(This is offered purely for information purposes and does not constitute any kind of advice or advertising)

Faced with the climate crisis that has affected a number of Spain’s autonomous communities and had devastating effects on a number of towns and cities in the Community of Valencia, the Spanish Government has approved Royal Legislative Decree 6 of 5 November 2024, adopting emergency measures to respond to the damage caused by the Isolated Depression at High Levels (“DANA”) in several towns and cities between 28 October and 4 November 2024, and subsequently Royal Legislative Decree 7 of 11 November 2024, adopting emergency measures to support the Plan to provide an immediate response, reconstruction and recovery following the damage caused by the Isolated Depression at High Levels (“DANA”) in several towns and cities between 28 October and 4 November 2024, which amends some of the provisions of its predecessor and at the same time sets out a series of additional measures.

This document explains some of the principal measures affecting employers and professionals with regard to the grant of subsidies and aid to deal with the damage caused, along with certain tax-related and financing measures and matters relating to Social Security that will widely benefit those whose homes and businesses are based in any of the affected areas.

 

COMPENSATION FOR DAMAGE

Damage to industrial, commercial and service establishments

Aid of up to 7% is established for compensable damage, up to a maximum amount of €36,896.

    • For small and medium-sized businesses (defined as businesses that have a net annual turnover of no more than €6,000,000), the compensation paid out by the Consorcio de Compensación de Seguros (Spanish Insurance Compensation Consortium) will not be subject to any deduction for excess.
    • For businesses with a turnover of more than €6,000,000, the excess amounts established in Order ECC/2845 of 23 December 2015 will apply.

Any person wishing to take advantage of this aid must provide a certificate, issued by their insurer, recording that the insurer has not paid all or part of the amount corresponding to the legal excess applied by the Consorcio de Compensación de Seguros. The term allocated for requesting compensation for damage (both for natural persons and businesses) will be 2 months following publication of Royal legislative Decree 6/2024 in the Official State Journal (“BOE”) (6 November 2024).

 

TAX RELATED MEASURES

1.Suspension of deadlines

The following measures will apply to all taxpayers who, on 29 October 2024, had (i) their registered office, (ii) their trading establishment, or (iii) real estate properties used for their activities, in the towns or cities in question, where these have suffered damage (if this has required them to vacate the premises or the damage has made it necessary for them temporarily to shut down their activities).

    • The deadlines for filing tax returns and making any relevant payments and self-assessments that are due between 28 October 2024 and 31 December 2024 have been extended to 30 January 2025. This applies to Corporate Groups with regard to VAT and the consolidated filing of Company Tax returns when the parent or representative organisation, or any dependent company, has its registered office in the area in question.
    • In the case of taxpayers that are liable for VAT, the deadline for the electronic submission to the SII (Immediate Information Service) of invoicing records from November is extended to 16 December 2024.
    • The deadlines for attending to claims, embargo proceedings and requests for important tax-related information have been extended to 30 January 2025 (unless the deadline established in the general regulations is later), along with the deadlines for presenting arguments against the opening of such proceedings or hearings ordered in processes for the imposition of taxes or penalties or declarations of annulment, the refunding of overpaid taxes, the correction of material errors, actions for revocation and other review procedures, in the event that these had not been concluded by 28 October 2024.
    • The deadlines for filing an Appeal to Set Aside or a Financial-Administrative Claim against actions by the Spanish Tax Authority, where these had not been concluded by 28 October 2024, have been extended to 30 January 2025 (unless the deadline established in the general regulations is later).
    • Taxpayers will be granted a deferral on their payment of taxes due in returns filed with a submission deadline of between 28 October 2024 and 30 January 2025 (both inclusive). The deferral term will be 24 months, and no interest will accrue during the first 6 months.

2.Tax benefits

    • Exemption from Spanish Real Estate Tax (“IBI”): In 2024, for urban and rural properties and properties with special characteristics located in the affected areas, when it is demonstrated that the people and goods living and located in these properties have had to be wholly or partially relocated to different houses or premises until the damage they have suffered has been repaired.
    • Reduction in Spanish Business Tax (“IAE”): In 2024 for businesses and industries whose premises or assets connected with their activities are located in the affected towns and cities.
    • The voluntary term for paying the second personal income tax instalment due for the 2023 tax year has been extended to 5 February 2025, and taxpayers in this situation are regarded as being up-to-date with their payment obligations.
    • The aid provided for under Article 11 of Royal Legislative Decree 6/2024 (direct aid for companies and professionals) and the aid granted under the National Civil Protection System Act (Article 24) may not be reclaimed, and neither will any tax refunds resulting from the tax measures included in these Articles.
    • People who are subject to personal income tax, who engage in business activities in the towns and cities affected, and who calculate their net income using the objective estimate method may reduce the net unit income earned from these activities in 2024 by 25%. Taxpayers who have been calculating their net income during the 2024 tax year using the objective estimate method may decide not to apply this method for the said tax year and calculate the income earned from all of their activities during 2024 using the simplified direct estimate method, with a series of requirements.
    • Taxpayers who are liable for VAT, who engage in business activities in the affected towns and cities, and who are covered by the special simplified tax regulations can reduce the amounts accrued as a result of their business operations in 2024 by 25%.

3.Direct aid line for companies and professionals that are especially affected

This may be requested by self-employed workers and businesses that have been duly incorporated in Spain, when their registered office or domicile on 28 October 2024 was located in any of the affected towns or cities, provided that they pay personal income tax or company tax on their business activities and are registered in the list of employers, professional personnel and tax withholding entities. To receive the grant of this aid they must remain registered through to 30 June 2025.

    • The grant of aid payments of between €10,000 and €150,000 is established for individual companies, based on the volume of operations carried out during 2023 or, where this is not available, on their business turnover for that year.
    • Individual entrepreneurs or professionals will receive a one-off payment of €5,000.

Requests must be submitted via the Spanish State Tax Authority’s website by completing the electronic form between 19 November and 31 December 2024.

FINANCIAL MEASURES INTENDED FOR HOMES, BUSINESSES AND SELF-EMPLOYED WORKERS

    • A guarantee facility has been approved for private households, businesses and self-employed workers up to a maximum of €5 billion. It will be in place from 29 October 2024 to 31 December 2025 and may be extended.
    • A suspension (moratorium) is established on the obligation to pay interest and principal on any loans or credit lines (with or without a mortgage guarantee) granted prior to publication of the Royal Legislative Decree. This will last for three months and may be renewed for a further nine months for the amortization of capital. Loan and credits secured with a mortgage guarantee on buildings in the towns and cities affected: for individuals and businesses (with a turnover of less than €6 million). Loan and credits without a mortgage guarantee: individuals resident in the affected towns and cities and self-employed workers and businesses with a turnover of less than €6 million whose main business activities are located in those towns and cities. The Application period will last for three months following the entry into force of Royal Legislative Decree 6/2024 (i.e. through to 7 February 2025).

MEASURES RELATING TO SOCIAL SECURITY

The following are some of the most important:

    • Companies that have social security contribution account codes and whose registered business address is within the areas affected, or companies that are indirectly affected outside these areas: when these companies have seen or may see the normal operation of their business disrupted or restricted and are given authorisation to introduce a temporary lay-off procedure (“ERTE”) on grounds of force majeure, they may benefit, with regard to any workers that are affected by the lay-off process, from a 100% exemption from paying their corporate Social Security contribution for common, professional and joint payment contingencies with regard to any amounts payable during the period affected by the suspension of contracts or reduction in working hours, between the months of November 2024 and February 2025 (both inclusive).
    • Companies that have social security contribution account codes and self-employed workers who reside or whose registered business address is within the areas affected, or those who are indirectly affected outside these areas, when included as part of any Social Security scheme, may request, either directly or via their authorised representatives, the deferral of their social security contributions or joint payment obligations that accrue between the months of October 2024 and January 2025 (in the case of companies and marine workers), and between the months of November 2024 and February 2025 (in the case of self-employed workers included under any other special social security scheme). Alternatively, the latter may request and obtain a moratorium of up to a year on the payment of their social security contributions or joint payment obligations, free of any interest. Either the deferral or the moratorium option must be chosen. They may not be combined.
    • The regulatory term for the settlement and deposit of social security contributions and joint payment obligations for the months of October 2024 through to January 2025 (from November 2024 to February 2025 for self-employed workers) is extended by one month.
    • The payment of social security contributions and joint payment obligations for businesses and self-employed workers with their working premises (or residence, for self-employed workers) within the affected area is suspended from the entry into force of Royal Legislative Decree 6/2024 until 28 February 2025.
    • The deadline for businesses to file and deposit any social security payments and joint payment obligations that accrued in September 2024 and had not yet been paid when Royal Legislative Decree 6/2024 came into force is extended, and they may make these payments during November 2024 without paying any surcharge or interest. This also applies to any supplementary payments which were required under the regulations to be paid in during October 2024. In the case of self-employed workers, the payment of contributions accruing in October 2024 may be made in November 2024, without the payment of any interest or surcharge.