Tax, Economic and Legal News Related to Covid-19
On the occasion of the crisis produced by the COVID-19, last Friday the Royal Decree-Law 7/2020 of 12 March was published in the BOE and today the Royal Decree-Law 8/2020 has been published.
Of the set of measures approved, the measures of a tax, labor and social security, commercial and financial nature affecting the development of business activity are detailed and summarised below for your consideration. The rest of the approved measures that affect a particular level or other areas different from those described are not subject to analysis.
We recommend that you read them in detail as they are all very relevant.
- 1. Approved tax measures.
- 2. Approved social security measures.
- 3. Financial measures adopted
- 4. Measures of a commercial, associative nature and affecting cooperatives and approved foundations (changes affecting listed companies are not included).
- Holding of meetings and adoption of resolutions of the governing bodies by videoconference.
- Suspension of the deadline for drawing up the annual accounts
- Suspension of the deadline for approval of the annual accounts and notice of the general meeting
- Telematic assistance of the Notary to the general meeting of partners
- Impossibility of exercising the right of separation of the partners
- Extension of reimbursement of contributions to cooperative members
- Extension of the dissolution of companies on the occasion of their term
- Suspension of the legal deadline for calling the general meeting of shareholders to adopt the resolution to dissolve the company.
- Suspension of the expiration period of the register entries during the validity of the royal decree declaring the state of alarm.
- Deadline for the duty to apply for the competition.
1. Approved tax measures.
The only tax measures approved to date are:
Deferrals and installments in the payment of taxes:
- Only companies with a trading volume of no more than 6,010,121.04 Euros in 2019 are applied.
- They are applied to debts whose deadline for presentation is from 13 March to 30 May 2020, both inclusive.
- Amounts corresponding to withholdings, VAT and payments on account of corporate income tax may be deferred up to a limit of 30,000 euros.
- The period of deferment shall be 6 months and no interest on arrears shall accrue during the first 3 months of the deferment, thereafter interest on arrears of 3.75% shall be applied.
- No other measures have been approved other than the above and, therefore, amounts greater than those described will not be deferrable (in the case of the taxes indicated above) and no deferral may be requested for the taxes indicated by companies that invoice more than the amount indicated.
Suspension of administrative deadlines:
The deadlines have been extended to 30 April 2020 for, inter alia, the following procedures that have already been initiated but have not yet been completed as of today, 18 March 2020:
- The deadlines for payment of the tax debt for settlements made by the Administration.
- The deadlines and fractions of the agreements of postponement and fractioning granted.
- The deadlines for attending to requests, seizure proceedings and requests for information.
- The deadlines for making allegations in procedures for the application of taxes, penalties or declarations of invalidity, the return of undue income, the correction of material errors and revocation.
The deadlines for procedures to be communicated as from today, 18 March, have been extended to 20 May 2020, unless the deadline granted by the general rule is longer, in which case the latter will apply.
Finally, the period between today, March 18, and April 30, 2020, will not count for the purposes of the maximum duration of the procedures for the application of taxes, penalties, and revisions processed by the AEAT.
Likewise, the period to file economic-administrative appeals or claims against tax acts, as well as to appeal through administrative channels against the resolutions issued in the economic-administrative proceedings, shall not commence until the end of said period.
It establishes the validity of digital signatures that have expired and whose renewal cannot take place due to the existing exceptional situation.
Taxes and grants from the Generalitat de Catalunya
The Generalitat de Catalunya has approved a moratorium on the payment of ALL own taxes and those assigned to the Generalitat until the end of the alarm period.
Therefore, in this case, the obligation to pay any tax managed by the Generalitat de Catalunya is suspended.
All deadlines are also suspended in relation to procedures corresponding to the Generalitat.
The aid of up to 2,000 euros is also provided for self-employed workers who have had to cease their activity.
However, this decree has not yet been published and is awaiting publication for a concrete analysis.
Not all the measures are commented on, but only the one corresponding to the ERTE by a situation of force majeure and the case of self-employed workers by its direct economic importance is detailed.
Suspensions of contracts and reductions in working hours that have a direct cause in losses of activity as a result of COVID-19 are permitted, including the declaration of the state of alarm, involving the suspension or cancellation of activities, the temporary closure of premises with a public influx, restrictions on public transport and, in general, on the mobility of people and/or goods, lack of supplies that seriously impede the continuation of the ordinary development of the activity, or in urgent and extraordinary situations due to contagion of the staff or the adoption of preventive isolation measures decreed by the health authority, which are duly accredited, and it is established that they shall be considered as coming from a situation of force majeure.
Thus, the term for resolution of all these procedures is established in 5 days.
In these cases, the company will be exonerated from the payment of the business contribution for the duration of the period of suspension of contracts or reduction of the working day authorised on this basis when the company, on 29 February 2020, had less than 50 workers on board. If the company had 50 or more employees on that date, the exemption from the obligation to pay contributions will be 75% of the company’s contribution.
This exemption will have no effect on the employee and will be applied at the request of the employer, after the communication of the identification of the employees and the period of suspension or reduction of the working day.
Extraordinary measures in the field of employment shall be subject to a commitment by the company to maintain employment for a period of six months from the date of resumption of activity.
Self-employed workers: extraordinary benefit on cessation of activity
Self-employed workers whose activity has been suspended due to an alarm condition or whose turnover in the month prior to that for which the benefit is requested is at least 75% less than the average turnover for the previous six-month period may receive an extraordinary benefit for a cessation of activity.
The benefit will last for one month and may be extended until the last day of the month in which the alarm condition ends if this is extended beyond the month.
The requirements are:
- Be discharged on the date of the declaration of the alarm condition.
- In the event that the activity is not directly suspended, proof of a reduction in invoicing of at least 75% in relation to that made in the previous six months.
- Be up to date with the payment of Social Security contributions.
- The amount of the benefit to be received will result from the application of 70% to the contribution base, provided that the minimum contribution period (12 months) is accredited, otherwise 70% of the minimum contribution base will be applied.
3. Financial measures adopted
Line of guarantees to credit institutions to finance corporate liquidity operations.
It has been approved that the Ministry of Economic Affairs and Digital Transformation will provide guarantees for financing granted by credit institutions, financial credit establishments, electronic money institutions, and payment institutions to companies and the self-employed to meet their needs arising, among others, from the management of invoices, working capital requirements, maturities of financial or tax obligations or other liquidity needs, for a maximum amount of EUR 100,000 million. The applicable conditions and requirements to be met, including the maximum period for applying for the guarantee, will be established by Agreement of the Council of Ministers, with no further regulatory development required for their application.
Extension of ICO lines to SMEs and the self-employed.
The net borrowing limit for the Official Credit Institute has been increased by 10 billion euros in the State Budget Law, in order to provide additional liquidity to companies, especially SMEs and the self-employed. This will be done through the ICO’s Lines of Financing through the intermediation of financial institutions in the short, medium and long term and in accordance with its policy of direct financing for larger companies.
New CESCE coverage lines to international operations
As an extraordinary measure, and for a period of six months from the entry into force of the Royal Decree-Law, the creation of an insurance coverage line of up to 2 billion euros is authorised, charged to the Internationalisation Risk Reserve Fund, with the following characteristics
a) The necessary working capital credits for the exporting company will be eligible, without the need for a direct relationship with one or more international contracts, provided that they respond to new financing needs and not to situations prior to the current crisis.
b) Beneficiaries: Spanish companies considered as Small and Medium-sized Enterprises as defined in Annex I of EU Regulation 651/2014 of the Commission, as well as other larger companies, as long as they are non-listed entities, in which the following circumstances concur
a. That they are internationalised companies or companies in the process of internationalisation, as they meet at least one of the following requirements
- companies where international business, as reflected in their latest available financial information, accounts for at least one third (33%) of their turnover, or
- companies that are regular exporters (those companies that have regularly exported during the last four years according to the criteria established by the Secretary of State for Trade).
b. That the company faces a liquidity problem or lack of access to financing as a result of the impact of the COVID-19 crisis on its economic activity.
Companies in a situation of bankruptcy or pre-bankruptcy are expressly excluded, as well as those companies with incidents of non-payment with public sector companies or debts with the Administration, registered prior to 31 December 2019.
The percentage of credit risk coverage in the operations underwritten under this facility will not exceed the limit that may be established at any given time in accordance with EU regulations on State aid.
4. Measures of a commercial, associative nature and affecting cooperatives and approved foundations (changes affecting listed companies are not included).
Holding of meetings and adoption of resolutions of the governing bodies by videoconference.
Even if the articles of association do not provide for it, during the alarm period, the meetings of the respective governing and administrative bodies of the aforementioned entities/companies may be held by videoconference. The meeting will be understood to be held at the domicile of the legal entity.
Likewise, resolutions may be adopted by written vote and without a meeting, provided that the chairman so decides and must be adopted when requested by at least two of the members of the body.
Suspension of the deadline for drawing up the annual accounts
The period of three months from the end of the financial year for the governing or administrative body of a legal entity to prepare the annual accounts, ordinary or abridged, individual or consolidated, and, if legally required, the management report, and to prepare other documents that are legally required by company law, is suspended until the end of the state of alert.
This period will be resumed for a further three months from the date of completion of the alarm statement.
If on the date of the declaration of the state of alert, the governing body or administration of a legal person bound by the obligation has already drawn up the accounts for the previous financial year, the period for the accounting verification of these accounts, if the audit is obligatory, will be understood to be extended by two months from the end of the state of alert.
Suspension of the deadline for approval of the annual accounts and notice of the general meeting
The Ordinary General Meeting to approve the accounts of the previous financial year will necessarily meet within three months of the end of the period for drawing up the annual accounts.
If the notice of the general meeting has been published before the declaration of the state of alarm but the day of the meeting is later than that declaration, the administrative body may change the place and time set for the meeting or revoke the resolution to call the meeting by means of a notice published at least forty-eight hours in advance on the company’s website and, if the company does not have a website, in the “Official State Gazette” (Boletín oficial del Estado).
In the event of revocation of the resolution to call the meeting, the administrative body must call the meeting again within the month following the date on which the alarm condition ended.
Telematic assistance of the Notary to the general meeting of partners
The notary who is required to attend a general meeting of shareholders and take the minutes of the meeting may use means of remote communication in real-time that adequately guarantee the fulfillment of the notary’s function.
Impossibility of exercising the right of separation of the partners
Even if there is a legal or statutory cause, in capital companies the shareholders may not exercise the right of separation until the end of the state of alert and any extensions thereof that may be agreed.
Extension of reimbursement of contributions to cooperative members
The reimbursement of contributions to cooperative members who leave during the validity of the alarm state is extended until six months after the end of the alarm state.
Extension of the dissolution of companies on the occasion of their term
If during the period of validity of the state of alarm, the term of duration of the company as set out in the articles of association expires, the company will not be automatically dissolved until two months have elapsed since the end of this state.
If, before the declaration of the state of alarm and during the validity of this state, there is a legal or statutory cause for the dissolution of the company, the legal period for the convocation by the administrative body of the general meeting of shareholders to adopt the agreement of dissolution of the company or the agreements that have the purpose of enervating the cause, is suspended until the end of this state of alarm.
If the legal or statutory cause for dissolution has occurred during the period of the state of alarm, the administrators will not be liable for the corporate debts incurred during that period.
Suspension of the expiration period of the register entries during the validity of the royal decree declaring the state of alarm.
The following measures will be taken during the validity of the alarm state and, if applicable, any extensions to it that may be agreed:
- The period of expiry of presentation entries, precautionary notes, mentions, marginal notes and any other registry entries that may be canceled due to the passage of time is suspended.
- The calculation of the periods shall be resumed on the day following the end of the state of alert or its extension, as the case may be.
Deadline for the duty to apply for the competition.
As long as the state of alert is in force, the debtor who is in a state of insolvency is not obliged to apply for a declaration of bankruptcy.
Until two months have passed since the end of the state of alert, the judges will not admit for processing the necessary applications for insolvency proceedings that have been filed during that state or that are filed during those two months.
If an application for voluntary competition has been submitted, it will be admitted for processing, with preference, even if it is submitted at a later date.
Nor will the debtor who has notified the court with jurisdiction over the declaration of bankruptcy of the commencement of negotiations with creditors to reach a refinancing agreement or an out-of-court settlement agreement, or to obtain adherence to an advance proposal for an agreement, have the duty to request the declaration of bankruptcy while the state of alert is in force, even if the period referred to in the fifth paragraph of Article 5 bis of Law 22/2003 of 9 July on Bankruptcy has expired.
We remain at your disposal for any doubt or clarification in relation to this issue.