Sign in/Register
Looking for the Professionals/Advertiser Login?
By Signing up you are agreeing with our Terms and Privacy Policy.Forgot your password?
Feedback is welcome
SELF-EMPLOYED workers and owners of small and medium-sized businesses will be considered for a slice of the €7 billion fund approved by Spain's government this week if they can show at least a 30% drop in their income in 2020, based upon their figures for 2019.
The cash can be used to cover fixed costs such as salaries, rent on premises, utility bills, paying suppliers and contractors, or paying back debts incurred between March 2020 and May 2021.
According to the Royal Decree, or Bill of Law, signed off yesterday (Friday) by the Council of Ministers, the funds will be split into two – a total of €2bn will be set aside specifically for the Balearic and Canary Islands, which have been the hardest hit by the loss of tourism in the past year, and the remaining €5bn will be split between the remainder of Spain's regions in line with the general fall in their gross domestic product (GDP) and youth unemployment levels as at December 2020.
The idea is to guarantee that companies and sole traders who were solvent before the pandemic remain so, and are in a position to keep going until the health crisis is largely over.
Payments can cover up to 40% of the loss of income for small businesses and sole traders with up to 10 employees, and up to 20% of loss of income for all other companies.
For self-employed workers, a fixed sum of up to €3,000 can be paid to those who declare their earnings for tax purposes every quarter on an 'estimated' basis, as opposed to those who only make one income tax and four value-added tax (IVA) declarations due to all their income being subject to retentions of 15% at source.
For the remainder, benefits range from between €4,000 and €200,000.
As yet, the government has not been able to confirm when the money will be paid into successful applicants' bank accounts, although it is expecting to have lists drawn up ready to transfer the funds to regional governments within 10 days to a month.
Industries that qualify for financial assistance include tourism, hotel and catering including bars and restaurants, businesses linked to these and to retail, including wholesalers, transport support sectors, and activities related to culture and sports.
Treasury minister Nadia Calviño has not given an estimate as to how many companies or traders are likely to benefit, but says the government has looked at those industries with staff furloughed, or temporarily laid off, and expanded on this 'to include those not covered by the lay-off scheme but which could be in a potential situation of excess debt'.
She expects the funds will cover 'a good part of the companies identified' as having been 'the hardest hit by the pandemic' and 'the most financially-viable'.
Weeks of debate between the parties to Spain's coalition government, left-wing Unidas Podemos and centre-left socialists (PSOE), centred on whether the full €11bn set aside for the self-employed and small and medium-sized businesses should go to these as direct payments, and whether they should come with a condition of zero redundancies, other than temporary lay-offs or voluntarily early retirement.
In the end, €7bn will be given out as direct payments, and the remaining €4bn used for helping companies restructure their debts and rebuild their capital – those firms which are too small to apply to the SEPI Solvency Fund, made up of a total of €10bn to help bail out 'key and strategic' enterprises affected by the pandemic.
Firms and workers who receive the benefits offered must continue their business activity until at least June 2022, and will have to pay back the funds if they do not; they are also forbidden from paying dividends or increasing bonuses for their management, directors or shareholders during that time.
Nothing has been mentioned about the funds being on condition of zero redundancies – as was the case with the temporary lay-off scheme – but this condition has not been specifically excluded, either, and companies and sole traders are likely to be closely monitored to ensure their needs are real, that they are used in part to maintain jobs, and that any permanent redundancies are in response to genuine financial necessity.
In addition to the €11bn, a new stay of grace for tax payments has been agreed for another month.
Up until now, companies and small and medium-sized businesses have been allowed to delay paying their taxes due in January, February and March for up to six months, interest-free – this will now also apply to taxes due in April.
A moratorium on the requirement for insolvent and struggling companies to declare themselves in receivership has been agreed until the end of this year, in order to prevent bankruptcies and firms going out of business.
For debt restructure, the government has set aside €3bn, but says it will only be granted 'as a last resort' – companies and small and medium-sized businesses with loans from the national Credit Institute, the ICO, can negotiate an extension on their repayment term or a conversion of their finance agreements into 'participative loans'; reductions via the debt repayment scheme will only be permitted where they are the last hope of a business before it is forced to cease trading altogether.
Where these are granted, they will be on the debt capital, not the interest, and a code of good practice must be adhered to so that 'only viable companies with excess debt problems' can take them up.
The amount the ICO will contribute towards the debt reduction will be 'proportional' to its guarantee on the sum owed, meaning banks which provided the balance of the loans will also have to 'participate', or bear some of the loss.
Finally, the remaining €1bn will be for building up capital in companies badly affected by the Covid crisis, but which are too small to apply for the ICO financial instrument.
This €1bn will be managed by COFIDES, and as a condition, the government will expect to be able to recover what it pays out over time and at a reasonable, affordable level to be agreed in advance since, as Sra Calviño argues, the State 'should be permitted a participation' in 'future positive results' of companies which it has 'bailed out'.
DETAILED talks over how to maintain the rights and freedoms of cross-border workers living in Spain and with jobs in Gibraltar have reached a conclusion and a new system ready to be put into place.