Spain. Covid-19. Measures to reduce operating costs for SMEs and the self-employed

Spain. Covid-19. Measures to reduce operating costs for SMEs and the self-employed

Measures have been passed to contribute to mitigating the effects of the health crisis in on the leases of premises, warehouses or business or industry leases.

Two distinct cases have been set up depending on whether the lessor is a “large holder” of real estate.

 

Case one. Lessor [being a] “large holder” of real estate

• Large holder of real estate Requirements (alternative) to be considered as such:
  • Public housing company or entity.
  • holder of more than 10 urban real estates, excluding garages and storage units.
  • Built surface of over 1,500 m².
• Application period for the moratorium, until May 2th.
• Moratorium (to be paid during 3 years) is of obligatory acceptance for the lessor, i.e. it cannot be denied.
• Lessee requirements to qualify for this moratorium:
  • Self-employed:
    • Registered in RETA [Special Regime for Self-Employed Workers] or an alternative mutual fund on March 14, 2020.
    • Activity suspended by the [Spanish] State of Alarm.
    • If activities were not suspended by the State of Alarm, show proof of a reduction in turnover in the calendar month prior to requesting the 75% deferment on the monthly average of Q1 2019.
  • SME:
    • Be an SME at an accounting level, meeting 2 out of 3 of the following requirements:
      • Assets < €4,000,000.
      • Turnover < €8,000,000.
      • Average number of workers < 50.
    • Activity suspended by the State of Alarm.
    • If activities were not suspended by the State of Alarm, show proof of a reduction in turnover in the calendar month prior to requesting the 75% deferment on the monthly average of Q1 2019.

 

Case two. Lessor not considered a “large holder”

• Application period, until May 2th.
• Moratorium subject to agreement between the parties. In other words, it is not established that it is compulsory for the lessor.
• Use of deposits and guarantees may approved to pay all or part of the rent. In this case, the deposit must be replaced within 1 year or before the end of the lease, whichever occurs first.
• Lessee requirements (same as the previous case):
  • Self-employed:
    • Registered in RETA [Special Regime for Self-Employed Workers] or an alternative mutual fund on March 14, 2020.
    • Activity suspended by the State of Alarm.
    • If activities were not suspended by the State of Alarm, show proof of a reduction in turnover in the calendar month prior to requesting the 75% deferment on the monthly average of Q1 2019.
  • SME:
    • Be an SME at an accounting level, meeting 2 out of 3 of the following requirements:
      • Assets < €4,000,000.
      • Turnover < €8,000,000.
      • Average number of workers < 50.
    • Activity suspended by the State of Alarm.
    • If activities were not suspended by the State of Alarm, show proof of a reduction in turnover in the calendar month prior to requesting the 75% deferment on the monthly average of Q1 2019.

 

Accreditation of lessee requirements

In summary, the lessee, self-employed or SME, can fall within two cases, for which proof requirements are established:

• 75% reduction in activity. Declaration of responsibility in which, based on the accounting information, shows a reduction in monthly turnover greater or equal to 75% compared to the average monthly turnover in the first quarter of 2019.

If requested by the lessor, accounting books must be shown to prove the reduction in activity.

• Cease of activity. Through a certificate issued by the State Tax Administration Agency or competent body from the Autonomous Community, as appropriate, based on the declaration of cessation of activity declared by the interested party.

 

Consequences of undue application for moratorium

If a lessee takes this moratorium without meeting the requirements, he/she will responsible for any damages, as well as expenses generated from applying for these exceptional measures, without prejudice to other responsibilities that may exist.