Summary of tax measures taken to combat COVID-19

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The first measures in the fight against Covid-19 were approved by Royal Decree-Law 7/2020, of March 12. Among other tax measures, this Royal Decree Law approves the possibility of deferring the payment of the withholdings, VAT and payments on account (corporate tax) due by self- employees and small companies up to a combined limit of 30,000 euros for a period up to 6 months, without guarantees and without interest during the first 3 months of the deferral.

The deferral of these payments will be applicable to the tax payable deriving from tax returns with a deadline for submission until May 30, 2020 and the deferral will be granted provided the following requites are complied with:

  • The taxpayer has a turnover not exceeding 6,010,121.04 in 2019.
  • The maximum amount of the taxpayer’s tax debts whose deferment without guarantees is requested does not exceed 30,000 euros, counting for this purpose those that were previously deferred.
  • The maximum term of the deferral is 6 months, and during the first 3 months no interest will be accrued.
  • Applies to all tax returns including withholdings, VAT and installment payments.
  • Certain specific formal requirements must be met to request the deferral.

Later, on March 14, Royal Decree 463/2020 (RD), declaring the State of Alarm for the management of the health crisis caused by COVID-19, approved further administrative measures in relation to the suspension of administrative and judicial procedures and deadlines. Royal Decree 465/2020, of March 17, modifies Royal Decree 463/2020, indicating that the suspension of the terms and the interruption of the administrative terms referred to in Royal Decree 436/2020 will not apply to tax returns deadlines, subject to special regulations, nor will it affect, in particular, the deadlines for filing tax returns and self-assessments.

Finally, Royal Decree-Law 8/2020 (RDL), of March 17, of extraordinary urgent measures to face the economic and social impact of COVID-19 approves a package of economic and social measures to protect and support the manufacture and social fabric, minimize the impact of the virus on the economy and ensure that, once the health alarm is over, a rebound in activity occurs as soon as possible.

Among the measures related specifically to the field of taxation, this RDL clarifies that the suspensions already approved by RD 463/2020 are also applicable to tax procedures. Article 33 of RDL 8/2020 establishes measures to extend among others, the payment period deriving from tax assessments issued by the tax authorities, both the voluntary payment period and the executive payment period, as well as the period to make payments under a current deferral or installment agreements already granted.  An extension of certain periods and terms in tax procedures has also been approved.

Lastly, the AEAT has published a series of frequently asked questions to clarify the measures adopted due to the state of alarm: Check Document

THE FOLLOWING DEADLINES ARE SUSPENDED AND EXTENDED TO APRIL 30, 2020:

  • Voluntary and executive payment period of tax debts derived from tax assessments issued by the Tax Authorities, such as those derived from tax inspections, penalties, surcharges or provisional settlements.
  • The expiration of deferrals deadlines and installments payments which have been already granted.
  • The deadline related to the development of public auctions and liquidation of assets in payment of debts
  • Deadlines to meet requirements, seizure proceedings and requests for information with tax implications, as well as deadlines for allegations whose term has not concluded before the entry into force of RDL 8/2020.
  • Within the executive procedure to settle the payment of tax debts, guarantees that fall on real estate will not be executed until April 30, 2020.

This suspension of these periods and terms, and its extension until April 30, will apply to those administrative assessments or procedures that have been notified to the taxpayer before the entry into force of RDL 8/2020 (that is, before March 18, 2020).

Those administrative procedures or tax assessment notified to the taxpayer as from March 18, 2020 will be suspended, and their respective terms will be extended until May 20, 2020, unless the voluntary payment period is longer by application of the standard rule.

The period between March 18 and April 30 will not count for the purposes of the duration of the tax procedures maximum period, but the administration may carry out procedures and promote them if they are essential. This period also does not count for the purposes of statute of limitation.

The terms to file appeals or claims will start from April 30 unless the notification to appeal in accordance with the rule is made later.

There are certain specific deadlines in relation to procedures with the cadastral office and certain limitations to the present suspension in the case of certain resources.

FINANCIAL MEASURES FOR COMPANIES WITH TAX IMPACT

The RDL 8/2020 has approved:

  • A line of guarantees that cover both the renewal of loans and new financing by credit institutions to meet their needs derived, among others, from the management of invoices, the need for cash flow or other liquidity needs, including those derived from deadlines related to financial or tax obligations, to facilitate the maintenance of employment and mitigate the economic effects of COVID-19
  • ICO: Increase of ICO’s net debt is allowed
  • CESCE: In order to strengthen the cash flow of exporting companies, CESCE’s has strengthened its capacity to increase coverage on behalf of the state.

The deeds required to formalize these contractual novations of mortgage loans and credits that are produced under the Royal Decree-Law 8/2020, will be exempt from the stamp duty tax.

NO EXTENSION MEASURES ARE APPROVED FOR THE REGULATORY DEADLINES TO SUBMIT TAX RETURNS

It should be noted that none of the aforementioned approved regulations affects the deadlines for the submission of tax returns and self-assessments. Therefore, according to current regulations, all taxpayers are required to submit self-assessments on time and in spite of the fact that they may request the deferral of the tax payable.

Specifically, on March 30, the VAT of February 2020 must be submitted, on March 31st the informative declaration of assets and rights held abroad (form 720) must be submitted, on April 20th quarterly VAT and installment payments for the first quarter of 2020 will also have to be submitted, amongst others. In addition, the obligation to report operations in the SII remains, without any modification.

EXPIRATION OF ELECTRONIC CERTIFICATES

In relation to those taxpayers whose electronic certificate is expired or about to expire, we inform you that the AEAT allows the use of expired certificates in its HEADQUARTERS in accordance with the provisions of Royal Decree 463/2020, of March 14.

ASSISTANCE TO TAXPAYERS IN OFFICES (PHYSICAL PRESENCE)

The Tax Administration Offices will be TEMPORARILY CLOSED FOR PRESENTIAL ASSISTANCE due to the state of alarm declared by RD 463/2020, whose Third Additional Provision establishes the SUSPENSION OF ADMINISTRATIVE DEADLINES.

MEASURES ADOPTED BY THE DIFFERENT AUTONOMOUS COMMUNITIES

We attach to this circular a document detailing the notices and information of interest that have been published on the websites of the different Autonomous Communities. As you can see, the information is very diverse and some territories have not yet announced measures, while others, such as Andalusia, have already approved. This information has been prepared by AEDAF: check document.

 

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  • We will be happy to assist you at any of our offices by phone, e-mail or video conference for any of the above mentioned specific matters or any other: CONTACT US
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