The Community of the Basque Country has published a COVID-19 line of direct grants for the self-employed and businesses to mitigate the effects of COVID-19. 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 obligations to suppliers and other financial and non-financial creditors, as well as any uncovered fixed costs incurred, arising from contractual commitments prior to 13 March 2021, which have been accrued in the period from 1 March 2020 to 31 May 2021, and are outstanding at the latter date.
The grants are divided into three eligible headings:
- Line 1: aimed at individual entrepreneurs and self-employed professionals, as well as entities under the income-allocation system for personal income tax purposes that have applied the simplified or special VAT equivalence surcharge system in 2019 or 2020 and are eligible for a maximum grant of EUR 3,000.
- Line 2: aimed at individual entrepreneurs and self-employed professionals and entities, not included in Line 1, whose volume of business in 2020 was less than or equal to EUR 10 million and are not taxed under the consolidated corporation tax ("IS") system.
- Line 3: aimed at persons and entities not included in Line 1 or Line 2, which meet the requirements and other eligibility conditions established in the public notice.
What are the specifications in the Basque Country with respect to RD 5/2021?
Making use of the authorisations granted to the Autonomous Communities in RD 5/2021, the Autonomous Community of the Basque Country has extended the scope of the grant to the sectors whose activity has been particularly affected, reaching a total of 173 eligible activities (78 CNAEs in addition to the 95 established in RD 5/2021).
Which persons can be beneficiaries?
Eligible beneficiaries are those persons and entities that undertake any of the activities defined in Annex I of the Order of 29 June 2021 (see link) approving the bases of the public notice ("Order") and are in the following situations:
- The individual entrepreneurs and self-employed professionals, as well as entities under the income-allocation system for personal income tax ("IRPF") purposes that have applied the simplified value added tax("VAT") system in 2019 or 2020.
- Individual entrepreneurs and self-employed professionals, as well as entities under the income-allocation system for personal income tax purposes that have applied the special VAT equivalence surcharge system in 2019 or 2020.
- Individual entrepreneurs and self-employed professionals, as well as entities and groups taxed under the corporation tax consolidation system, who had a downturn in their annual volume of business, in their VAT return or equivalent indirect taxation in 2020 of more than 30% compared to 2019.
The following are also ineligible:
- Financial companies.
- Entrepreneurs or self-employed professionals, entities and groups taxed under the corporation tax consolidation system who are subject to an outstanding recovery order following a previous decision of the European Commission declaring aid to be illegal and incompatible with the internal market.
- Entities that are part of a public sector, or that have a majority of public representatives in their governing bodies.
- Those who have registered in the activity giving entitlement to access to this grant after 31 March 2020-.
- Those entrepreneurs or professionals who, in their personal income tax return for 2019, have 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, with the exception of the cases established in section 2 of article 4 of the Order.
What requirements must I satisfy?
In order to qualify as a beneficiary, the following requirements must be met:
- Have a tax domicile in the Autonomous Community of the Basque Country. However, those who, without having their tax domicile in the Basque Country, have had a volume of business in 2020 of more than EUR 10 million and have undertaken their economic activity in this Autonomous Community may participate in the call for applications.
- Have carried out at least one of the activities defined in Annex I of the Order (see link) in 2019 and 2020, and have carried out one of them on the date of submission of the application.
- They must not have been convicted on a firm ruling barring them from obtaining subsidies or public grantsor 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 have given rise to the definitive termination of any contract drawn up with the public sector. .
- They must be up to date with the payment of their obligations in relation to refunds of subsidies or public grants, the company's 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.
- They must not be subject to an outstanding recovery orderfollowing a previous decision of the European Commission declaring aid to be illegal and incompatible with the internal market.
In addition to these requisites, the beneficiaries of the grants must undertake the following commitments and obligations:
- Continue the activity corresponding to the grants up to at least 30 June 20
- 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.
- Accept the awarded grant. In this regard, if within ten days of receiving notification of the decision to award the grant, the individual or company benefitting from such aid does not expressly renounce it, it shall be understood that they have accepted it.
- Use the grant to meet the debt obligations identified in its application within two months of receiving the grant.
- Justify compliance with the requirements and conditions, as well as the performance of the activity, which determine the awarding of the grant.
- Provide any information requested by the Economic Control Office and the Basque Court of Auditors in the exercise of their functions of auditing the use of the grants.
- Submit to the verification and control actions that correspond to the Economic Control Office in relation to the grants.
- Report to the body managing the call for applications if other subsidies or grants, income or resources have been received for the same purpose, from any public or private administration or body.
- Report to the body managing the call for applications if there is a change in any circumstances, both objective and subjective, that had been taken into account for the award of the grant.
- 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.
- Retain until at least 31 December 2023 the supporting documents on the use of the funds received until such time as they may be subject to verification and control.
- Proceed to reimburse the funds received in the cases foreseen in the applicable regulations.
How much is the grant?
The amount of the grant shall be determined by the amount of eligible costs declared by the applicant, provided that they are within the following limits:
- Individual entrepreneurs and self-employed professionals, as well as entities under the income-allocation system for personal income tax purposes that have applied the simplified or special VAT equivalence surcharge system in 2019 or 2020: the maximum grant approved will be EUR 3,000.
- Individual entrepreneurs and self-employed professionals, as well as entities and groups taxed under the corporation tax consolidation system, who had a downturn in their annual volume of business in their VAT return or equivalent indirect taxation in 2020 of more than 30% compared to 2019,, the maximum grant to be awarded will be:
- 40% 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, in the case 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, in the case the applicant has more than 10 employees.
What documentation will I be asked for in the application?
The parties concerned must fill in the form on the Basque Country's public sector's website , supplying the following information:
- the declarations of responsibility accrediting the requirements and conditions demanded in the call for applications
- the determination of the CNAE in which the applicant is carrying out its activity, when there is no correlation in the equivalences table with the heading of the Economic Activities Tax under which it is registered,
- the total amount of debt obligations for each of the eligible groups: payments to suppliers; bank debt guaranteed by public entity; remaining bank debt; and uncovered fixed costs,
- the amount requested, which shall be the total sum of the eligible costs,
- the declaration of responsibility as to whether the applicant is going to apply for or has applied for a grant for the same purpose in calls for applications in other Autonomous Communities or Autonomous Cities of the Kingdom of Spain, or that it meets the requirements for access to the grant established by Royal Decree-Law 5/2021 in other Autonomous Communities or Autonomous Cities of the Kingdom of Spain,
- a list of other public grants received or applied for up to the date of submission of the application, specifying the status of such grant and, where applicable, the awarded amount,
- information on whether or not the applicant is involved in any reimbursement or sanctioning procedure initiated in the framework of grants or subsidies granted by the General Administration of the Autonomous Community of the Basque Country, its autonomous bodies or public bodies governed by private law; and if so, provide the identification of the procedure or procedures in question.
The application shall be accompanied by a list of the debt obligations in accordance with the model available at the website of the Public Administration of the Basque Country ( of the Public Administration of the Basque Country).
By submitting the application, the applicant authorises the Basque Administration:
- To obtain from the Spanish Tax Agency, the Regional Treasuries of the provinces of the Basque Country, the Canary Islands Tax Agency and the Regional Treasury of Navarre the information necessary to verify compliance with the requirements of the grant.
- To verify the applicant's proof of address, as well as that they are up to date with their tax and Social Security obligations,
- To check in the corresponding public registers that the activity for which the grants has been obtained will be maintained until at least 30 June 2022, as well as, where applicable, the rest of the obligations defined in the call for applications.
How is my grant justified when it is approved?
The beneficiary must submit in electronic format through the Basque public administration's website and within four months of the payment of the awarded grant, the following documentation.
- If the awarded grant is less than EUR 3,000: a declaration of responsibility in accordance with the model in Annex II of the Order.
- If the awarded grant is more than EUR 3,000 and less than EUR 100,000: a list of the invoices paid, the reduction of the bank debt and the uncovered fixed costs, paid from it and the dates of the payments or repayments made, as well as, in the case of debt reduction with public guarantee, data referring to the guaranteeing entity, date of the guaranteed contract, of the outstanding principal and of the reduction of the nominal amount made, in accordance with the model in Annex III.
- If the awarded grant is more than EUR 100,000the same documentation as in the previous paragraph must be submitted, accompanied by an auditor's report certifying the following:
- The grant received must have been used to meet the debt obligations for which it was awarded.
- The debt obligations must have accrued between 1 March 2020 and 31 May 2021 and arise from contracts, orders, supply agreements, acceptance of offers, quotations or similar prior to 13 March 2021.
- These debt obligations must have been paid in accordance with the established sequence and within the deadline indicated in the call for applications.
- Breakdown of any other revenues or subsidies that have financed the activity and expenses subsidised, with an indication of the amount and origin.
- Where applicable, the amount of the refund to be made, calculated in the event of any remainders not applied, and the interest they carry.
What is the deadline, and how can I apply for the grant?
Applications may be submitted from 5 July 2021 up to 12.00 on 30 September 2021.
Applications shall be submitted electronically through the Government of the Basque Country's website in accordance with the specific model , which will be available on the website (see link).
In order to access the procedure applicants must identify themselves with one of the electronic certificates recognised on the website of the public administration of the Autonomous Community of the Basque Country.
For more information on the terms and conditions and the public notice of grants, see the Official Gazette of the Basque Country of 2 July 2021 (see link).