Public grants in the Community of Cantabria

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The government of Cantabria has published a Covid line of direct grants for the self-employed and businesses to mitigate the effects of COVID. This public grants scheme forms part of Royal Decree 5/2021, which sets out to provide companies and the self-employed with EUR 7,000 million in public grants.

What does the grant consist of?

The finalist grant consists of a sum of money which must be exclusively used to pay off debt and make outstanding payments to suppliers and other creditors, financial or non-financial, and the fixed costs incurred by the party applying for the grant, provided the payments accrued between 1 March 2020 and 31 May 2021, in relation to contracts prior to 13 March 2021.

What requirements must I satisfy?

Companies and self-employed persons who meet the following requirements can be beneficiaries of these subsidies:

They must be registered for tax purposes in Cantabria or, in the case of non-financial non-resident companies, they must have a permanent establishment in Cantabria, excluding the scenarios stipulated in section 4 of Article 3 of Royal Decree-Law 5/2021¹.

They must have carried on at least one of the economic activities defined in Annex I of Decree 54/2021 (see link) regulating the terms and conditions of the public notice, in 2019 and 2020, and still be carrying on this activity when the application is made..

They must be in one of the following situations:

They must apply the objective-estimate system for personal income tax ("IRPF").
They must have had a downturn of more than 30% in their annual volume of business declared or verified by the authorities, in value-added tax or equivalent indirect tax, in 2020 with respect to 2019.

They must also meet the following requisites on presentation of the application:

They must not have been convicted on a firm ruling barring them from obtaining subsidies or public grants, or for offences relating to prevarication, bribery, misappropriation of public funds, influence peddling, fraud and illegal collection of funds or urban development offences.
They must not, for any proceedings in which they have been found guilty, have given rise to the definitive termination of any contract drawn up with the authorities.
They must be up to date with the payment of their obligations in relation to refunds of subsidies or public grants.
They must be up to date concerning compliance with their tax and social security obligations.
They must not have requested voluntary bankruptcy proceedings, they must not have been declared insolvent in any proceedings, they must not have been declared bankrupt, unless an agreement has been reached in such proceedings, they must not be subject to judicial proceedings or have been declared ineligible as per Bankruptcy Law 22/2003 of 9 July, if the period of ineligibility established in the bankruptcy ruling has not terminated.
They must not have tax residence in a country or territory officially classified as a tax haven.

Also, status as beneficiaries will not be considered for entrepreneurs or professionals, companies and consolidated groups which, even if they meet the requisites of the public notice, declared negative net earnings for personal income tax in 2019 for any economic activities for which they applied the direct-estimate method for the purposes of determination or, where applicable, when the tax basis for corporation tax or non-resident income tax was negative, prior to application of the reserve for capitalisation and compensation of negative tax bases, notwithstanding the circumstances established in section 2 of Article 3 of Decree 54/2021.

In addition to these requisites, the beneficiaries of the grants must undertake the following obligations:

They must continue the activity making them eligible for the subsidy up to 30 June 2022.
Provide justification for the funds received in the manner stipulated in section 2 of Article 9 of the Decree.
Refrain from distributing dividends in 2021 and 2022.
Refrain from approving any increases in the remuneration of senior management over a period of two years following approval of the subsidy.

How much is the grant?

The amount of the grants will be established on the basis of the subsidisable expenditure stated in the application by the party concerned, and under no circumstances may be grant be more than the expenditure considered subsidisable.

The following are the maximum grant thresholds established, depending on the type of beneficiary:

Entrepreneurs or professionals applying the objective-estimate personal income tax system: the amount of the subsidy will be a maximum of EUR 3,000.
Entrepreneurs and professionals with a downturn of more than 30% in 2020 in their annual volume of business, in VAT or equivalent indirect tax, with respect to 2019: the maximum grant approved will be as follows:

A 40% downturn in the volume of operations in 2020 with respect to 2019, in excess of 30%, an amount which may not be less than EUR 4,000 or more than EUR 200,000, in the case of entrepreneurs or professionals applying the personal income tax direct-estimate system, and also permanent establishments and entities with a maximum of 10 employees.
A 20% downturn in the volume of operations in 2020 with respect to 2019, in excess of this 30%, an amount which may not be less than EUR 4,000 or more than EUR 200,000, in the case of companies and entrepreneurs or professionals and permanent establishments with more than 10 employees.

For registrations or companies created between 1 January 2019 and 31 March 2020, and entrepreneurs or professionals who were registered for a period of less than one year in 2019 or 2020: the amount of the grant will be as follows:

a maximum of EUR 3,000 if they apply the objective-estimate personal income tax system.
a maximum of EUR 30,000 if they do not apply the objective-estimate personal income tax system.

Companies that have made a structural modification to the company: the amount of the grant will be a maximum of EUR 30,000.

What documentation will I be asked for in the application?

Presentation of the application entails the express consent of the applicant to the checks that must be carried out by the taxation authority in relation to the situations stated in sections 6 and 10 of the application form.The party concerned may, however, refuse this authorisation, in which case their application will be rejected.

The presentation of the application will also entail authorisation to gather data concerning the identity of the applicants or their representatives, whose relevant documents must be current. If no express authorisation is granted to gather these data, the corporate tax number of the company applying, or the individual's tax number, and a current ID card, or equivalent document of the representative, must be furnished.

With respect to accreditation by the applicants and beneficiaries of the grants that they are up to date with their tax obligations, public-law obligations and social security obligations, this will be furnished in simplified format, by means of the responsible declaration on the application form.

No additional accreditative documentation to accompany the application form is requested.

How is my grant justified when it is approved?

The beneficiaries of public grants are obliged to provide justification for the utilisation of the funds approved, pursuant to the purpose of this grant. Thus, beneficiaries will be required to present the following justificatory documentation before 31 March 2022:

In the case of grants of less than EUR 60,000, the beneficiaries must demonstrate application of the funds received to the intended purpose, by providing a simplified justificatory account which will include:

Justificatory report of compliance with the requirements established in the public notice announcing the grant.
Classified list of the expenditure of the activity subsidised, identifying the creditor and the invoice or receipt, its amount, date of issue and date of payment.
Breakdown of any other income or subsidies that have financed the activity subsidised, with an indication of the amount and origin, where applicable.
Where applicable, letter of payment of a refund in the event of any remainders not applied, and the interest they carry.

In the case of grants equal to or more than EUR 60,000, the beneficiaries must demonstrate application of the funds received to the intended purpose, by providing a justificatory account with the following documents:

Report on justificatory action for compliance with the conditions imposed by approval of the subsidy, stating the activities carried out and the results obtained.
Report by an auditor on the official list of auditors ("ROAC"), with an electronic signature, certifying:

- - That the invoices and evidence of payment have been verified in a "Justificatory account" annex.
  - That the beneficiary of the subsidy has the original documents.
  - That the invoices meet the requisites of Royal Decree 1619/2012 of 30 November approving the Regulation concerning invoicing obligations.
  - That the invoices are issued in the name of the beneficiary of the subsidy, they refer to outlays between 1 March 2020 and 31 May 2021, and stem from contracts prior to 13 March 2021.
  - That the value date of justifications for payment of the invoices is between the date of presentation of the application for the subsidy and 30 March 2022.
  - Whether there are any other income or subsidies that have financed the activity subsidised, with an indication of the amount and origin, where applicable.

Where applicable, letter of payment of a refund in the event of any remainders not applied, and the interest they carry.

Also, a check will be run to ensure that the person or company benefiting from these grants has not distributed dividends in 2021 and 2022 and has maintained the economic activity up to 30 June 2022, as shown in the information furnished by the AEAT to the Autonomous Community of Cantabria. Notwithstanding the foregoing, justification for continuation of the activity will be made in a responsible declaration which must be presented by the beneficiary by electronic means before 31 July 2022.

What is the deadline, and how can I apply for the grant?

The period for submission of applications commences on 22 June and terminates on 21 July 2021.

The applications and the documentation required will be made in telematic format only by means of the electronic ID or one of the electronic certificates recognised by the Autonomous Community of Cantabria.

The applicant must use the application form available on the Autonomous Community of Cantabria's common electronic register (see link).

The parties concerned must also consider that these subsidies will be awarded in the order of presentation of the applications, complete and properly filled in, until the budget for these grants has been exhausted.

For more information on the public grants scheme, go to the Official Gazette of Cantabria (see link).

1. Groups and entrepreneurs, professionals or businesses whose volume of operations in 2020 exceeded EUR 10 million, carrying on their economic activity in more than one autonomous community or in more than one autonomous city, can apply for schemes in all territories in which they operate.

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