The Spanish Official Gazette (BOE) published on March 18, a Royal Decree Law 8/2020 which includes a set of extraordinary measures addressed by the Spanish Government to respond to the economic and social impact of COVID-19 in Spain.
This new piece of regulation follows the previous Royal Decree 463/2020, March 14, declaring the lookdown of the country as of 14 March 2020. The purpose of this regulation is to limit the spread of the coronavirus while keeping the Spanish economy from tanking.
As a result of the lockdown measures, consumer demand and consumer spending have decreased dramatically and therefore, Spanish companies have seen their sales declining, and they fear that this may potentially result in liquidity problems.
The aim of stimulus measures approved is to minimise the deterioration of the Spanish economy as well as to ensure that such situation is transitory and does not become systemic.
Measures can be divided in three main categories: (i) protecting employees and cash-strapped households; (ii) supporting continuity of the producing activities and industries and employments; and (iii) eradicating COVID-19.
Among those that may be of interest to individuals and companies carrying out business are the following:
1.- Labour measures. Employees Reestructuring and Lay-off Payments
Measures to allow controlled restructuring of the workforce are introduced by Royal Decree Law 8/2020, March 17. Specifically, Employment contracts suspension and short-term work allowances during the coronavirus-related disruption are now permitted. That rule entitles employers, where the circumstances recommend, to apply force majeure clauses, allowing them to suspend not only salaries but social security-related payments too.
2.- Public measures. Public contracts
Contracts entered into by companies and Spanish public entities that cannot be complied with or which obligations cannot be performed as a result of the COVID-19 disruption will not allow the public entity to terminate the contract. Performance of the contract may be suspended and may even allow the company to seek a compensation from public entity.
3.- Corporate measures. Corporate Governance, Insolvency measures and Listed Companies
3.1 Corporate Governance: In order to help companies to meet filing deadlines to hold the compulsory anual shareholders meeting, RDL 8/2020 allows for companies to hold telematics meetings of the governing bodies (e.g. videoconference) even if their bylaws do not provide it. Also, most of the corporate deadlines are suspended, including the one related to the filing of the anual financials where not only has the deadline been suspended, but the term extended. Similar measures have been approved for other filings such as the auditing report.
3.2 Insolvency measures: The two-month period to request the opening of insolvency proceedings provided for in the Spanish Insolvency Law (Law 22/2003, July 9) is suspended.
3.3 Listed companies: In response to the impact of COVID-19 in the markets and IBEX-35 hitting its historic low, RDL 8/2020 had included several restrictions to the acquisitions of certain assets and stakes in Spain. These apply to foreign investors and to business or companies operating in strategic areas or interests.
Specifically, RDL 8/2020 declares a suspension of the investments made by investors outside the EU or the European Association of Free Commerce as well as those investments in strategic sectors when the investors, as a result of such transaction, holds 10% of the share capital or gains control over the governing body.
Similarly, investments made by foreign publicly owned and sovereign entities are suspended.
4. Tax and Custom measures
4.1 Small and Medium Companies: RD 463/2020 allows the possibility of deferment of certain tax debts for taxpayers with a volume of transactions not exceeding 6.010.121,04.-€ in 2019, provided that the debt does not exceed 30.000.-€ and is within the jurisdiction of the State tax administration. Moreover, it has been foreseen that no default interest will accrue during the first three months.
4.2. A suspension and lengthening of tax time periods: It is relevant to point out that this suspension or lengthening (until April 30, 2020 or May 20, 2020, depending on every case) will not apply neither the filing of any tax return (state administration) nor the payment of the consequent tax debt.
4.3 To speed up customs formalities for imports in the industrial sector, so as to prevent effects on the supply chain of goods from third countries or a halt in exports, it provides that the person in charge of the department of customs and excise and other special taxes at the Spanish tax agency (AEAT) will be able to order that the declaration procedure and customs clearance must be conducted by anybody or public official from the customs and excise and special taxes division.
4.4 Finally, RDL 8/2020 allow an exemption from the ad valorem stamp tax charge on notarized documents for any deeds recording contractual novations of mortgage loans and credit facilities drawn up under the royal decree-law.
Daniel Aroca from Auren Spain