As the month of September comes to a close, so does the financial aid some sole traders are still receiving from the Central Government via their Mutuas. What plans are in place for sole traders after the 30th September?
Well, there has been a lot of chatter over recent weeks from associations that represent sole trader interests about extending financial aid, but nothing definitive has been confirmed so far. This of course is of great concern to affected business owners because we are still nowhere near anything that resembles “normal”. In fact, the situation has not progressed much over the past few months; although lockdown as we experienced it is over, travel is still restricted with many countries implementing quarantine periods after returning from Spain which does not help our tourism dependent islands.
Two of Spain’s most prominent sole trader associations, UPTA and ATA were given a seat at the table to ensure the plight of business owners was not overlooked in government discussions, and they were the main force behind the extension of financial aid that was approved in June. However, this was based on the premise that more than 90% of sole traders would restart their business activity after the state of emergency concluded when experts predicted the pandemic would “wind down” until at least October, giving us a chance to recoup summer losses. As we know, this prediction did not come true. With this in mind, the associations have made the following proposals for the Government to consider:
- To extend employees on furlough to 1st April 2021
- To extend sole trader special financial aid (the version that is compatible with continuing their business activity) until 1st April 2021
- Re-estabishing extraordinary financial aid for those businesses whose activity has been impacted by current limitations or by new outbreaks
- To reduce Social Security contributions until 1st April 2021 for those sole traders who have suffered losses equal or superior to 50% in the 3rd Quarter 2020 compared to the 3rd Quarter 2019
- To extend ICO line of credit until 1st April 2021 as well as a grace period up to 24 months
- To temporarily reduce IVA (mainland Spain equivalent of IGIC) up to 50% for hospitality, tourism and culture sectors plus hairdressers and gyms
- To increase deferment of taxes until 1st April 2021
- Tax relief for sole traders (personal tax) and companies (corporate tax) who have maintained the same level of employment in 2020
- To extend limits of those business that operate under the fixed-tax system (módulos) until 2022
- To create a network of business mentors to help prevent the risk of bankruptcy and advisory services geared towards digitalizing businesses
The presidents of both associations are adamant their negotiations with the government will be successful resulting in new lines of financial aid and credit to struggling business owners, deeming it “inconceivable” to question that assistance will be made available during these difficult times, especially since some regions have returned to a lockdown state.
According to Social Security, more than 140.000 sole traders have received financial aid and that more than 154 million euros have been spent in this concept so far.
We can only hope that within the next few days, more information comes to light and definitive agreements are reached to provide business owners with the assistance they need and deserve to keep their businesses afloat. I wish you all the best and as always, stay safe.
If you would like to receive advice for your own business or if you are looking to change asesoría, please contact me for further information to arrange a personalized consult.
