Difficult times.

Please allow me to express  my first words in remembrance and encouragement for all the people and their  loved ones affected by this disease that has us all trapped in our homes in this worldwide lockdown that seems a science fiction movie. Our best wishes to all of you

Once said this, let me summarize in the next lines the most important tax an social security urgent decisions taking by the Spanish Government.

1. Tax Aspects

The first steps taken on the 14th of March were:

• Tax deferral of 6 months: Provisions to defer certain tax debts to certain taxpayers (including individuals) for up to € 30,000 and for a period of up to six months (no interest on overdue tax would be levied during the first three months), for Spanish tax returns with a deadline for submission between 13^th of  March and 30^th of  May 2020.  This deferment requires a prior specific request by the taxpayer.
• Suspension of deadlines litigation and administrative procedures: With some minor exceptions, provisions to suspend all deadlines for legal and administrative proceedings of a non-tax nature for the duration of the State of Emergency.
• Compute of time elapsed: Provisions not to compute time elapsed during the duration of the State of Emergency for the purposes of calculating the date of application of the statute of limitations.
• Tax deferrals till 30^th of April from tax debt assessed by the Tax Authorities at the 18th March: Provisions to defer until 30^th of  April 2020 the obligation to settle due and payable tax debts as at 18^th of March 2020 (including deferred tax debts and foreclosures by reason of tax debts) arising from assessments previously raised by the Spanish tax administration (eg by reason of a tax inspection, pending surcharges, penalties etc).
• Deferral of deadline for attending tax requests: Provisions to defer until 30^th of April 2020 the obligation by taxpayers to respond to queries raised by the tax administration outstanding as at 18^th of  March 2020.  Taxpayers nevertheless have the option to submit responses during the deferment period.
• Tax deferrals till 20^th of May from tax debt assessed by the Tax Authorities:  Provisions to defer until 20^th of May 2020 the obligation to settle due and payable tax debts arising from assessments raised by the Spanish tax administration (e.g. by reason of a tax audit, surcharges, penalties etc) after 18^th of  March 2020.
• Deferral till 20^th of May of deadline for attending tax requests and appeals: Provisions to defer until 20^th of May 2020 the obligation by taxpayers to respond to queries or the submission of first appeals against assessments raised by the tax administration received after 18^th  March 2020 (or later if by application of standard procedures).
• Small Business and entrepreneurial (self employed) Debts for tax returns from 13^th of March to 30^th of  May 30 may be deferred and fractioned without contribution of guarantee by Small Business  with a turn over not exceeding 6 million euros and self-employed, up to the amount of 30,000 euros, the first 3 months without interest and the following 3 with the interest of delay currently 3.75%.

• At present, these deferment and suspension provisions do not apply to deadlines for submission of personal tax returns. Therefore:

1. a) Income Tax and Wealth Tax returns will need to be submitted as usual on or before 30th June 2020
2. b) Gift Tax returns must be submitted within 30 working days from the date of the gift
3. c) Inheritance Tax returns must be submitted within six months from the date of demise (with specific deferment provisions for an additional six months period). Requests for extensions must still be filed before the end of the fifth month after the demise.

Finally last 14^th of April the Spanish Government after very much pressure from the business and economic agents  finally decided to extend until next May 20, 2020 the deadlines for the presentation and filing of tax returns and self-assessments declarations for the first quarter of 2020 (model 303, 111, 115, 349, etc.) until next May 20, 2020 (instead of until April 20) for  taxpayers with turnover not exceeding 600,000 euros in 2019.

In addition, there are several other regional and municipal extraordinary provisions dealing with the impact of COVID-19 on certain regional and municipal taxes. We will inform you accordingly of the ones affecting Mallorca and the Balearic Islands  in net communications.

1. Social Security

Extraordinary urgent measures have been also adopted referring social security contributions: principally an extraordinary benefit for cessation of activity for those affected by the declaration of the state of alarm for the management of the health crisis situation caused by COVID-19, validity limited to one month  – or if it continues for more than a month. This includes:

–           self-employed or self-employed workers, whose activities are suspended, by virtue of the provisions of the aforementioned Royal Decree, or, in another case, when their turn over  in the month prior to which the benefit is requested is reduced by at least 75 % in relation to the turn over average of the previous semester

–           employees  affected by a temporary dismissal procedure (ERTE) may collect unemployment benefits , even if they have not contributed the minimum period necessary for it

–           employers or  companies that have declared  temporary dismissal procedure (ERTE) will benefit from the exemption of Social Security contributions in the following manner: if the company has less than 50 workers, the social security contributions for suspended contracts and reduced hours is 0. If it has more than 50 workers, they will only have to contribute for 25% of these suspended contracts or reduced days

–           Finally, both self-employed entrepreneurial and business  who do not have deferred payments of debts with Social Security are allowed to request the deferment of payment of their debts with Social Security between April and June 2020 , with a substantial reduction in the required interest rate, which is set at 0.5%.

Also the Spanish Instituto e Crédito Oficial (ICO) is granting special COVD -19 loans through commercial banking at low interest rates for self-employed, entrepreneurial, small  business and  companies that are being affected by the crisis of the coronavirus COVID-19 and need liquidity with an the specific line for the tourism sector, which also extended to throughout the country, and increasing the lending capacity in the rest of the ICO lines by 10,000 million. The first section of the line of public guarantees or loan is already operational. This is 20,000 million euros, of which 10,000 million are intended to cover, retroactively, the loans granted since last March 18, and whose commercialization will be supervised by the Bank of Spain.

Public Notaries and judicial Courts are open during the lockdown but jut for urgent matters.

This is in principal what is in force now , there are further discussions on the rental deferments, supplementary aids to business  and suspension of other tax deadlines. Regions and municipalities are also implementing their own aid measures and benefits.

Finally, one last thought. It is now, in difficult times like these days, where we must regain strength, look ahead and dream of enjoying our beloved island and its sea again. And by remembering all those moments that we believed  had been granted us eternally and for free let us not forget,  like somebody said, that in midst of every crisis lies great opportunity.

Please keep safe and healthy.

Carlos Espinosa – Solicitor & Tax Advisor

+34 627 41 32 01

carlos.espinosa@iurisnautic.com