The Community of Valencia has published a call for direct aid to the self-employed (entrepreneurs and professionals) and companies to support solvency and reduce the indebtedness of the private sector.
This public grants scheme forms part of Royal Decree 5/21, which sets out to provide companies and the self-employed with EUR 7,000 million in public grants.
What are the grants?
The grant consists of a sum of money which must be exclusively used to pay off debt and make 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.
Which new sectors does the Community of Valencia include with respect to the RD?
The grants will also extend to the secondary sector thanks to an extension of activities that will be eligible for them, a total of 181 economic activities, an extension of 86 with respect to the 95 originally stipulated in Royal Decree 5/21. The new sectors include some industrial areas (such as textiles), commercial areas and also culture and education, such as the manufacture of musical instruments or the audiovisual sector.
What requirements must I satisfy?
Beneficiaries of the grants must meet the following main requisites:
- They must be registered for tax purposes in the Community of Valencia (with the exception of the scenarios stipulated in Article 4 of section a) of "Consell" Decree 61/2021 ).1.
- They must have carried on an economic activity in 2019 and 2020 as defined in the Annex to "Consell" Decree 61/2021 (see link).
- They must not have 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.
- The annual volume of operations declared or verified by the applicants' authorities, not applying the objective-estimate system for personal income tax, VAT or any equivalent indirect tax in 2020 has fallen by more than 30% with respect to 2019, with a volume of subsidisable outstanding debt of at least EUR 4,000.002/3.
Compliance with the requisites will be verified with the information furnished by the Spanish Tax Agency (“AEAT”) to the "Generalitat" regional government.
How much is the grant?
The grant for companies, professionals or beneficiary organisations will be determined in two phases, in due consideration of the following parameters:
- Phase one: a decision will be taken concerning the applications of entrepreneurs or professionals applying the objective-estimate personal income tax system. In this case a fixed sum will be allocated as the equivalent of the volume of outstanding debt declared by the applicant, to a maximum of EUR 3,000 per applicant.
Phase two: a decision will be taken concerning the applications of entrepreneurs or professionals applying the direct-estimate personal income tax system, and permanent establishments and entities whose annual volume of operations for the purposes of VAT or any equivalent indirect tax in 2020 has fallen by more than 30% with respect to 2019.
This grant is a minimum of EUR 4,000, with a maximum amount equivalent to the volume of outstanding debt declared by the applicant (maximum EUR 200,000).
It must be borne in mind that the process to approve this kind of application will be carried out in phases in accordance with the provisions of Article 7 section b) of "Consell" Decree 61/2021.
What documentation will I be asked for in the application?
The application form, properly filled in and signed, will have the following information:
- Tax number of the applicant.
- Tax address of the company or self-employed professional.
- Whether the professional or entrepreneur applied the objective-estimate personal income tax system in 2019 or 2020.
- Whether it is a consolidated group paying corporation tax.
- Whether, in 2019 or 2020, they formed part of a group applying a special-territory tax consolidation system, the composition of this group in 2020, and whether any of the companies paid VAT to a special-territory tax authority exclusively during those years.
- Whether, in 2019 or 2020, they formed part of a group applying a common-territory tax consolidation system, and whether any of the companies exclusively paid VAT to a special-territory tax authority during those years.
- Indication of whether they intend to apply for grants in territories other than that in which they are registered for tax.
- Indication of whether they exclusively carry out operations not liable for tax or exempt from tax with no obligation to submit periodic VAT self-assessments, and determine payment in instalments in accordance with the procedure described in Article 40.2 of Corporation Tax Law 27/2014 of 27 November.
- Series of public grants received during the timeline of the National Temporary Framework for assistance to businesses and the self-employed, approved by the European Commission in Decision SA.56851 (2020/N) of 2 April. Any grants received to be used for the same subsidisable costs to be applied to the grants will also be stated, where applicable.
- Amounts of outstanding debt, broken down as debts to suppliers and creditors and debts as nominal bank debt, with an indication of whether or not they have a public guarantee.
- Responsible declaration of compliance with the requirements established in Article 13 of the General Law on Subsidies.
- Responsible declaration of compliance with obligations concerning continuation of activity up to 30 June 2022, non-distribution of any dividends in 2021 and 2022, and non-approval of increased remuneration for senior management over a period of two years following approval of the grant.
- Express authorisation for the AEAT agency to supply the necessary information to check compliance with the requirements for grants and the obligations arising from them. Additionally, authorisation for the exchange of information with the Ministry of Finance concerning the grants approved and any refunds that may be forthcoming in relation to them.
The subsidy will be furnished in a single advance payment, exempting the beneficiary from the obligation to furnish any guarantees or collateral, as per the provisions of Decree-Law 7/2021 of 7 May.
How is my grant justified when it is approved?
When the grant has been approved, within 3 months after payment of the grants, the Community of Valencia will demand the following documentation to justify direct grants:
- Audited justificatory account with a report by the auditor4 for grants approved in excess of EUR 60,000:
- List of documentation required and reviewed in the course of the audit.
- Detailed analysis of receipts for outgoings and payments, with an indication of the type of incident detected, and of the contracts to which they relate.
- Detailed list of other income used to pay subsidisable costs, with an indication of the amount, origin and application of these funds to the subsidisable costs, with an indication of the total amount of the grants received.
- Simplified justificatory account for grants approved under EUR 60,000:
- Report on justificatory action for compliance with the conditions imposed by the decision to issue the subsidy.
- Classified list of the expenses paid out, identifying the individual creditor or creditor entity and the document, its amount, date of issue and date of payment. The date of the contract concerned will also be stated.
- Breakdown of any other income or subsidies that have financed the subsidisable costs, with an indication of the amount and origin.
What is the deadline, and how can I apply for the grant?
The deadline for submission of applications depends on the type of applicant:
- From 31 May to 4 June (both inclusive): Applicants applying the objective-estimate system, businesses that made structural modifications to the company between 1 January 2019 and 31 December 2020, and professionals or businesses registered or incorporated between 1 January 2019 and 31 December 2019 in the terms stipulated in Article 5.1.a of "Consell" Decree 61/2021.
- From 7 June to 20 August (both inclusive): Other applicants not included in the previous section.
Applications along with the documentation required will be submitted in telematic format only at the Generalitat's electronic site in the procedure known as "Solicitud de subvenciones extraordinarias para el apoyo a la solvencia empresarial, en la Comunitat Valenciana, en respuesta a la pandemia de la Covid-19. Plan resistir plus". Access to the electronic site will be provided on the Department of Finance and Economic Model's website to make the application, where information on the grants will also be available.
Applicants must bear in mind that the application process has two procedures:
- Procedure one: request for an appointment to make the application (does not require an electronic signature).
- Procedure two: submission of the application (requires an electronic signature) along with the documentation required, during the appointment only, as otherwise the application will be considered not to have been submitted.