-visual arts.

In the case of temporary contracts, the commitment to maintain employment shall not be deemed breached when the contract is terminated by the expiration of the agreed time or the performance of the work or service that constitutes its object or when the activity that is the object of recruitment.

4. Tax measures

In the tax field, it is established that from the declaration of the state of alarm until April 30th, 2020, the term to file replacement appeals or administrative-economic claims will begin to run from April 30th, 2020 and will apply both in the Assumptions where the one-month period to appeal had started and the aforementioned period had not ended on March 13th, 2020, as in cases where the administrative act object of appeal or claim has not yet been notified.

Likewise, it is established that the period from the declaration of the state of alarm until April 30th , 2020 will not count for the purposes of the maximum duration of the term for the execution of the resolutions of the economic-administrative bodies and that, during this period , the limitation and expiration periods of any actions and rights contemplated in the tax regulations are suspended.

5. Annual accounts

The period of three months from the closing of the fiscal year is suspended for the preparation of annual accounts of the legal entities that are obliged to do so during the state of alarm, resuming for another three months from the end of said state.

In the case of annual accounts already prepared as of the date of the declaration of the state of alarm, the period for verification by auditors is extended, when this is mandatory, up to two months after the end of the state of alarm.

If you have any questions regarding this or any of the other initiatives offered to those affected by the current disruption, please contact Luis Vilaclara at Lvilaclara@svasesoresfinancieros.com.