The Community of La Rioja 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 creditors, financial or non-financial, and the outstanding fixed costs incurred by the party applying for the grant, provided the paymentsaccrued between 1 March 2020 and 31 May 2021, in relation to contracts prior to 13 March 2021.
- repaythe principal of banking debt, from operations between 1 March 2020 and 12 March 2021.
What are the specifications in La Rioja with respect to RD 5/2021?
Availing itself of the authorisations granted to the Autonomous Communities in RD 5/2021, La Rioja has extended the scope of aid to the sectors stipulated in Sections A to S of the 2009 National Classification of Economic Activities (CNAE-2009)which includes both the sectors of activity defined in Annex I of Royal Decree-Law 5/2021 and those in which activity has been considerably affected in the Autonomous Community of La Rioja, with the exception of companies listed in Division 64 (financial services, with the exception of insurance and pension funds) in Section K.
Which persons can be beneficiaries?
The following persons or companies can be beneficiaries of direct grants:
- Any entrepreneurs and professionals and businesses whose annual volume of business for value-added tax (VAT) or equivalent indirect tax fell by more than 30% in 2020 with respect to 2019, and which meet the requisites to be eligible for the grant..
- Entrepreneurs or professionals applying the objective estimate for personal income tax (IRPF) and who meet the requisites to be eligible for the grant.
- 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 composed.
The following will not be considered eligible for grants: entrepreneurs or professionals, entities and consolidated groups which, even if they meet the requisites, 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, notwithstanding the circumstances established in condition six, section 3, of the terms and conditions of the grants.
What requirements must I satisfy?
Entrepreneurs or professionals and companies with an interest may carry out preliminary enrolment if they meet the following requisites:
- They must be registered for tax purposes in the Autonomous Community of La Rioja, excluding the scenarios stipulated in section 4 of Article 3 of Royal-Decree Law1.
- In 2019 and 2020 they must have carried out at least one of the activities stipulated in Sections A to S of the CNAE-2009, with the exception of Division 64 in Section K, and must still be carrying this out at the time of application.
- The annual volume of operations in VAT or other equivalent indirect tax in 2020 fell by more than 30% with respect to 2019. This requisite is not applicable to any which applied the objective-estimate system in 2019 or 2020.
- 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 grantssince the beginning of the application of the temporary framework on 2 April 2020 and EUR 10 million in grants for fixed costs.
- They must meet the following requisites on presentation of the application:
- 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 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 any data, reports or background obtained by the tax authority that are necessary to administer these grants to be furnished.
In addition to these requisites, thebeneficiaries of the grants must undertake the following commitments and obligations::
- Continue 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.
How much is the grant?
Amounts of grants will be as follows:
- Entrepreneurs or professionals and companies applying the objective-estimate personal income tax system: the grant will be equivalent to the amount of subsidisable expenditure set out in the application, to the limit of EUR 3,000.
- Entrepreneurs and professionals and companies with a downturn in their annual volume of operations with a downturn in their annual volume of operations in VAT or equivalent indirect tax of more than 30% in 2020 with respect to 2019: the grant approved will be a minimum of 4,000 euros.
If the credit available is not sufficient to approve all the applications submitted in accordance with the aforementioned criteria, they will be distributed proportionately with regard to the amount requested in a bid to cater for all the applications, in due consideration of the maximum limits.
Conversely, if, when the distribution has been carried out, any credit remains, this will be applied to the second group (entrepreneurs and professionals with a downturn in the volume of operations of more than 30% in 2020), by means of a directly proportional distribution weighted at 50% in accordance with the downturn in the volume of operations, and the amount of the grant divided by the cumulative sum of all the amounts of grants applied for in this second tranche.
In any case, the total amount of the grant cannot exceed the thresholds set out below:
- 40% of the downturn of the volume of business in 2020 with respect to 2019 which exceeds the 30%, in the case of entrepreneurs or professionals applying the personal income tax direct-estimate system, and permanent establishments and entities with a maximum of 10 employees.
- 20% of the downturn of the volume of business in 2020 with respect to 2019 which exceeds the 30%, in the case of entities and entrepreneurs or professionals and permanent establishments with more than ten employees.
- The total sum of the grant cannot exceed EUR 200,000..
Also, in the scenarios stipulated below, the amount of the grant will be a maximum of EUR 3,000 pfor entrepreneurs and professionals and businesses applying the objective-estimate system for personal income tax, and a maximum of EUR 4,000for other entrepreneurs and professionals:
- Registrations or companies created between 1 January 2019 and 31 March 2020.
- Companies that made a structural modification to the company between 1 January 2019 and 31 December 2020.
- Entrepreneurs or professionals and businesses registered for a period of less than one year in 2019 or 2020.
What documentation will I be asked for in the application?
The parties concerned must fill in the form on the La Rioja Development Agency's website, supplying the following information:
- Tax number of the applicant.
- The authorisation referred to in Article 95.1.k) of the General Taxation Law.
- Indication of whether they intend to apply for grants in territories other than that in which they are registered for tax.
- Whether, in 2019 and 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 its companies paid VAT to a special-territory tax authority exclusively during those years./span>
- Whether, in 2019 and/or 2020, they formed part of a group applying a common-territory tax consolidation system, and whether any of its companies exclusively paid VAT to a special-territory tax authority during those years.
- 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.
- Responsible declaration of a detailed list of debts and expenditure that meet the subsidisation requisites, with two separate sections: one for payments pending to suppliers, in chronological order; and another for bank debt, with an indication of whether or not they have a public guarantee.
- Responsible declaration of compliance with the commitments and obligations defined in the public notice.
As part of the accreditative documentation, the following documents will be attached to the application form:
- If the applicant is an individual, copy of the national ID card/foreign ID card of the applicant, only if they have not authorised consultation of their identificatory data.
- If the applicant is a legal entity:
- Copy of its tax number, only if it has not authorised consultation of its identificatory data..
- Deed of incorporation, the company's articles of association and, where applicable, any subsequent modifications, all of which must be filed in the proper register where required, and in force when the application is submitted.
- Valid accreditation of the power of attorney of the signatory of the application, duly filed in the proper register, where applicable.
- Record of third-party registrations, as per the standardised specimen, properly filled in; or registration in the 'Ficha de terceros' application on the La Rioja Economic Development Agency's website.
It will not be necessary to submit this documentation if it is already in the possession of the La Rioja Economic Development Agency, it has not been changed and is still current.
Additionally, in any of the following scenarios, the documentation stipulated in each case must be submitted along with the application:
- In the scenarios contemplated in the second paragraph of section 3 of condition 6: declaration of personal income tax/corporation tax/non-resident income tax for 2019, as applicable.
- Whether, in 2019 and/or 2020, they formed part of a group applying a special-territory tax consolidation system, and whether any of its companies exclusively paid VAT to a special-territory tax authority during those years. form 309 for annual declaration of VAT in 2019 and 2020, or form 303 for fourth-quarter VAT in 2019 and 2020.
- Whether, in 2019 and/or 2020, they formed part of a group applying a common-territory tax consolidation system, and whether any of its companies exclusively paid VAT to a special-territory tax authority during those years: form 309 for annual declaration of VAT in 2019 and 2020, or form 303 for fourth-quarter VAT in 2019 and 2020.
- 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: 2020 corporation tax declaration or, if this was not submitted, profit and loss account for 2020 stipulating the net revenue.
How is my grant justified when it is approved?
The beneficiary must justify,within a maximum period of three months after notification of approval and payment of the subsidy, application of the funds received through the presentation of a responsible declaration of the classified list of the payments made to satisfy debts and fixed costs, with identification of the creditor and of the document, the amount, date of issue and date of payment, along with the invoices and bank payments concerned..
Additionally, the La Rioja Economic Development Agency will check, through the information provided by the state tax agency, compliance by the beneficiary with the following obligations:
- Continuation of the activity corresponding to the grants up to 30 June 2022.
- No distribution of dividends in 2021 and 2022.
- No increases in the remuneration of senior management were approved within two years of notification of approval and payment of the grants, and the beneficiary may be required to present the relevant documentation.
What is the deadline, and how can I apply for the grant?
The applications may be submitted as of 18 June 2021, and up to 14.00 h on 2 July 2021.
Applications will be submitted and the procedure for approval, justification, administration and resources handled in full telematically through the La Rioja Economic Development Agency's website (see link).
For more information on the terms and conditions and the public notice of grants, see the Official Gazette of La Rioja of 17 June 2021 (see link).
1. 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.