The recent Royal Decree-Law 5/2021, of March 12, on extraordinary measures to support business solvency in response to the Covid-19 pandemic, provides, among other aspects, direct aid to companies and the self-employed as financial support on their solvency and debt reduction.
Companies and the self-employed must meet a series of requirements and conditions, which are as follows:
1. Have a tax address in Spain or operate in Spain through a permanent establishment, if it is a foreign entity.
2. Belong to the sectors defined in Annex I of the aforementioned Royal Decree-Law.
The Annex contains a list of sectors, including the hotel and catering sector, the manufacturing industry related to trade and hospitality, the wholesale and retail trade, the sectors auxiliary to transport, etc.
3. Have in 2020 an annual volume of operations declared in VAT or equivalent indirect tax that has decreased by more than 30% compared to 2019.
For the self-employed or professionals who apply the objective estimation regime in Personal Income Tax, it will be sufficient to be assigned to one of the sectors defined in Annex I.
4. Allocate the aid to the satisfaction of the debt and payments to suppliers and other creditors, financial and non-financial, as well as to the fixed costs incurred, as long as these:
– have occurred between March 1, 2020 and May 31, 2021.
– emanate from contracts prior to March 13, 2021.
5. Not having been sentenced to the penalty of losing the possibility of obtaining subsidies or public aid or for crimes of prevarication, bribery, embezzlement of public funds, undue influence peddling, fraud and illegal collections or urban crimes.
6. Not having given rise, due to having been declared guilty, to the definitive resolution of any contract entered into with the Administration.
7. Be up to date with the payment of obligations for the reimbursement of subsidies or public aid.
8. Be up to date in compliance with tax obligations and with regard to Social Security.
9. Not have requested the declaration of voluntary bankruptcy, not having been declared insolvent, not being declared bankrupt and not subject to judicial intervention.
10. Not having tax residence in a country or territory classified by regulation as a tax haven.
It is important to note that the following categories of companies and self-employed are excluded as recipients of the aid:
– Those who in the Personal Income Tax return for 2019 have declared a net loss for the economic activities in which the direct estimation method had been applied for its determination.
– Those who have had in 2019 the carry forward losses of the Corporate Income Tax or the Personal Income Tax of non-residents, before the application of the capitalization reserve and compensation of carry forward losses.
In addition to meeting the requirements indicated above, the recipients of the aid must undertake the following commitments:
– Maintain the activity corresponding to the aid until June 30, 2022.
– Not distribute dividends during 2021 and 2022.
– Not increase the remuneration of senior management personnel for a period of two years from the application of any of the measures.
It is now up to the Government to distribute the aid between the Autonomous Communities, which will be in charge of its public notice and management.
