On 1st April 2020, the Royal Decree-Law 11/2020 of 31st March, by which complementary urgent measures are adopted in the social and economic areas to face COVID-19, has been published in the Spanish Official Gazette, and it comes into force today 2nd April 2020.
Hereunder, due to the dense content of the regulation and for a better understanding, we will break down the different measures by subjects, regarding the aspects we consider most relevant. However, if you need to go deeper into its content, clarify any doubt or require any consultation, we remain at your entire disposal through the usual channels of communication of our firm in order to give you a detailed and quick response.
Among the measures incorporated in the Decree, the following ones should be highlighted:
- Measures about main residence rental contracts:
As a starting point, it establishes the criteria to interpret the situation of economic vulnerability as a result of the health emergency due to COVID 19, which is the essential requirement to benefit from the measures laid down in this Royal Decree-Law and which shall be duly proved with the documents outlined in the rule.
A moratorium of the rental debt shall be established for those tenants who have proved their economic vulnerability situation, distinguishing two groups:
- Lease contracts in which the lessors are large holders and public housing enterprises or entities:
It is considered to comply with the condition of being a large holder, if the lessors hold more than 10 urban properties, excluding garages and storage rooms, or a constructed area of more than 1.500 square meters.
For such contracts, it shall be possible to reduce the rent up to 50% or to establish a moratorium on the payment of the rent, for a maximum period of 4 months. The lessor must decide which option is accepted.
- Lease contracts in which the lessors do not have that condition: A temporary deferral agreement may be reached regarding the payment of the rent. However, if this is not accepted by the lessor, the tenant may have access to the financial assistance introduced by the Government in this Royal Decree-Law.
The possibility of suspending the launches in the eviction procedures for main residence rentals is considered if the required conditions are met.
Those main residence lease contracts whose renewal ends within the term of the alarm state and the following two months can be extended for a maximum period of 6 months if the lessor accepts, unless the parts agree different terms.
It is agreed to develop a financing credit line with the Official Credit Institute with a total coverage of the State so that the bank entities can offer benefits for the tenants in a vulnerability situation.
The granted benefits for the tenants with a main residence contract who are in an economic vulnerability situation shall amount up to 900 € per month and up to 100% of the rent or 100% of the loan subscribed for the payment of the rent.
Furthermore, some measures addressed to the public administrations are approved in order to encourage the promotion of rental benefits.
- Measures about the mortgage moratorium:
As in the measures of the previous group, as a starting point, it establishes the criteria to interpret the situation of economic vulnerability as a result of the health emergency due to COVID 19, which is the essential requirement to benefit from the measures laid down in the Royal Decree-Law and which shall be duly proved with the documents outlined in the rule.
It is considered that the mortgage debt referred to in the Royal Decree-Law, of 17th March, shall be the debt assumed for the acquisition of the main residence, the properties affected by the economic activity developed by entrepreneurs and professionals and the non-main residence properties in a rental situation and for which, having the condition of lessor, the rent has not been received since the alarm state declaration and until up to a month after its termination.
This Royal Decree-Law, besides, modifies the content of the Royal Decree-Law 8/2020, of 17th March about the mortgage moratorium, expanding and complementing the cases, that it is no longer limited to the main residence mortgage.
- Measures about the suspension of obligations arising from credit contracts without mortgage guarantee:
Also, based on proving the situation of being a natural person with an economic vulnerability as a result of the health emergency due to COVID 19 in the terms contained in this Royal Decree-Law, there shall be the possibility of the temporary suspension for a 3 months term of the contractual obligations of all loans or credits without mortgage guarantee that have been in force at the time of the implementation of this Royal Decree-Law, which will have the effects described in this rule from the creditor’s request accompanied by the required documentation.
It is considered that the guarantors may require that the creditor consumes the patrimony of the main debtor before claiming the guaranteed debt, even if they had declined the excussion benefit.
- Support measures for self-employed and companies:
The exceptional granting of a moratorium on the payment of the Social Security contributions shall be enabled, taking into consideration these exceptional circumstances, and subject to the conditions determined by Ministerial Order.
The accrual period for companies would be from April to June 2020, whereas for self-employed workers it would be from May to July 2020.
Self-employed workers whose activity has been suspended and who are now receiving the extraordinary allowance due to the cessation of activity, and who have not paid in time their social contributions for the days worked in March, may pay them after the deadline without any surcharges.
Deferral of social security debts
Companies and self-employed workers who have no Social Security debt deferrals in force may request, until 30th June 2020, the deferral of the debts to be paid between April and June 2020, at an interest rate of 0.5 % and subject to the previous compliance with certain requirements.
Social bonus for self-employed workers
Self-employed workers who have ceased their activity or whose turnover has been reduced by 75 % shall also have the right to get a social bonus under the terms set out in Royal Decree 897/2017, of 6th October.
Flexibility in supplies
Exceptionally, during the validity of the alarm state, self-employed workers and companies affected by the health crisis will be able to benefit from a series of measures of temporary suspension or modification of the supply contracts, without any penalty, and they will be given the option to change the access toll and the adjustment of the contracted power without any extra charge.
Likewise, a mechanism has been established for self-employed workers and all SMEs to suspend the payments – by the contract holder to the supplier – of electricity, natural gas and other petroleum products’ invoices.
Temporary Extraordinary Allowance for Household Employees
A temporary extraordinary allowance is created for household employees, of which they may benefit due to their lack of activity, the reduction of working hours or the termination of the contract as a result of COVID-19.
- Protection measures for consumers and users:
Termination of certain contracts
A series of measures are also included for the protection of consumers and users with regard to the termination, suspension and extension of contracts signed, whether for the purchase or sale of goods or the provision of services, including those contracts of a consecutive nature, when they are impossible to comply with as a result of the measures adopted during the validity of the alarm state, without any penalty for the consumer.
These protective measures apply to travel package contracts that have been cancelled as a result of the health crisis.
- Support measures for the maintenance of employment:
The exceptional circumstances allowance applicable to the group of temporary workerswhose contract is terminated because it comes to an end is set up without any waiting period requirement in order to put them on the same level as the persons included in the temporary employment regulation file. The contract is required to have a minimum duration of two months.
Likewise, the Sixth Additional Provision of Royal Decree-Law 8/2020 is clarified, which should be understood as the company’s will to maintain employment for a period of 6 months from the termination of the measures to reduce the working day or suspend contracts based on the COVID-19: the commitment will not be considered breached if the employment contract is terminated due to fair disciplinary dismissals, resignation, retirement, total or absolute permanent disability or severe disability of the worker.
In the case of temporary contracts, the commitment will also not be deemed as breached if the contract is terminated for reasons that are legally applicable, or if the activity that is the object of the contract cannot be carried out immediately.
Temporary incapacity in a situation of total confinement.
The protection of the temporary incapacity situation is extended to workers who are obliged to move from one place to another and who provide essential services in accordance with Royal Decree Law 10/2020, if it has been agreed to confine the population where they are domiciled, if they are refused the possibility of moving by the competent authority, if they cannot carry out their work remotely and if they are not entitled to any other benefit.
The childcare allowance for seriously ill children shall be compatible with the unemployment benefit that the worker may be entitled to due to the reduced working hours as a consequence of the ERTE.
- Measures to support the economic activity due to the temporary difficulties resulting from COVID-19:
A series of measures are established to speed up the management of credits, aids and subsidies granted by certain public authorities for certain industrial research and development projects.
Similarly, in the event of the cancellation of international events, the ICEX (Foreign Trade Institute) will grant additional aid to companies based on the non-recoverable costs incurred.
The payment of interests and depreciations corresponding to the loans granted by the Secretary of State for Tourism under the Emprendetur programme will be suspended for one year without any penalty.
- Other measures of interest:
Recovery of pension plans in the event of unemployment or cessation of activity derived from the health crisis situation caused by COVID-19.
During a six-months period starting from March 14th, 2020, the holders of pension plans may, exceptionally, make effective their consolidated rights in order to cover the income not received, if they are in any of the following situations:
- In a legal situation of unemployment as a result of an ERTE caused by the health crisis.
- Being a business owner of an establishment, whose activity has been suspended.
- Being a self-employed worker who has ceased the activity as a consequence of COVID-19.
The redemption or reimbursement of the consolidated rights for the benefits of the pension plans will be subject to the tax regime established for the benefits of the pension plans.
General administrative terms
The calculation of the deadlines for the filing of appeals in administrative
proceedings or to initiate any other objection procedures, in any procedure from which unfavorable effects or taxation may arise for the interested party, will be carried out from the working day following the end of the declaration of the state of alarm, regardless of the period of time that may have elapsed since the date of notification of the administrative act being appealed.
Moreover, it is expressly recognized that the term extensions for the payment of tax debts set forth in article 33 of Royal Decree Law 8/2020 shall apply to the other debts of public nature.
The term to file replacement appeals or administrative claims shall be extended, both regarding the procedures regulated in the General Tax Law, as well as in the Regulatory Law of the Local Treasuries.
Thus, with regard to the notifications received between March 14th, 2020 to April 30th, 2020, the term to file replacement appeals or administrative claims will start counting from April 30th, 2020 and will apply in the following cases:
- In the cases in which the period to appeal had started of one month from the day after the notification of the contested act or resolution and said period had not ended on March 13th, 2020.
- In those cases where the administrative act or resolution object of appeal or claim has not been notified yet.
Likewise, the regulation of the term extensions for certain tax procedures has been clarified. In this sense, we would like to highlight the following:
- For the purpose of the maximum duration of the period for the execution of the resolutions of economic-administrative bodies, the period between March 14th, 2020 to April 30th, 2020 does not count.
- The limitation and expiration periods of any actions and rights contemplated in the tax regulations are suspended from March 14th, 2020 until April 30th, 2020.
- It is expressly recognized that the term extensions for the payment of tax debts will be applied equally to the other debts of public nature.
- It is clarified that the extension of deadlines for tax procedures established in Royal Decree-Law 8/2020 will be applied to the procedures, actions and proceedings that are governed by what has been established at the state, regional and local level, as long as they are the object of regulation by the General Tax Law and the Regulatory Law of the Local Treasuries.
Measures to speed up judicial procedures
The approval of a specific adjustment plan is foreseen in the sphere of the social and contentious-administrative jurisdictional orders, as well as in the sphere of the Commercial Courts.
If, upon the entry into force of this Royal Decree-Law, an order had been issued on the application of the measures related to the application of ERTES, it will have full effect for the recognition of the corresponding benefits. However, the applications that have been presented before the bankruptcy judge that have no resolution, must be sent to the labour authority.
Some modifications are also established according to the regulations of Royal Decree-Law 8/2020, of March 17th, in relation to companies in bankruptcy.