At Confialia we have prepared this blog post so that you can assess whether or not your company is entitled to receive the direct aid approved by the Government in its Royal Decree Law Royal Decree Law 5/2021 of 13 March. We have tried to summarise. Read carefully, we are sure you will be interested.
Four points to bear in mind
- If you declared a negative net result in 2019, it disqualifies you as a beneficiary.
- The granting of aid will end on 31 December 2021.
- The company will have to justify the maintenance of the activity by 30 June 2022.
- It is possible to apply to calls for applications from different Autonomous Communities.
With this government aid, the aim is to protect the productive fabric and avoid a structural impact on the economy. In line with other European countries, the State has deployed different packages of measures to support companies and the self-employed.
These are not rescue measures for companies that were not viable before the outbreak of the COVID-19 crisis. It is a form of investment in favour of the recovery and growth of those companies that are viable because they have a feasible medium-term plan and a suitable business model.
What can you do with that money?
This direct aid shall be of a finalist nature. They may be used to satisfy debt and make payments to suppliers and other creditors, financial and non-financial, as well as fixed costs, deemed eligible and incurred by the self-employed and enterprises from 1 March 2020 and 31 May 2021.
Once payments to suppliers have been made, in order of seniority and, if appropriate, the nominal amount of bank debt shall be reduced . Priority shall be given to the reduction of the nominal amount of the debt with public guarantee.
How to calculate the amount of the turnover drop?
With the turnover figure that your company declared in the 2020 VAT form 390. In this way, you will be able to demonstrate to the autonomous communities if the volume of operations has fallen by 30% compared to 2019 and therefore, if you are entitled to receive this aid in 2020.
Turnover 2019 - Turnover 2020 = "Falling Turnover".
Turnover drop / Turnover 2019 = % drop, which should be more than 30 %.
What activities are eligible for this type of aid? The company will have to prove that its activity is included in the CNAES listed in Annex 1 of Royal Decree Law 5/2021, which lists around one hundred activities.
- companies and self-employed workers in the hotel and catering sector (which are the sectors with access to the extended ERTEs).
- manufacturing activities related to commerce and the hotel and catering trade, wholesale and retail trade
- sectors auxiliary to transport; aeronautical maintenance
- activities related to culture and sports activities.
If you are taxed under the objective estimation system and the activity carried out is listed in Annex 1, you will be able to access the aid through your tax return, where this activity is reflected. The amount to be received would be 3,000 euros.
In the case of consolidated groups that pay corporate income tax under the consolidated taxation system, for the purposes of compliance with the eligibility and transfer requirements, the said groupshall be understood as a single taxpayer,
Who is not eligible to apply?
- Companies and professionals who have declared a negative result in IRPF, IS or IRNR during 2019.
- Those that have filed for voluntary insolvency proceedingsor have already declared voluntary insolvency proceedings
- Those which have been declared, in any proceedings, insolvent
What are the requirements to be a beneficiary of these grants?
- Have no debts with the Tax Authorities or Social Security.
- Not being able to distribute dividends, nor to increase the salary of its managers during the two years after receiving the aid.
- Be up to date with the payment of obligations for the reimbursement of public subsidies or aid.
- Be up to date with tax and Social Security obligations.
What are the award criteria?
The Autonomous Communities will be responsible for establishing the criteria for aid per recipient, so that the following ceilings are not exceeded:
- It is established that the aid may not be less than 4,000 euros (except in the case of objective estimation) or more than 200,000 euros.
- For those entrepreneurs and professionals under the simplified direct or normal direct regime and whose turnover has fallen by more than 30 % in 2020 compared to 2019, the maximum aid to be granted will be 40 % of the fall in turnover in 2020 compared to 2019 that exceeds 30 %. In the case of entrepreneurs or professionals who apply the direct estimation regime in the IRPF, as well as entities and permanent establishments that have a maximum of 10 employees.
Example. If a company had a turnover in 2019 of 400,000 and has suffered a drop of more than 30%, here are some examples:
| Turnover 2019 | 400.000,00 | ||||||
| Turnover decrease in 2020 | 20% | 30% | 40% | 50% | 60% | 70% | 80% |
| Fall in turnover | 80.000,00 | 120.000,00 | 160.000,00 | 200.000,00 | 240.000,00 | 280.000,00 | 320.000,00 |
| Aid Basis | 0,00 | 0,00 | 40.000,00 | 80.000,00 | 120.000,00 | 160.000,00 | 200.000,00 |
| Amount of aid 40% of base | 0,00 | 0,00 | 16.000,00 | 32.000,00 | 48.000,00 | 64.000,00 | 80.000,00 |
On the other hand, 20% of the amount of the drop in the volume of operations in 2020 compared to 2019 that exceeds 30%, in the case of entities and entrepreneurs or professionals and permanent establishments that have more than 10 employees.
Example. If a company had a turnover in 2019 of 800,000 and has suffered a drop of more than 30%, here are some examples:
| Turnover 2019 | 800.000,00 | ||||||
| Turnover decrease in 2020 | 20% | 30% | 40% | 50% | 60% | 70% | 80% |
| Fall in turnover | 160.000,00 | 240.000,00 | 320.000,00 | 400.000,00 | 480.000,00 | 560.000,00 | 640.000,00 |
| Aid Basis | 0,00 | 0,00 | 80.000,00 | 160.000,00 | 240.000,00 | 320.000,00 | 400.000,00 |
| Amount of aid 20% of base | 0,00 | 0,00 | 16.000,00 | 32.000,00 | 48.000,00 | 64.000,00 | 80.000,00 |
Balearic and CanaryThe Balearic and Canary Islands may increase the percentages of loss cover and aid ceilings.
When the time comes, Confialia will be in a position to offer its clients the service and assistance they need to carry out the procedure, but when will it be possible to apply for this aid? When will it be possible to apply for these grants?
It is expected that the call for aid will begin in about 40 days from 12 March 2021 (a period of 30 days is established for the signing of the agreement with the State. After that, it will take 10 days for the autonomous communities to receive the transfer of funds. We are talking about possibly being able to request the aid from 22 April 2021.
Can I use this aid to restructure my debt with the banks?
You can do this if your company is viable, but with transitory problems, and in agreement with the financial institutions. For loans with a public guarantee, three levels of action may be applied:
1.- The extension of the maturity of loans, in addition to the extension approved last November.
2.- Convert these loans into participative loans, maintaining the coverage of the public guarantee.
3.-To make direct transfers to the self-employed and SMEs for the reduction of the principal of the guaranteed financing contracted during the pandemic.
Finally, what if I am no longer able to pay the taxes due in the first quarter of 2021, will that make me ineligible to claim these grants?
Another important measure foreseen in RD law 5/2021, is the extension to four months to delay the payment of taxes due between 1 and 30 April 2021, without interest for late payment.