COVID-19: Special Measures for Sole Traders and Small to Medium Businesses and Other Benefits

Since my last post, we have experienced a rollercoaster both personally and professionally as every aspect of our

Since my last post, we have experienced a rollercoaster both personally and professionally as every aspect of our lives is affected by the lockdown in effect. Spain’s lockdown is so far the strictest and our Government has alerted us that it will be extended once again until 26th March, but that it will more than likely be prolonged even further.

The latest decree that affects sole traders and small to medium businesses, Royal Decree-Law 11/2020, 31st March which was published on 1st April contains a series of measures to provide much needed aid.

DEFERRED PAYMENT OF SOCIAL SECURITY CONTRIBUTIONS: The Social Security Treasury will grant upon request a six-month interest free extension on monthly contributions, which for sole traders will be those due between May and July 2020 and between April and June 2020 in the case of small to medium businesses. The irony here is that this was decided on the same day the Treasury charged March’s contribution to our bank accounts!

The specifics to apply for this aid is to be confirmed, but what we do know is that it applies to those businesses whose activity was not prohibited under Royal Decree 463/2020, 14th March. This measure does not apply to businesses that have suspended employee contracts under the ERTE system. We also know that the applications must be submitted 10 days before the fee is due to be charged which is always the last working day of the month. Although applications will be considered approved, the Treasury has three months to officially respond in case the applicant is not eligible to defer payment.

Deferred payment of any type will only be approved if the applicant does not have prior debts with the Treasury, and as always, penalties apply if they detect false information or fraud. This measure is detailed under Article 34 of this decree.

As mentioned, the contribution for March has already been charged, which means that many sole traders and small to medium businesses who applied for Sole Trader Unemployment will be due a refund.

DEFERRED PAYMENT OF SOCIAL SECURITY DEBTS: Article 35 of the Decree outlines that if any sole trader or small to medium business owner accrues debt with the Treasury for payments due between April and June, they may request delayed payment, but 0,5% interest on the amount would apply. This will only be approved if the applicant does not have prior debts with the Treasury and does not currently have an existing deferment in place. The application must be submitted in the same time-frame as described previously.

UTILITIES: Many businesses had to close their doors from day one of the state of emergency, and the Government has agreed that utility contracts (water and electricity) can be suspended without penalty and that payment of bills that coincide with dates within the state if emergency can be suspended also. However, be advised that should you suspend payment, you may not switch company until payments are brought up to date.

DEFERMENT OF MORTGAGES ON BUSINESS PREMISES: Delayed mortgages was first mentioned in Royal Decree-Law 8/2020, 17th March but only for the applicant’s primary residence, however, this latest decree is extending this financial aid to business owners for premises linked to their business activity as well as landlords (natural persons not companies) who are no longer receiving rental income as a result of measures that apply to tenants. This aid applies to those business owners who are considered financially vulnerable due to suspended activities and loss of income. Conditions obviously apply.

FINANCIAL AID FOR PAYMENT OF RENT OF PRIMARY RESIDENCE: Article 10 of this decree refers to special aid that has been put into place for those who forsee difficulties making rent. If the applicant does not meet the criteria for automatic derferment of rent, this line of credit is for up to 900 euros per month or in some cases 100% of the rental amount if the business owner can demonstrate they are in a vulnerable situation.

The Decree is 88 pages long so this is a very brief summary, but their are other provisions for different circumstances, such as receiving payment from an existing pension plan or signing on for benefits to pay electricity bills in the home if you meet the criteria. There are changes on a near daily basis as the Government navigates the minefield that is COVID-19 and the imposed quarantine.

Stay safe!

About Sabrina L. Williams

Although I was born in the UK, I moved to the Canary Islands, Spain at a young age and I haven't looked back. The Canaries is a fantastic place to live, I mean you can do all types of outdoor activities practically all year round because of the great weather. Horses are my poison but the islands are also a superb spot for water sports so they do attract a lot of attention from people around the world. Anyway, enough about that. Back in 2011, I made one of the biggest, scariest yet best decisions I'd ever made and set-up my own business in the middle of a recession. I love what I do as no two days are the same, plus Spanish law keeps me on my toes as it is constantly changing (often without warning!) so there is always something new to learn. As I've branched out in the world of Administrative Consultancy, I decided to create a blog to discuss topics of interest to others in my industry and my clients, share tips and experiences, to see what new ideas people have for improving their businesses and the like so I hope you'll find the time to join me on this venture...

Leave a Comment