Public grants from the Community of Catalonia

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Order ECO/127/2021 published by the Community of Catalonia starts proceedings for preliminary registration for the COVID line of direct grants for the self-employed and businesses to mitigate the effects of COVID. This public grants procedure forms part of Royal Decree-Law 5/2021 ("RD 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 and pending payment, provided the payments accrued between 1 March 2020 and 31 May 2021, in relation to contracts prior to 13 March 2021.

What are the specifications in Catalonia with respect to RD 5/2021?

The Order ECO/127/2021 (the "order") published by the Community of Catalonia starts proceedings for preliminary registration for the grants, a mandatory step to gain access to the subsidy, following the public notice for grants. In this regard, the official public notice with full details of the terms and conditions of the grant has not yet been published, because it will be defined on the basis of the information obtained from these proceedings.

These preliminary registration proceedings are established in order to clearly define the terms in which the grant must be approved, and to provide the authorities with relevant data to define the terms and conditions and the public notice for the grants.

The Order determines the purpose of the grants, the requisites that must be met by the parties concerned, the contents of the information that must be supplied during preliminary registration, the timeline and the mechanism for presentation of the information required.

In relation to other new features, the Community of Catalonia has expanded the subjective scope of beneficiaries of extraordinary direct grants initially provided for in Royal Decree 5/2021, to those sectors of activity most affected within the autonomous community, reaching a total of 191 admissible CNAEs.

Which persons can be beneficiaries?

The following persons can be beneficiaries of direct grants:

Entrepreneurs or professionals and companies operating in the sectors of activity listed in the annex to the Order (see link) in 2019 and 2020 that are still carrying on the activity, and whose annual volume of operations, in value-added tax (VAT) or equivalent indirect tax in 2020 fell by more than 30% with respect to 2019. Joint ownerships and civil societies are included.
Any entrepreneurs or professionals applying the objective-estimate personal income tax system (IRPF) and operating in the sectors of activity listed in the annex to the Order (see link) in 2019 and 2020, and still carrying on the activity.
Consolidated groups paying corporation tax in consolidated format whose group business in 2020 fell by more than 30% with respect to 2019.

For the purposes of compliance with the requisites of eligibility and transfers, the recipient of the grant will be understood as a single taxpayer, instead of all the companies of which it is composed¹.
These groups must be operational and have employees who are resident for tax purposes in Catalonia.
Any organisations that formed part of a group in 2019, but not in 2020, will be considered independent, and may apply for grants provided they meet the requisites in an individual format. In the case of a group, the application will be submitted by the company representing the group, and in any case this must include all the companies which formed part of the group in 2020.

Any entrepreneurs, professionals and companies applying the direct-estimate system with a volume of eligible debts pending that is equal to or more than EUR 4,000.

The following will not be considered eligible for grants: entrepreneurs or professionals, entities and consolidated groups which, even if they meet the requisites of the Order, 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 (IRNR) was negative, prior to application of the reserve for capitalisation and compensation of negative tax bases.

What requirements must I satisfy?

Entrepreneurs or professionals and companies with an interest may carry out preliminary registration if they meet the following requisites:

They must carry out one of the economic activities listed in the annex to the Order (see link) in 2019 and 2020, which must still be ongoing at the present time.
The annual volume of operations in their VAT return or equivalent indirect tax in 2020 must have fallen by more than 30% with respect to 2019.
They must be registered for tax purposes in Catalonia or be a permanent establishment, in the case of non-financial non-resident companies operating in Spain, excluding the scenarios stipulated in section 4 of Article 3 of Royal Decree-Law 5/2021².
They must not have been issued with grants for the same purpose to a total cumulative amount per company of EUR 1.8 million in direct grants and EUR 10 million in fixed cost grants in accordance with the national time framework reported to the European Commission.
This amount is EUR 270,000 for companies in the fishing and aquaculture sectors, and EUR 225,000 for companies in the agricultural sector.
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 be 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.
Their tax residence must not be in a country or territory officially classified as a tax haven.

In addition to the above requirements, self-employed people (entrepreneurs and professionals) and non-financial companies applying for these grants must meet the following requisites:

They must be the holder of the bank current account stipulated.
They must not have been sanctioned in a firm ruling for serious infringements concerning the employment integration of people with disabilities, or for very serious infringements concerning employment relations or occupational health and safety, within the year preceding the public notice. If they have been sanctioned, they must have applied the corrective measures stipulated, and paid over the amounts required in these circumstances.
They must meet the requisites stipulated in Articles 32.1, 32.3 and 36.4 of Linguistic Policy Law 1/1998 of 7 January (Regional Government of Catalonia's Official Journal Nº 2553 of 7.1.1998).
They must never have received firm administrative rulings or firm conviction rulings, for carrying out or tolerating discriminatory employment practices due to sex or gender.
They must have a system to organise and manage prevention pursuant to the regulations in force.
They must meet the provisions of Law 17/2015 of 21 July on the effective equality of women and men.
They must observe the right to accessibility for people with disabilities pursuant to Law 13/2014 of 30 October on accessibility.
They must observe the regulations in force in relation to sustainable development.
They must comply with the provisions of Article 13.5 of Law 26/2015 of 28 July on amendments to the system for protection of infants and adolescents.
They must comply with regulations governing intellectual property.
They must comply with the other requisites and obligations stipulated in the regulations in force concerning subsidies and the sector regulations applicable.

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

Maintain their activity until 30 June 2022.
Refrain from distributing dividends in 2021 and 2022.
Refrain from approving any increases in the remuneration of senior management over a period of 2 years.
Preserve and keep in custody accreditative documentation showing the application of the funds received, and place this at the disposal of the authorities in the Regional Government of Catalonia for any checking activities, and for any purposes of checks on economic and financial activity by the financial accounting section of the Regional Government of Catalonia, the accounting commission or other competent national or EU bodies. They must also supply any information that is required of them to justify the conditions that accredit compliance with the requirements to receive this grant.
They must comply with Article 55.2 of Law 19/2014 of 29 December on transparency, access to public information and good governance, and accept the ethical principles and rules of conduct in respect of which beneficiaries must adapt their activity.
They must comply with the other obligations stipulated in the regulations in force concerning subsidies and the sector regulations applicable.

How much is the grant?

The amounts will be determined by the terms and conditions of the grant, which have yet to be published, at all times within the maximum limits established by RDL 5/2021.

What documentation will I be asked for in the application?

The requisites that must be met by applicants for approval of the grants will be accredited by cross-references of the necessary data with the state tax authority which will include the necessary information in each case, and also through the responsible declarations made by the parties concerned on the preliminary registration form. In this regard, the preliminary registration will not require any documents to be supplied in addition to the data required for the form.

The preliminary registration form includes the following data to be supplied:

Basic data concerning the company, entrepreneur or professional applying for the grant and/or concerning their representative, for the purposes of identification, capacity, notification, checking and contact in relation to the procedure for approval of the grants.
The bank details of the company, entrepreneur or professional applying.
Data concerning the activity carried on by the company, entrepreneur or professional applying.
Data concerning the consolidated group of which the company, entrepreneur or professional applying forms part.
Tax data concerning the volumes of operations carried out in relation to the economic activity subsidised, in 2019 and 2020.
Data concerning the number of male and female employees of the company, entrepreneur or professional applying.
The amount of the debt for which the grant is being requested, broken down into a typology of debts to suppliers, other financial and non-financial creditors, and the fixed costs of the company, entrepreneur or professional applying.

How is my grant justified when it is approved?

The process of providing justification for the grants and any accreditative documentation will be determined by the terms and conditions of the grant, which have yet to be published.

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

The preliminary registration form may be submitted from 21 June 2021 to 30 June 2021 at 15.00.

The preliminary registration must be formalised on the website of the Regional Government of Catalonia only, and the identification systems and the electronic signature must be accepted by the "Generalitat" government authorities.

For the preliminary registration, parties concerned who meet the requisites established for these grants must fill in and submit electronically the form on the "Canal Empresa" corporate proceedings portal (see link).

The parties concerned must consider that submission of the preliminary registration form is a necessary condition for them to receive the extraordinary grant, provided there is compliance with the requisites that may be established for approval, in the terms and conditions and also in public notices concerning the grants. When the public notices concerning extraordinary grants have been published, with no other steps to be taken by the party concerned, submission of the preliminary registration form, duly filled in with the data required, entails application for the grant.

For more information on public grants, consult Order ECO/127/2021 of 14 June 2021 in the Official Journal of Catalonia's "Generalitat" government (see link).

Annex. List of CNAE-09 activities added by the Autonomous Community of Catalonia.

CNAE-2009	ACTIVITY DESCRIPTION
170	Hunting, capture of animals and related services
1021	Processing of fish, crustaceans and molluscs
1061	Manufacture of grain mill products
1071	Manufacture of bread; manufacture of fresh pastry goods and cakes
1081	Production of sugar
1082	Production of cocoa, chocolate and confectionery products
1084	Production of spices, sauces and condiments
1085	Production of ready-prepared food
1107	Manufacture of non-alcoholic beverages; production of mineral waters and other bottled waters
1320	Manufacture of textile fabrics
1391	Manufacture of knitwear fabrics
1393	Manufacture of rugs and carpets
1412	Production of work clothes
1431	Production of stockingwear
1511	Preparation, tanning and finishing of leather; preparation and dying of hides
1512	Production of leatherwork items, travel wear, saddlery and harnesses
1629	Production of other wood products; cork items, for basketmaking and esparto grass products
1711	Manufacture of paper pulp
1722	Manufacture of paper and cardboard items for domestic, sanitary and hygiene use
2013	Manufacture of other inorganic basic chemical products
2015	Manufacture of fertilisers and nitrogen compounds
2016	Manufacture of primary-format plastics
2060	Manufacture of man-made fibres
2313	Manufacture of hollow glass
2331	Manufacture of ceramic tiles and slabs
2341	Manufacture of ceramic items for household and ornamental use
2344	Manufacture of other ceramic products for technical usage
2349	Manufacture of other ceramic products
2351	Production of cement
2352	Production of limestone and gypsum
2363	Production of fresh concrete
2420	Manufacture of tubes, pipes, hollow profiles and related fittings, in steel
2445	Other non-ferrous metal production
2530	Manufacture of steam generators, excluding boilers for central heating
2571	Production of knives and cutlery
2652	Manufacture of watches and clocks
2720	Manufacture of batteries and accumulators
2732	Manufacture of other electronic and electric wires and cables
2740	Manufacture of lamps and electrical lighting equipment
2752	Manufacture of non-electric domestic appliances
2821	Production of ovens and burners
2841	Manufacture of metal forming machinery
2891	Manufacture of machinery for the metallurgy industry
2895	Manufacture of machinery for paper and paperboard production
2896	Manufacture of plastic and rubber machinery
2910	Manufacture of motor vehicles
2932	Manufacture of other components, parts and accessories for motor vehicles
3011	Construction of boats and floating structures
3020	Manufacture of locomotives and railway rolling stock
3099	Manufacture of other transport equipment not classified elsewhere
3220	Manufacture of musical instruments
3821	Treatment and disposal of non-hazardous waste
4122	Construction of non-residential buildings
4641	Wholesale trading in textiles
4642	Wholesale trading in clothing and footwear
4651	Wholesale trading in computers, peripherals and computer programmes
4661	Wholesale trading in agricultural machinery, equipment and supplies
4663	Wholesale trading in machinery for mining, construction and civil engineering
4664	Wholesale trading in machinery for the textile industry and sewing and knitting machines
4671	Wholesale trading in solid, liquid and gaseous fuels and similar products
4677	Wholesale trading in scrap metal and refuse products
4729	Other retail trading in foodstuffs in specialist establishments
4730	Retail trading in automotive fuel in specialist establishments
4763	Retail trading in recordings of music and videos in specialist establishments
4779	Retail trading in second-hand items in establishments
4950	Pipe transportation
5224	Goods handling
5814	Magazine publishing
5821	Publishing of video games
5912	Activities involving post-production of films, videos and television programmes
5915	Activities involving film and video production
5917	Activities involving film and video distribution
6130	Satellite telecommunications
6399	Other information services not included elsewhere
7312	Communication media representation services
7410	Specialist design activities
7810	Placement agency activities
7820	Temporary employment agency activities
7830	Other provision of human resources
8030	Research activities
8211	Combined administrative services
8220	Call centre activities
8520	Primary education
8531	General secondary education
8532	Technical and professional secondary education
8543	University education
8551	Sport and recreational education
8552	Cultural education
8559	Other education not included elsewhere
8790	Other care activities in residential establishments
8891	Daytime child care activities
9003	Artistic and literary creation
9106	Archiving activities
9312	Sports club activities
9524	Repair of furniture and household items
9602	Hairdressing and other beauty treatments

1. In this case, the volume of operations to be considered to determine the downturn in activity will be the sum of all volumes of operations by the organisations making up the group in 2019 and 2020. The parent company, or any of the investees, must have carried out and continue to carry out at least one of the CNAE activities stipulated in the annex to the Order, as the main activity declared to the authorities.
2. 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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