Direct aid for self-employed workers and businesses | Royal Decree-Law 5/2021.

The Council of Ministers has approved the fund for direct aid to self-employed workers and SMEs, totaling €7 billion. This business support plan provides direct aid of between €3,000 and €200,000. The compensation will be granted for a drop in turnover of at least 30% compared with 2019 in the sectors most affected by the restrictions.

This aid is earmarked, meaning that it must be used to pay invoices and debts relating to utilities, suppliers, and payroll. Self-employed workers taxed under the module-based system (Módulos) will receive €3,000. All other self-employed workers will receive between €4,000 and €200,000, depending on their size and the drop in revenue they have suffered.

Amount of the aid

The Autonomous Communities (regions) will set the criteria for the aid per recipient, so that the following maximum limits are not exceeded:

A) €3,000 in the case of entrepreneurs or professionals taxed under the objective assessment method (estimación objetiva).

B) For entrepreneurs and professionals taxed under the direct assessment method (estimación directa) whose turnover (volumen de operaciones) fell by more than 30% in 2020 compared with 2019, the maximum aid granted will be:

a) 40% of the drop in turnover in 2020 compared with 2019 in excess of that 30%, for businesses with a maximum of 10 employees.
b) 20% of the amount of the drop in turnover in 2020 compared with 2019 in excess of that 30%, in the case of businesses with more than 10 employees

The aid may not be less than €4,000 or more than €200,000.

What does the aid consist of?

This is direct aid to self-employed workers and businesses to support solvency and reduce private-sector indebtedness.

This direct aid must be used to pay debts and to make payments to suppliers and creditors.

It may also be used to cover eligible fixed costs, provided that they accrued between March 1, 2020, and May 31, 2021. These costs must arise from contracts entered into before March 12, 2021.

Payments to suppliers will take priority, starting with the oldest. Where applicable, the principal of bank debt will be reduced, giving priority to reducing the principal of publicly guaranteed debt.

Requirements

This aid is intended for entrepreneurs and professionals who meet the following requirements:

– Be a self-employed worker or a non-financial company and be included in the CNAE listPDF set out in the decree.

– Have their tax domicile in Spanish territory (non-resident entities must operate in Spain through a permanent establishment).

– Be up to date with the repayment of public subsidies.

– Be up to date with their obligations to the tax authorities and Social Security.

– Annual turnover reported for 2020 must have fallen by 30% compared with 2019 (as reported or as verified by the tax authorities, for VAT (IVA) or the equivalent direct tax).

If you are taxed under the objective assessment method for Personal Income Tax (IRPF), you may also be eligible if your activity is included in the CNAE list.

For consolidated groups taxed under the tax consolidation regime for Corporate Income Tax (IS), the group will be the recipient, not each of the entities separately. The drop in activity will be determined as the sum of all of the group’s turnover.

Commitments

The recipients of these measures undertake the following commitments:

1. They must maintain the activity to which the aid relates until June 30, 2022.

2. They may not distribute dividends during 2021 and 2022.

3. They may not approve increases in senior management remuneration for a period of two years from the application of any of the measures.

How to apply for the aid

The Autonomous Communities will be responsible for granting the COVID aid, and they have yet to establish the criteria for allocating the aid per recipient. It will therefore be necessary to wait for each Autonomous Community to publish its calls for applications.

The direct aid may be granted until December 31, 2021, at the latest.

Once you have been awarded the aid, you must demonstrate that you have maintained the activity for which it was granted until June 30, 2022. In the event of non-compliance, you would have to repay the aid in full.