COVID19 – what measures are the government preparing for small businesses?

The central government have published an emergency law, the «Real Decreto-ley 7/2020, de 12 de marzo, por el que se adoptan medidas urgentes para responder al impacto económico del COVID-19, o coronavirus» (Royal Law-Decree 7/2020 by which urgent measures are adopted to respond to the economic impact of COVID-19 or Coronavirus). Cervantes Alarcon Consulting brings you the latests analysis of the law and how it may affect your business.

TL;DR : If you are a Spanish business taxpayer and your income last tax year was under 6 million euros, you can ask for a deferral of payment of taxes due this quarter (IVA, retentions and deferred Corporation Tax due this quarter). You can defer payment for up to six months, and the first three months will be interest free. The following three months, interest at the current legal rate will be added to the debt. However, the deferral will be automatic, you don’t have to wait for permission.

This law has a direct impact upon small businesses affected by the coronavirus emergency. It includes measures to allow impacted businesses to delay the payment of certain taxes – given that some are due at the end of the month, it is worthwhile examining the impact for taxpayers.

This Royal Decree contains measures aimed at containing the damages that COVID-19 is causing to the Spanish economy. Therefore, it contemplates that, within the scope of the powers of the National Tax Administration, payment of self-assessment business taxes due can be deferred, upon request of the interested party between March 13 and May 30, 2020.

Other taxes than can be deferred are taxable retentions, and divided Corporation Tax which are due in this quarter. However, in order to be eligible for postponement, certain requirements must be met.

The requirements referred to are stipulated in article 82.2.a) of the General Tax Law 58/2003, of December 17. This precept establishes that tax debts that are less than the amount established by the tax regulations could be postponed with total or partial exemption of guarantees. Currently, this amount is set at 30,000 euros by Order HAP / 2178/2015, (published October 9).

Furthermore, to be able to opt for the deferment, it is an essential requirement that the debtor be established in Spain with a volume of operations not exceeding 6,010,121.04 euros in 2019. The maximum term of the deferral would be six months and, in this period, default interest would not be accrued during the first three months.

The law also allows companies to ask for a deferral of repayments on loans that have been backed by the Secretary General for Industry and Small and Medium-sized Enterprises. You will have to prove that COVID-19 has caused economic inactivity, a drop in sales or interruption in your supply chain which has stopped production.

It should also be noted that a series of support measures have been published aimed at the tourism sector, which has been particularly affected by the current crisis. In this way, finance has been extended to all companies and self-employed workers with registered office in Spain that are included in certain economic sectors defined in the Royal Decree-Law. These include the transportation of passengers, hotels and accommodation, restaurants and food stalls and the rental of vehicles.

Apart from this law, autonomous regions of Spain have also started to issue their own packages of economic aid. As of the date of publication of this article (13/03/2020) Andalucia had not issued any.

More measures are expected to be published in the forthcoming days. Please check back to our page as we will publish explanations of them as and when the measures are approved.

Contact Cervantes Alarcon Consulting if you have a business in Spain and need regular book-keeping and accountancy services.

Maria Luisa

María Luisa Cervantes is a chartered accountant who graduated from the University of Granada in 2002. Founder of Cervantes Alarcón Consulting, she is an experienced accountant and financial advisor who is a member of the Almería guild of economists. With more than 15 years of experience in business administration and international trade, she is also a subject matter expert in the UK - Spanish bilateral agreements which cover the rights of expats to live, work and retire in Spain.