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DIRECT GRANTS

Public grants from the Xunta de Galicia (Galician regional government)

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The Xunta de Galicia 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-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 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.

These finalist grants include the following programmes:

Programme I: assistance for objective-estimate mutualists and self-employed people.
Programme II: assistance for individual self-employed persons and self-employed entities or companies with up to 10 employees, or up to 25 employees with a turnover of up to EUR 2 million.
Programme III: assistance for self-employed entities or companies with more than 10 employees and a turnover of more than EUR 2 million, or companies with more than 25 employees.

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

Making use of the provisions granted to the autonomous communities in RD 5/2021, Galicia has extended the scope of the aid to all activities classified in economic activity codes-CNAE09 not included in Annex I of RD/2021, provided they experienced a downturn in their volume of operations of at least 40% in 2020 with respect to 2019, excluding all financial activities.

The Xunta de Galicia has also broadened the scope of people or companies benefiting from the grants in comparison to the provisions of RD 5/2021, provided the requisites are met or the exceptions established in the Order can be justified.

In relation to the amount of the grant, various scales have been established depending on the programme to which the applicant belongs, and also on the downturn in the volume of operations and the number of employees, with due observation of the minimum and maximum amounts established in RD 5/2021.

Which persons can be beneficiaries?

The following persons can be beneficiaries of direct grants:

Self-employed persons, entrepreneurs or professionals applying the objective-estimate personal income tax system and carrying out one of the economic activities included in Annex I of “RD 5/21".
Self-employed persons, entrepreneurs or professionals applying the objective-estimate personal income tax system and carrying out one of the economic activities not included in Annex I of “RD 5/21", which experienced a downturn in their annual volume of operations of 40% or more in 2020 with respect to 2019.
All self-employed persons, professionals, companies and entities carrying out one of the economic activities included in Annex I of “RD 5/21”, which experienced a which experienced a downturn in their annual volume of operations of 40% or more in 2020, a downturn in their annual volume of operations, of more than 30% in 2020 with respect to 2019.
All autonomous persons, professionals, companies and entities carrying out one of the economic activities not included in Annex I of “RD 5/21”, which experienced a downturn in their annual volume of operations, in VAT or equivalent direct tax, of 40% or more in 2020 with respect to 2019.
Additionally, beneficiaries can also be seasonal self-employed workers¹, provided they can attest to continuation of their activity, even if they are not officially registered at the time of application, and were registered for a minimum of 4 months and a maximum of 9 months in either 2019 or 2020.
Beneficiaries can be self-employed persons and companies that were registered or incorporated between 1 January 2019 and 31 March 2020, and businesses that made structural modifications to the company between 1 January 2019 and 31 December 2020

The authorities will not consider the following as beneficiaries: (i) Self-employed persons working collaboratively or corporately; (ii) Finance companies. (iii) Companies undergoing a crisis, excluding the scenarios referred to in Articles 3.2 and 10.3 of the Order of 9 June 2021 establishing the terms and conditions of the public notice; (iv) co-owners, heirs or members of civil societies. In this case, the direct beneficiary of the grant will be the entity applying; (v) entrepreneurs or professionals, consolidated entities and groups which, in their direct estimate of personal income tax, corporation tax or non-resident income tax, declared a negative net result for 2019, except in the scenarios described in Article 3 section e) of the Order.

What requirements must I satisfy?

The beneficiaries of the grants must meet the following requisites when submitting the application:

They must be registered for tax in Galicia (with the exception of the scenarios stipulated in Article 7.a of the Order of 9 June 2021 establishing the terms and conditions of the public notice², hereinafter the "Order").
They must have experienced a downturn in their volume of operations of more than 30% in 2020 with respect to 2019, if they carry on an economic activity included in Annex I of RD 5/2021.
They must have experienced a downturn in their volume of operations of 40% or more in 2020 with respect to 2019, if they carry on an economic activity not included in Annex I of RD 5/2021.
They must have payments outstanding to suppliers, creditors, financial or non-financial, or bank debts, or other fixed costs accruing between 1 March 2020 and 31 May 2021, in relation to contracts prior to 13 March 2021. These amounts must be equal to or greater than the grant requested.
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 any refunds of subsidies or public grants.
They must be up to date concerning compliance with their tax obligations and social security obligations.
They must not have requested voluntary bankruptcy proceedings, they must not have been declared insolvent in any proceedings and must not be in bankruptcy, 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.
They must authorise the Department of Employment and Equality to send their data to the Treasury Ministry.

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.
Apply the grant to the purpose for which it was approved.
They must be up to date in terms of compliance with tax obligations at state level and at the level of the autonomous regions, and also with social security, and must not have any debts outstanding with public authorities prior to the final proposal of payment of the grant.
Notify the issuing body of any changes in the conditions taken into consideration for approval of the subsidy.
They must have accounting ledgers, completed records and other documents properly audited in the terms laid down in business and sectoral legislation applicable to the beneficiary in each case.
They must take the proper dissemination measures to publicise the public funding of the activities subsidised, stating in all activities and supports used the origin of the funds financing these grants, pointing out that they have been financed by the Government of Spain.
They must submit to any controls, checks and inspections that will be carried out by the Department of Employment and Equality, to any financial controls by the general financial authorities of the autonomous community, those laid down in the Court of Auditors and the Accounts Board, or other state bodies, and present any information that is required of them during the exercise of these activities.
They must return the funds received in the scenarios stipulated in Article 33 of Law 9/2007 of 13 June on Galician Subsidies, and in the cases stipulated in this order.
Notify all the grants obtained, within the timeframe referred to in this order.
Any other obligations established in Article 11 of Law 9/2007 of 13 June on Galician Subsidies, and in Article 14 of General Law on Subsidies 38/2003 of 17 November.

How much is the grant?

In relation to the amount of grants, the following criteria will be observed, depending on the type of programme:

Programme I:

The amount of the grant will be a maximum of EUR 3,000 for entrepreneurs or professionals applying the objective estimate for personal income tax in 2019.
For seasonal self-employed persons, the amounts of the grant will be 50% of the amounts shown above.

Programme II: the amount of the grants will be established in accordance with the downturn in the volume of operations in 2020 with respect to 2019, and will initially be approved for the following sums³:

EUR 6,000 if the downturn in the volume of operations is more than 30%, up to 60%.
EUR 7,000 if the downturn in the volume of operations is more than 60%, and less than 70%.
EUR 8,000 if the downturn in the volume of operations is 70% or more.

This amount will be increased up to EUR 3,000 depending on the number of employees the company has at the time the order is published, on the following scale:

EUR 1,000 if it has between 4 and 9 employees.
EUR 2,000 if it has between 10 and 20 employees.
EUR 3,000 if it has between 21 and 25 employees.

For seasonal self-employed persons, the amounts of the grant will be 50% of the amounts stipulated above.

In relation to the minimum grant for beneficiaries of Programme II, this will be EUR 4,000, except for seasonal self-employed persons, for whom it will be EUR 2,000.

In relation to the maximum grant for beneficiaries of Programme II, this cannot exceed the following thresholds:

One: EUR 200,000.
Second: 40% of the downturn of the volume of business in 2020 with respect to 2019 which exceeds 30% of the downturn in turnover during that period, in the case of entrepreneurs and professionals applying the personal income tax direct-estimate system, and permanent establishments and entities with a maximum of 10 employees.
Third: 20% of the downturn of the volume of business in 2020 with respect to 2019 which exceeds 30% of the downturn in turnover during that period, in the case of entities and entrepreneurs or professionals and permanent establishments with more than 10 employees.
Fourth: the amount of the expenditure subsidised.

Programme III: the amount of the grants will be established in accordance with the downturn in the volume of operations in 2020 with respect to 2019, and will initially be approved for the following sums⁴:

EUR 10,000 if the downturn in the volume of operations is more than 30%, up to 60%.
EUR 12,000 if the downturn in the volume of operations is more than 60%, and less than 70%.
EUR 15,000 if the downturn in the volume of operations is 70% or more.

This amount will be increased up to EUR 15,000 depending on the number of employees the company has at the time the Order is published, on the following scale:

EUR 5,000 if it has between 26 and 50 employees.
EUR 10,000 if it has between 51 and 100 employees.
EUR 15,000 if it has more than 100 employees.

For seasonal self-employed persons, the amounts of the grant will be 50% of the amounts stipulated above.

In relation to the minimum grant for beneficiaries of Programme III, this will be EUR 4,000, except for seasonal self-employed persons, for whom it will be EUR 2,000.

In relation to the maximum grant for beneficiaries of Programme III, this cannot exceed the following thresholds:

First: EUR 200,000.
Second: 40% of the downturn of the volume of business in 2020 with respect to 2019 which exceeds 30% of the downturn in turnover during that period, in the case of entrepreneurs and professionals applying the personal income tax direct-estimate system, and permanent establishments and entities with a maximum of 10 employees.
Third: 20% of the downturn of the volume of business in 2020 with respect to 2019 which exceeds 30% of the downturn in turnover during that period, in the case of entities and entrepreneurs or professionals and permanent establishments with more than 10 employees.
Fourth: the amount of the expenditure subsidised.

What documentation will I be asked for in the application?

During proceedings for the application, the Xunta de Galicia will demand presentation of the following documentation:

When action is taken through representation, the representation document must be presented in accordance with the standardised specimen on the website, with a digital signature, or any other legally valid format.
In the case of self-employed persons and companies carrying out an economic activity not included in Annex I of RD 5/2021, the following documentation must be presented along with the application:

Form 390 for the years 2019 and 2020 (annual VAT return).  Form 303 for the years 2019 and 2020 (quarterly VAT return).
Form 130 IV quarter for the years 2019 and 2020 (quarterly personal income tax return).  Form 131 for the years 2019 and 2020.
Form 111 (income tax withholdings from employees).
Form 190 (annual remittance of withholdings and prepayments).
VAT form 322 for GROUPS, years 2019 and 2020.
Form 184 for entities using the income-allocation system, years 2019 and 2020.
Form 100 for the year 2019.
Form 200 for GROUPS, years 2019 and 220.
Form 202 for payments in instalments, 2019 and 2020.
Form 222 for payments in instalments, 2019 and 2020, for groups.
Other documents.

If their earnings were negative in 2019, in order to attest to economic solvency, they must present the 2019 corporation tax return or, as applicable, the personal income tax return for the years 2017 and 2018.
Certificate of registration with the mutual insurance company, where applicable.

Also, for the purposes of processing this procedure and verifying compliance with the requisites to be a beneficiary, all the necessary data held by the authorities or drawn up by public administrations or furnished by the state tax agency will be consulted automatically, unless the party concerned objects to consultation.

If the parties concerned object to consultation, they must state this on the application form and present the following documents, as applicable:

Certificate from the AEAT tax agency attesting to tax residence.
Certificate from the AEAT tax agency attesting to the sections of business activities tax (IAE), and the taxpayer's document, stating the codes of national business activity classification (CNAE -09-) considered equivalent used to classify the activity carried on by the applicant in 2019, 2020 and 2021.
Document attesting to the annual volume of operations, in VAT and, where applicable, Canary Islands tax, in 2019 and 2020, whether this volume of operations in 2020 fell by more than 30% with respect to 2019 and the percentage fall, in the case of activities included in Annex I of RD 5/2021 (Forms 303, 390 and 322 (for groups) for the years 2019 and 2020, and Canary Islands tax, where applicable).
Document attesting to the annual volume of operations, in VAT and, where applicable, Canary Islands tax, in 2019 and 2020, whether this volume of operations in 2020 fell by more than 40% with respect to 2019 and the percentage fall, in the case of activities not included in Annex I of RD 5/2021 (Forms 303, 390 and 322 (for groups) for the years 2019 and 2020, and Canary Islands tax, where applicable).
Document attesting to all taxable eligible income from their economic activity reported in their 2019 tax declaration, and the sum of all taxable eligible income from their economic activity reported in their self-assessments of payments by instalments for 2020, for personal income taxpayers, when the applicant for the grant is tax-resident in the Cities of Ceuta or Melilla or exclusively carries out operations with no obligation to submit a periodic self-assessment of VAT or Canary Islands tax, according to the information already furnished to the tax agency for the Autonomous Community of the Canary Islands, and did not apply the objective-estimate personal income tax system in 2019 or 2020 (Forms 100 for 2019, 130 for 2020, 184 for entities using the income-allocation system, years 2019 and 2020).
Document attesting to the tax base declared in the last instalment payment in the years 2019 and 2020 respectively, for those paying corporation tax or non-resident income tax with a permanent establishment, when the applicant for the grant is tax-resident in the Cities of Ceuta or Melilla or exclusively carries out operations with no obligation to submit a periodic self-assessment of VAT or Canary Islands tax, according to the information already furnished to the tax agency for the Autonomous Community of the Canary Islands, and did not apply the objective-estimate personal income tax system in 2019 or 2020 (form 202 for payment by instalments in 2019 and 2020, when these are paid pursuant to corporation tax Article 40.2. Form 222 for GROUPS. Form 200 for 2019 and documentation attesting to turnover in 2020. Form 220 for groups).
Document attesting to the number of employees, taking account of the average number in 2020 of those receiving economic gain from work as stipulated in the monthly or quarterly declarations of withholdings and prepayments (Form 111 for 2020 and 190 for 2020).
Document demonstrating that the applicant forms part of a group, and information on its composition in 2019 and 2020 (Form 220).
Census certificate from the AEAT tax agency attesting application of the objective-estimate personal income tax system in 2019 and 2020.
Where applicable, document attesting that they did not declare negative net earnings in their personal income tax statement in 2019 for any economic activities for which they applied the direct-estimate method for the purposes of determination, or 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 (Form 100 and 200 for 2019 and form 220 for groups).
Census certificate from the AEAT tax agency showing whether the applicant is registered in the census of entrepreneurs, professionals and withholders and, if registration or deregistration occurred in 2019 or 2020, information on the dates of registration and deregistration in the census. If the activity was deregistered, the taxpayer must state the reason.
Where applicable, document attesting to a downturn in business in the territory, focusing on the weight of remuneration for personal work by their employees in the territory, in relation to any groups and entrepreneurs, professionals or entities whose volume of business in 2020 exceeded EUR 10 million, carrying on their economic activity in more than one autonomous territory or in more than one autonomous city (Forms 190 and 111).
Certification demonstrating they are up to date concerning compliance with their social security obligations.
Certification demonstrating they are up to date concerning compliance with their obligations to the authorities in the autonomous community of Galicia.
Certification demonstrating they are up to date concerning compliance with their obligations to the state tax agency.

How is my grant justified when it is approved?

Justification for the grants will be made telematically within 3 months of reception of the grant, with the following documents attached:

Simplified justificatory account (Form in Annex IV of the Order):

Report on compliance with the conditions for the grant.
A classified list of the activity's expenditure, with identification of the creditor and of the invoice, date of issue and date of payment, which must be made by transfer or bank deposit. When invoices and payment obligations are subsequent to 13 March 2021, the date of the contract originating the expenditure must also be stated.
Breakdown of any other income or subsidies that financed the activity concerned by the grant, with an indication of the amount and origin.
Where applicable, letter of payment of a refund in the event of any remainders not applied, and any interest they carry.

Justificatory account (Form in Annex V of the Order) for grants in excess of EUR 30,000:

Invoices issued by suppliers and other creditors, paid by the beneficiary against the grant approved. When invoices and payment obligations are subsequent to 13 March 2021, the date of the contract should also be stated.
Banking evidence of payment of invoices. When the creditors are financial institutions, certificate from the financial institution attesting to total or partial cancellation of the debt. A certificate showing banking debt priorities must also be furnished.
When invoices and payment obligations are subsequent to 13 March 2021, contract or contracts from which payment obligations to suppliers and creditors arise or, if there is no written contract, order or acceptance of the offer or the estimate, with attestation in any case of the date on which the debt or the payment obligation is undertaken.

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

Applications may be submitted between 14 June and 30 September 2021, both inclusive.

Applications, along with the documentation required, must be presented electronically on the standardised forms (available in the annexes to the Order), by means of any of the mechanisms for identification and signature accepted by the Xunta de Galicia's website, according to the procedure on the Xunta de Galicia's website.

The process for approval of the grants establishes a direct-approval procedure which is not considered to be a competitive basis. The grant is approved by means of a check on the person or entity applying to ensure they have met the requisites established, in the order in which applications are received, until the credit budget has been exhausted.

For more information on the public grants scheme, go to the Order of 9 June 2021 in the Official Gazette of Galicia;for details of the notice posted.

1. The general system, and not the seasonal system, will be applied to self-employed persons who have been registered for a period of over 9 months.

2. This requisite exempts groups of companies, entrepreneurs, professionals and businesses whose volume of operations in 2020 exceeded EUR 10 million, operating in Galicia and carrying on their economic activity in more than one autonomous community or in more than one autonomous city.

3. If there are any surplus credits on a programme, the provisions of Article 5.2 of the Order will apply.

4. If there are any surplus credits on a programme, the provisions of Article 5.2 of the Order will apply.

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