The government of Navarra 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 payments to suppliers and other financial or non-financial creditors, with the following requisites:
- Debts must relate to economic activities carried out by the applicant.
- They must have accrued between 1 March 2020 and 31 May 2021, and they must relate to contracts prior to 13 March 2021.
- They cannot have already been paid off when the grants are requested.
- VAT or any other indirect taxes that could be recovered or offset by the beneficiary will not be eligible for subsidy..
Which persons can be beneficiaries?
Beneficiaries are persons and entities that undertake any of the activities defined in Appendices I and II of the public notice (see link) and are in one of the following situations:
- They apply the objective-estimate personal income tax system.
- Their annual volume of business declared or verified by the authorities for VAT fell by more than 30% in 2020 with respect to 2019.
These grants may also be requested by entities with no legal personality (civil societies, joint ownerships, temporary company mergers etc.) carrying out any of the economic activities stipulated on a professional or corporate basis.
Also, the grants exclude (i) entrepreneurs or professionals who, in their personal income tax return for 2019, declared negative net earnings for any economic activities for which they applied the direct-estimate method for the purposes of determination or, where applicable, tax loss carryforwards for corporation tax or non-resident income tax, prior to application of the reserve for capitalisation and compensation of tax loss carryforwards; (ii) finance companies; (iii) entities which operate in a public sector or have a majority of public representatives in their governance bodies.
What requirements must I satisfy?
In order to qualify as a beneficiary, the following requirements must be met:
- Have a tax address in Navarra. However, applicants with no tax address in Navarra whose volume of business in 2020 exceeded EUR 10 million that undertook their economic activity in this autonomous community may participate in the call for applications.
- Carry out one of the activities defined in Appendices I and II in the public notices for the grants (see link) in 2019 and 2020, and still be carrying out this activity when the application is made.
- They must be unaffected by any bans on status as beneficiary stipulated in Article 13 of Navarra's Law on Subsidies.
- They must not be currently complying with firm administrative rulings or firm conviction rulings, for carrying out or tolerating employment practices considered discriminatory due to sex or gender, nor, where applicable, may they be pending compliance with a sanction or ruling imposed for such reasons.
- They must not be subject to an outstanding recovery order following a preliminary decision by the European Commission declaring aid to be illegal and incompatible with the internal market.
- They must not have constituted an undertaking in difficulty at 31 December 2019, pursuant to the definition in Article 2, Section 18 of Commission Regulation (EU) No 651/2014 (general category exemption regulation).
This requirement will not apply to microenterprises or small businesses already in difficulty at 31 December 2019, provided they are not undergoing bankruptcy proceedings or have received salvage or restructuring assistance.
- 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 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 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 these requisites, the beneficiaries of the grants must undertake the following commitments and obligations:
- Maintain the activity corresponding to the grants up to 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 two years following approval of the subsidy, and present the accreditative certificate on the grants form.
- Demonstrate, in the format and timeline stipulated, that the grant received has been used to pay off outstanding expenditure.
- They must submit to verifications, to be carried out by the approval body, and any other processes of verification and financial control that may be carried out by the competent control bodies in Spain or the EU, and furnish any information that may be requested of them during these proceedings.
- The general obligations laid down in Article 9 of Navarra's Law on Subsidies.
How much is the grant?
The amount of the subsidy will be determined by the amount of eligible expenditure declared by the applicant, provided that it is within the following limits:
- For entrepreneurs or professionals applying the objective-estimate personal income tax system: the maximum grant approved will be EUR 3,000.
- For entrepreneurs, professionals or companies with a downturn of more than 30% in 2020 in their annual volume of business with respect to 2019, the maximum grant approved will be:
- 40% of the downturn in the volume of business in 2020 compared to 2019, in excess of said 30%, an amount which may not be less than EUR 4,000 or more than EUR 200,000, when the applicant has a maximum of 10 employees.
- 20% of the downturn in the volume of business in 2020 compared to 2019, in excess of the aforementioned 30%, an amount which may not be less than EUR 4,000 or more than EUR 200,000, when the applicant has more than 10 employees.
- In the following specific cases, the grant will be as established in the table:
- For companies or professionals registered or incorporated between 1 January 2019 and 31 March 2020.
- For companies that made a structural modification to the company (excluding entrepreneurial transformations) between 1 January 2019 and 31 December 2020.
- For entrepreneurs or professionals and businesses registered for a period of less than one year in 2019 or 2020.
In these three specific cases, the maximum amount of the grant will be:
Nº people employed
Applies the objective-estimate personal income tax system
Does not apply the objective-estimate personal income tax system
0 - 3
4 - 10
11 - 20
What documentation will I be asked for in the application?
Those applying for the grant must fill in the specific application form which, by default and unless any specific objections are forthcoming, authorises the authorities in Navarra to make the necessary consultations with other public authorities in order to ascertain compliance with the requirements set out in the public notice.
The application form will also include the responsible declaration concerning compliance with the mandatory requisites, and the declaration that public grants, including those applied for pursuant to this public notice, received in accordance with the Temporary Framework, do not exceed EUR 1.8 million.
The only documentation that must be attached to the telematic application form is as follows:
- Document demonstrating each of the payments pending to suppliers or bank debts for which the grants will be used (invoices or documents with an equivalent probatory value).
- Copy of the last financial statements if the applicant is subject to the transparency obligation. In this case, it is advisable for the financial statements to be submitted without personal data, since they will be posted on the Open Governance Portal.
How is my grant justified when it is approved?
Application of the grants must be demonstrated before 31 October 2021, telematically on the grants file available on the portal of the government of Navarra (see link).
The applicant must provide banking evidence of payment of the expenses for which the grant has been used, and no cash payments are acceptable.
If the amount of the grant is equal to or more than EUR 50,000, the applicant must present an audit report to certify that the invoices and documents evidencing the payments made relate to debts which meet the requirements set out in the public notice concerning grants, and that they were paid pursuant to the order established therein. In cases where the beneficiary is obliged to audit the annual accounts, the same auditor will conduct the review of the justificatory account.
What is the deadline, and how can I apply for the grant?
The applications may be submitted from 20 July 2021 up to 20 September 2021.
Applications will be submitted electronically in the file in the procedures catalogue in the government of Navarra's portal (see link). This will have a web link to the form to register the application.
Likewise, in order to access the procedure the applicant must have the digital certificate, electronic ID or the identification system Cl@ve.
For more information on the terms and conditions of grants, see the Ruling of 30 June 2021 (see link).