Extension of the economic measures taken by the Spanish Government due to Covid-19

The Government makes the ERTE more flexible for workers in the tourism sector

The Council of Ministers approves the reduction to zero of VAT applicable to the supply of medical equipment of national products to public entities and hospitals

The Government has given green light to a new package of economic measures to ease the consequences of the unprecedented crisis the country is facing due to the coronavirus pandemic. The 30 measures that have been taken cover various areas such as employment and fiscal policy to reach those groups that have been left unprotected until now. Among others, the Executive will make access to Temporary Employment Regulation Files (ERTE) more flexible, provide coverage for permanent discontinuous workers and those who would have been out of work when the state of alarm was declared, and introduce taxation measures to provide greater liquidity to SMEs and the self-employed workers.

In particular, the Executive will facilitate access to ERTE or unemployment benefits for permanent discontinuous or seasonal workers. This measure benefits above all the tourism sector, one of the most affected sectors by the economic downturn and which does not yet have a clear date for resuming activity. When the crisis began, many of these workers had not yet taken up their positions. Now they will have a 90-day allowance even if they have exhausted their unemployment or have not contributed for long enough. The measure will benefit, above all, the most touristic communities and, in particular, the Balearic Islands, where this type of contract is used the most.

The Council of Ministers has also approved the flexibilization of the ERTE due to force majeure for companies in sectors considered essential that have suffered significant losses in their income: “a distinction will be made between workers who carry out the tasks called essential by health authorities and those who do not in a given company,” clarifies the Ministry of Labor in a press note. The Government has also given green light to the two-month extension of teleworking as the primary alternative for those who can carry out their business from home with the possibility for workers to adapt their working hours.

In addition, coverage has been extended for workers whose contracts have been terminated since 9th March, or voluntarily terminated since 1st March because they accepted a binding job offer that has lapsed. It is estimated that 2,700 people have been unable to access unemployment benefits because their employment relationship was terminated during the trial period at the request of their employer or because the employer withdrew from the contract. It is also foreseen that self-employed workers who have not yet chosen a mutual fund to manage social security benefits may choose one at the same time as they apply for the severance benefit.

Other new features approved this Tuesday are aimed at the rentals of commercial properties: SMEs and self-employed workers in difficulty will be able to renegotiate and defer rentals with large holders and public companies. In the case of other types of owners, the use of the deposit will be facilitated as a complementary mechanism to the agreements between landlords and tenants. In addition, the ICO guarantee line will be extended to cover not only loans requested through the banking system, but also promissory notes from the alternative fixed-income market; the capacity of the autonomous communities’ mutual guarantee societies will be increased by strengthening the revaluations of the Compañía Española de Reafianzamiento (Cersa) and the Consorcio de Compensación de Seguros will be empowered to act as a reinsurer of credit insurance risks.

“These are horizontal measures and some more specific measures to adapt the regulations applicable to certain sectors for this new phase of extension of the state of alert,” said the Vice President of Economic Affairs, Nadia Calviño, at the press conference following the Council of Ministers on Tuesday.

Fiscal measures

The Executive has also approved new tax measures for the self-employed workers and SMEs, as announced last week by the Finance Minister and Government Spokeswoman, María Jesús Montero.

Specifically, the self-employed workers under modular regime may exceptionally move to tax by direct assessment without having the obligation to remain in this system for three years, as established by current regulations. In 2021 they will be able to return to the modular regime if they so wish. In the case of SMEs, they will be able to modify their system of fractionated payment of corporate taxes based on their effective quarterly profits instead of based on the income of the previous year, an option that can usually only be chosen until February. This way, they will be able to reduce payments on account and reflect the real losses they have suffered. It is a matter of “aligning tax bases to the real situation” to ” release more than 1.1 billion euros of liquidity” for these groups, Calviño said.

The self-employed workers who decide to stay in the modular regime will nevertheless have access to a tax reduction: the Executive has established that the fractioned payments of income tax and VAT will be discounted on the calendar days under the state of alarm. According to the estimations made by the Ministry of Finance, this measure will save 30 million euros in the first quarter and 362,000 taxpayers will benefit from it in income tax payments and another 200,000 in VAT payments. In addition, SMEs will be able to make payment of tax debts subject to obtaining an ICO credit, if they have requested one.

Calviño has also announced a reduction to zero of VAT for imports from third countries and purchases within the EU and Spain of healthcare material aimed for public entities, clinics and hospitals or private social entities until July 31st. According to the Government, this exemption will mean a saving of 1,022 million euros. It has also approved, as already anticipated, a reduction in VAT on books, magazines and electronic newspapers from 21% to 4%.

The Government has also approved exceptional reductions and deferrals for the maritime ports, which will enable companies operating in the sector to save around 100 million euros. Beneficiary companies will, among other things, enjoy reductions in the rate of occupation and will be able to request deferrals of up to six months in the payment of port charges.

 

 

Source: ElPaís.com