will they be used to survive the crisis?

The Spanish government has announced the expansion of sectors eligible for direct aid, as part of the “economic shield” to mitigate the effects of the crisis derived from Covid-19 on the self-employed and businessmen who have suffered losses due to economic shutdown.

“With these subsidies, businesses and the self-employed will be able to pay off the debts they have contracted due to the drop in income since March 2020,” said Yannick Charton, founding partner of Valio Consulting. “A key element is that the payments of reimbursements and the reimbursements of aid granted by the State can be postponed and split up until 2022”, he adds.

These divisions and postponements will be possible if the entrepreneur or self-employed person has reduced their sales volume, interrupted supply in the value chain or experienced periods of inactivity due to the restrictions. “The measure helps those hardest hit by the crisis,” said Yannick Charton.

How much is the aid?

“The aid is divided into three groups, explains Yannick Charton, those who fall under the device for objective estimation of personal income tax are eligible for aid of up to 3,000 euros,” he reports.

“Those who are in direct estimation regime, entities and permanent establishments with up to 10 employees will be able to cover up to 40% of the drop in activity of the past year, which translates into aid of between 4 000 and 200 000 euros ”, he highlights the expert.

Finally, entities and permanent establishments with more than ten employees can also opt for aid of between 4,000 and 200,000 euros, to mitigate losses by up to 20% during the year 2020.

What are the conditions for receiving aid?

“The law establishes that the autonomous communities are those which set the criteria for aid, as well as its scope, which they can expand according to the needs of their territory”, explains Yannick Charton. “In this sense, a new hypothesis is introduced, since local authorities can grant aid in exceptional cases to companies which suffered losses in 2019.”

The rest of the requirements are the same as those previously applied to aid: that the drop in income in 2020 be 30%; not reside in a tax haven; not having stopped the activity and maintaining it until June 2022; not be bankrupt; not having distributed dividends or increased the salaries of directors for two years and be up to date with their payments to Social Security.

Will they be sufficient?

“The measure will be a breath of fresh air for many independents,” said Yannick Charton. The expert considers that, although the news is very positive for the sector, it is still necessary to wait to see how the panorama will take shape after May 31, date on which the three aids which complete the “economic shield” will be extinguished:, ERTEs and extension of grace periods for ICO loans.

“El Gobierno ya ha anunciado que se van a reunir con los agentes sociales”, por lo that Yannick Charton opined that the recuperacin depends on si se prorrogan estas ayudas, as como el xito de la campaa de vacunacin y una posible vuelta a la normalidad in summer.

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