In this article, we list the economic measures introduced by the Spanish government since mid-March 2020. All are designed to alleviate the effects of the state of alarm called in the light of the COVID-19 health crisis.
For information about general or specific measures contact our experienced legal team. https://costaluzlawyers.es/contact/ We will be only too pleased to help you.
Help for companies and employees
ERTE (Temporary Employment regulation file)
Introduced to: help businesses pay salaries and maintain employment
- Qualifying companies receive grants covering 70% of employees’ salaries and exemptions from paying of part or all social security contributions (75 to 100%).
- Companies with fewer than 50 employees are exempt from payment of contributions.
- Those companies who have received exemption from social security contributions (75 to 100%) must maintain employment for six months after resuming activity.
- Businesses with a sole employee may also benefit from these conditions.
Note that the Spanish government has agreed to extend the ERTE measure beyond the end of the state of alarm, as requested by employers and unions.
Postponement of social security contributions
Introduced to: help cashflow for companies and the self-employed
- Companies and self-employed individuals may postpone payment of social security contributions for six months.
- The period for payment of debts from outstanding social security payments is extended until 30 June 2020 and no interest will be charged if there were no debts prior to the state of alarm.
- Social security contributions for days not worked in March will be returned in the second half of May.
- Any self-employed individual whose work has been severely interrupted or reduced has the right to a benefit of at least €950.
- In general, companies are still obliged to pay contributions on time and must register and cancel workers in Social Security despite the state of alarm and the saturation of the Public Employment Services.
Unemployment benefit modifications
Introduced to: help those who lose their jobs as a result of COVID-19
- During the state of alarm, a delay in filing an unemployment benefit or a renewal “will not reduce the duration of the entitlement to benefit.”
- Employees on trial periods and dismissed from 9 March as well as those who voluntarily ended their contract after 1 March due to an expired job offer are entitled to unemployment benefit.
- Self-employed individuals may apply for unemployment benefits if they are up to date with their social security contributions or bring them up to date within 30 days.
Renegotiation of rent for premises
Introduced to: relieve cashflow problems
- Business owners who rent premises from large-scale landlords or public companies may renegotiate the terms of their rental payments.
- Business owners who rent from small-scale landlords may use their rental deposit to pay monthly rental fees.
Find out more about measures designed to alleviate rental payments for businesses during the COVID-19 crisis in Spain. https://costaluzlawyers.es/blog/are-you-eligible-for-the-covid-19-rent-moratorium-on-business-premises/
Taxes
Introduced to: alleviate cashflow for companies and the self-employed.
- Tax filing and payments for quarterly returns (VAT, personal income tax and company tax) has been extended until 20 May 2020.
Liquidity
Introduced to: help cashflow for companies and the self-employed
- The government approved the first credit line of €20,000 million, designed to guarantee liquidity of companies and self-employed individuals affected by COVID-19 restrictions.
- Half of this amount will go towards guaranteeing new loans to SMEs and the self-employed.
Entrepreneurs have requested that the amount be increased to €50,000 million.
Forced reduction in working day
Introduced to: help carers of COVID-19 patients
- The social security authorities will make up the salaries of employees who are forced to stay at home or work reduced hours to care for family members.
Redemption of pension plans
Introduced to: help individuals’ liquidity
- Self-employed individuals whose activity has stopped because of COVID-19 or employees in an ERTE may redeem contributions made to pension plans. Measures are in place to facilitate the process.
Deferral of tax payments
Introduced to: help company liquidity
- Companies who have applied for credit lines and are unable to make quarterly tax payments because of liquidity problems may delay the payments with no penalty until they receive the loan.
Delay in declaring bankruptcy
Introduced to: alleviate pressure on companies
- Companies who are obliged to file for bankruptcy have been granted extra time to declare their insolvency. They now have a period of two months after the end of the state of alarm in which to declare their bankruptcy. Judges are not obliged to admit their requests for processing until after this time.
Additional time period for shareholders meetings
Introduced to: facilitate company papework
- Listed companies that would normally hold their shareholders’ meetings at the end of June now have an extra four months and may hold the meeting at any time until the end of October.
- Virtual shareholder meetings (ie electronically) are permitted even if this procedure is not contemplated in the companies’ bylaws.
Extension for public tenders
Introduced to: help companies working on public tenders
- Public tender projects at a standstill because of COVID-19 are allowed to extend their completion period by a maximum of 15% or modify the economic clauses in the contract.
Households
The government has also introduced several measures to alleviate the effects of COVID-19 on households.
Help with rental payments
Introduced to: help tenants
- Tenants having difficulty making monthly payments may qualify for financial aid.
- Evictions have been suspended for six months.
- Rental contracts due for expiry during the COVID-19 state of alarm automatically renew for a further 6 months.
- Vulnerable tenants (unemployed, affected by an ERTE or self-employed) may apply for microcredits at zero interest to repay their rental debt over up to 10 years. If at the end of 10 years, they are still vulnerable, the state will take on the debt.
- Large-scale landlords, such as investment funds, must choose between offering their tenants payment of half the rent or the opportunity to restructure the debt in installments.
Read about better COVID-19 mortgage and loan conditions, https://costaluzlawyers.es/blog/your-guide-to-better-covid-19-mortgage-and-loan-conditions/
Utility supplies
Introduced to: prevent utility supplies being cut off
- In households classed as ‘vulnerable’, utility (electricity, water and gas) supplies may not be cut off during the state of alarm.
- The social bonus for those beneficiaries pending renewal is automatically extended until 15 September.
- Discounts on electricity bills can be as high as 40%.
Mortgage payment deferral
Introduced to: alleviate financial pressure on mortgage holders
- Employees who lose their jobs or at least 40% of their income due to COIVD-19 and employers who lose income may defer payment on their mortgages until 3 May.
Note that this moratorium only applies to mortgages for permanent homes, not second homes or other types of property.
Specific employment sectors
Recoverable working hours
Introduced to: help businesses make up lost hours
- Employees in non-essential sectors who received paid leave from 30 March to 9 April must make the hours they did not work before the end of the year.
Domestic and temporary employees
Introduced to: offer income support
- Temporary employees who do not otherwise qualify for unemployment benefit may receive subsidies of up to €440 a month.
- Domestic employees may receive up to 70% of their contribution (as determined by social security payments).
R&D&i
Introduced to: boost research and investigation in Spain
- Public institutions (science, technology and innovation) may introduce extra working hours. Employees will be compensated through productivity supplements or bonuses.
- Ministry of Science has approved extraordinary loans to the Carlos III Health Institute (of over €25 million) and the CSIC (€4.4 million).
- Science and technology parks may postpone or leverage loan payments to avoid closing down.
- The Barcelona Supercomputing Center Consortium is permitted to borrow to meet its international commitments (EuroHPC project).
Agricultural workers
Introduced to: reduce restrictions on working and alleviate financial burden
- Unemployed workers currently receiving agricultural benefit or unemployment benefit will be allowed to continue to receive this benefit at the same time as working in agriculture.
- All work permits for foreigners due to expire before 30 June will be automatically renewed.
- Foreigners aged 18 to 21 will automatically receive a work permit.
- Social security contributions for agricultural workers will be reduced during periods of inactivity in 2020.
Farmers
Introduced to: alleviate loan payments
- All farmers who received loans after the 2017 drought may agree a grace period with the loan provider and extend the repayment period. The Ministry of Agriculture will pay for the cost of the guarantees.
Consumers
Several measures introduced during the COVID-19 state of alarm in Spain also help consumers. They include:
Cheap loaner renewals
Introduced to: reduce financial burden
- Notary fees on loan renewals have been reduced by 50%. Note that mortgage loans are not included in this measure.
Purchases and returning rights
Introduced to: protect consumer rights
- Return periods (usually one month) that have been interrupted because of the state of alarm are put ‘on hold’ until the state of alarm period ends when the return period starts counting again.
- Consumers are also protected in the case of contracts for sales of goods and provision of services whose execution is impossible because of COVID-19.
Financial support from the private sector
In addition to the measures introduced by the government, the private sector has also implemented several ways of helping companies, employees and households during the COVID-19 crisis in Spain.
Credit lines from banks
Introduced to: help companies stay afloat
- Santander has launched pre-approved loans for SMEs, valued at €20 billion.
- BBVA and Caixabank have also opted for credit lines; valued at €25 billion they are for companies affected by COVID-19.
Extra mobile phone data
Introduced to: facilitate connection and entertainment
- Several companies have introduced extra GBs for data at no additional cost. They include Movistar (30GB), Vodafone (50GB), Amena (10GB) and Pepephone (5GB).
- Vodafone gave its business clients unlimited data for free until the end of March.
- MásMovil offered customers three months free access to the Sky TV platform.
Easier utility payments
Introduced to: facilitate payments
- Some companies have allowed SMEs to divide utility bills into 12 monthly instalments at no extra cost. This is the case with Iberdrola and Naturgy.
- Endesa opted to suspend power cuts due to non-payment during the COVID-19 crisis.
Contact us
At Costaluz Lawyers, we are well aware of the challenges facing both individuals and businesses during the current COVID-19 crisis. We are therefore keeping up to date with all measures introduced by both the government and private sector with the view to helping our clients at these difficult times.
If you require any assistance or more information about any of the measures included in this blog post, please do not hesitate to contact us.
Maria Luisa Castro
