The Corona files saga continues

New Corona aid Spain

02 / Apr

The government has announced a new plan to help the self-employed and enterprises due to the COVID situation. This plan consists of 4 segments.

Direct aid
The first segment is direct support to the self-employed and enterprises. EUR 7 billion have been budgeted for this segment. As we are used to, from experience with previous schemes, this one too has many conditions. It remains to be seen whether this subsidy is actually paid out to businesses. Our experience is in practice not a penny ends up with the entrepreneur.

According to the theory, this subsidy is granted to self-employed or companies whose turnover in 2020 is at least 30% lower than it was in 2019. Not all businesses are eligible. A list of groups of economic activities is attached to the scheme. Only businesses in these categories are eligible. In summary, these categories are:

  • Hotels and similar enterprises
  • Restaurants and food service establishments
  • Transport
  • Tourism sector
  • Body and exercise
  • Cultural activities

Objective of aid
Furthermore, the subsidy is intended only for the payment of debts to suppliers, banks or other creditors, provided that these debts were incurred between 1 March 2020 and 31 May 2021. Not every debt can be subsidised, only recurring expenses such as rent, electricity, water, mortgage and other recurring expenses. You can already see it coming. Especially the banks and utility companies benefit from these subsidies.

A nice detail is that according to the theory, foreigners with a second home in Spain can also apply for this scheme.

Level of subsidy
For entrepreneurs who apply the so-called module system, the maximum is €3,000. That is easy.

What is the question that concerns almost every professional at the moment is the regulation for business that do not apply a module system. The text is literally:
“For companies and professionals whose annual turnover declared or verified by the Administration (…) has decreased in 2020 by more than 30% compared to 2019, the maximum aid to be granted is 40% of the decrease in turnover in 2020 compared to 2019 that exceeds that said 30%.”

I understand it as meaning that for those businesses, a maximum of 40% of the decreased turnover can be received, but there are other opinions.

This maximum applies provided that the business owner does not have more than 10 employees. If the business has more than 10 employees, the maximum is 20%.

In both cases of entrepreneurs who do not apply the module system, the subsidy is a minimum of €4,000 and a maximum of €200,000.

Other conditions
There are other conditions, for example, that you have never been ordered in court to repay any subsidies, that you have never been ordere by court to dissolve a contract with the government because of circumstances that can be blamed on you, that you meet all possible obligations arising from other subsidies or agreements with the government, that social security contributions have been paid, that you have not filed for bankruptcy or deferred payment, and that you do not live in a tax haven.

In addition, you have to commit to remain active until at least 30 June 2022, not pay out any dividends during the years 2021 and 2022 and that the management does not receive any salary increases for two years after receiving any support.

Flexibility regarding loans guaranteed by the state
The second segment consists of measures to make repayment and interest obligations on loans guaranteed by the government more flexible. A budget of EUR 3 billion has been earmarked for this purpose, with the aim of helping businesses and the self-employed who have borne the brunt of the crisis. This aid will therefore mainly be used for refinancing. You can think of extending the term, converting the loan into equity or paying off current financing debts. Again, this is a scheme that will mainly benefit the banks, aimed at resolving defaults on financial debts.

Postponement of the obligation to file for bankruptcy
The term within which an entrepreneur is obliged to file for bankruptcy is 2 months after he or she discovers a payment problem. This term had already been extended and will be postponed again until the end of 2021. The aim is to give distressed entrepreneurs more time to generate turnover again.

Last segment
In this segment, all sorts of measures are taken to give entrepreneurs a little more time, such as the possibility of deferring tax debts by four months without interest, a deferral of the obligation to carry out subsidised projects or the possibility of holding shareholders’ meetings and members’ meetings online.
A striking part of this regulation is that the Stock Market Supervisor is given powers to put crypto currency under control. What this has to do with support and Covid is beyond me, but it is well known by now that this government creates certain regulations in the small print of legislative bills that have nothing to do with that bill, in the hope that it will pass unnoticed and stays out of parliamentary control.

Yet another regulation, a further increase in legal uncertainty and yet another example of the by now familiar blabber that in practice only benefits the big boys. The conditions have been drawn up in such a way that virtually no business will qualify, or that the costs are simply too high in relation to the benefits. In my experience, if a business gets this support, it is taken away again a few years later. Anyway, we will help anyone who wants to take a chance to apply for this subsidy.


Roeland van Passel