Royal Decree-Law 15/2020, of April 21, on urgent complementary measures to support the economy and employment, was published in the Official State Gazette (BOE) on April 22. Among other things, it incorporates a series of tax measures, such as the reduction of VAT applicable to the supply of certain medical equipment and electronic books, magazines, and newspapers; the option to waive the simplified tax assessment system ("modules") for Personal Income Tax (IRPF) and special VAT and IGIC (Canary Islands General Indirect Tax) regimes; and the option to change from a percentage-based tax rate to a percentage-based tax rate for corporate income tax installments.
We inform you that Royal Decree-Law 15/2020, of April 21, on urgent complementary measures to support the economy and employment, was published in the Official State Gazette (BOE) on April 22. This decree-law reinforces, complements, and expands upon the decisions adopted since the second week of March to counteract the impact of COVID-19, and generally came into effect on April 23.
The legislation incorporates more than 30 measures that strengthen business financing, offer tax support, facilitate economic adjustment, and protect jobs and citizens.
Below, we outline the main tax measures included in Royal Decree-Law 15/2020.
1. Reduction of VAT tax rates
A rate of 0% is established for deliveries, imports and intra-community acquisitions of medical material listed in the ANNEX, which will be documented on an invoice as if they were exempt operations, with the following characteristics:
• Transactions carried out between April 23 and July 31, 2020.
• The recipients must be public law entities, clinics or hospitals, or private social welfare entities as defined in section three of Article 20 of Law 37/1992 on VAT.
• These transactions do not limit the right to deduct.
The tax rate applicable to deliveries of electronic books, magazines, and newspapers that, as with their print counterparts, do not primarily contain advertising is reduced from 21% to 4%. At the same time, the percentage of revenue that advertising must provide to the publisher for the standard rate to apply is increased from 75% to 90%. Thus, effective April 23, 2020, the reduced rate of 4% will apply to:
Books, newspapers, and magazines, even when considered as services provided electronically, that do not contain solely or primarily advertising and do not consist entirely or predominantly of video or audible music content, as well as any complementary items delivered together with them for a single price.
This includes any work that results directly in obtaining a book, newspaper, or magazine in sheet or continuous form, a photolithographic print of such goods, or that consists of their binding.
For these purposes, complementary items include magnetic tapes, discs, videocassettes, and other similar sound or video magnetic media that form a functional unit with the book, newspaper, or magazine, enhancing or completing its content and sold with it, with the following exceptions:
a) Discs and magnetic tapes that contain exclusively musical works and whose market value is higher than that of the book, newspaper or magazine with which they are delivered together.
b) Videocassettes and other similar sound or videomagnetic media containing cinematographic films, television programs or series of fiction or music and whose market value is higher than that of the book, newspaper or magazine with which they are delivered together.
c) Computer products recorded by any means on the media indicated in the preceding letters, when they mainly contain programs or applications that are marketed independently on the market.
Books, newspapers, and magazines will be considered to contain primarily advertising when more than 90% (previously 75%) of the revenue they generate for their publisher is derived from advertising.
This category includes musical scores, maps, and sketchbooks, but excludes electronic articles and devices.
2. Option to change from percentage on quota to percentage on base in the installment payments of Corporation Tax
In order to adapt the calculation applicable to the settlements of the Tax to the economic reality, it is allowed, for tax periods beginning from 1 January 2020 and with exclusive effects for said period, that taxpayers whose volume of operations has not exceeded the amount of 600,000 euros exercise the option of making the partial payments, on the part of the taxable base of the period of the first 3, 9 or 11 months, by submitting within the period extended by Royal Decree-Law 14/2020 the partial payment determined by application of the aforementioned taxable base modality. For taxpayers who have not been able to exercise the option as described above and whose net turnover does not exceed €6,000,000, the option may be exercised within the installment payment period due in the first 20 days of October 2020, also determined by applying the aforementioned tax base method.
This measure will not apply to tax groups that apply the special tax consolidation regime regulated in Chapter VI of Title VII of Law 27/2014 on Corporate Income Tax.
Taxpayers who exercise the option as described above will be bound to this installment payment method exclusively for payments corresponding to the same tax period.
In summary, we must take into account:
• Quarterly payment for Micro-enterprises: taxpayers with a turnover not exceeding €600,000 - and who do not pay tax under the consolidation regime of this tax or the REGE in VAT - may choose to make the first quarterly payment of the 2020 fiscal year using the percentage system based on the months elapsed in the fiscal year - from January to March if the fiscal year coincides with the calendar year - if they submit form 202 by May 20th using this system.
• Installment payment for SMEs: Taxpayers with a turnover not exceeding €6,000,000, who have not been able to opt for the change of payment method like Micro-enterprises and who do not pay tax under the special group regime for this tax, may switch to the percentage-based option, but only in the second installment payment of the year. The installment payment made in the first installment will, of course, be deductible in this second payment. In this way, they can recover, at least in part, any excess advance tax payment that may have occurred in the first installment.
3. Waiver of the objective estimation regime ("modules") of the Personal Income Tax and special regimes of VAT and the Canary Islands General Indirect Tax (IGIC).
It is essential to temporarily adjust the amounts of installment payments and advance payments for the various taxes that are determined according to signs, indices, or modules, given the disruption to their activity caused by the current health emergency.
Therefore, the calculation of installment payments under the objective estimation method for Personal Income Tax (IRPF) and advance payments under the simplified VAT regime are adjusted proportionally to the period affected by the declaration of the state of emergency in economic activities. These payments, calculated using signs, indices, or modules previously determined under normal circumstances, would result in amounts that do not reflect the reality of current income.
Furthermore, to make the tax regime more flexible for SMEs and the self-employed, the legally mandated three-year waiting period for opting out of the objective estimation method for IRPF, the simplified regime, and the special VAT regime for agriculture, livestock, and fishing is eliminated. This allows taxpayers to reapply these methods in the 2021 tax year, provided they meet the regulatory requirements for their application. In this way, by being able to determine the amount of their net income using the direct estimation method, they will be able to more accurately reflect the reduction in income from their economic activity as a result of COVID-19, without this decision affecting the method of determining income applicable in subsequent tax years.
The waiver will also have the same effects with respect to the Canary Islands General Indirect Tax (IGIC).
Thus, effective from April 23, 2020:
• The tacit waiver of the objective estimation regime, made by submitting the first quarter installment payment on time -until May 20- calculating it in direct estimation, is allowed to have effects only for 2020. These taxpayers may return in 2021 to determining the net income by modules by revoking the waiver of this year in December 2020 or by submitting the first installment payment of 2021 under this modality.
• The same applies to VAT and IGIC regarding the waiver and revocation of special regimes.
• Likewise, for personal income tax (IRPF) taxpayers who determine their net income using the objective estimation method – for the activities listed in Annex II of Order HAC/1164/2019 – and for VAT taxpayers under the simplified regime who do not wish to opt out of the modules, the calendar days of the quarter during which a state of emergency was in effect will not be counted as days of business activity when calculating the quarterly installment payment and the advance payment based on the base data for the 2020 tax year, respectively.
In short, 18 days will not be counted in the first quarter, or, in other words, the quarterly IRPF installment payment and the advance payment will be 80.22% of what they would have been without this measure.
4. No start of the enforcement period for certain tax debts in the case of granting financing.
Within the scope of the State Tax Administration's powers, tax returns and self-assessments submitted by a taxpayer within the period stipulated in Article 62.1 of Law 58/2003, of December 17, General Tax Law, without payment of the corresponding tax debts resulting therefrom, will prevent the commencement of the enforcement period, provided certain requirements are met.
Specifically, if a tax self-assessment is submitted with a deadline between April 20 and May 30, without payment being made, the enforcement period—which would entail the imposition of a late payment surcharge—will not commence if the following requirements are met (failure to meet any of them would result in the commencement of the enforcement period the day after the end of the voluntary filing period):
• The self-assessment is submitted on time.
• The taxpayer has requested, during the voluntary period for submitting self-assessments, a loan guaranteed by the Ministry of Economic Affairs and Digital Transformation -art. 29 RD-law 8/2020- at least for the amount of the self-assessments and for their payment.
Specifically, Article 29 of Royal Decree-Law 8/2020 establishes:
1. To facilitate the maintenance of employment and mitigate the economic effects of COVID-19, the Ministry of Economic Affairs and Digital Transformation will grant guarantees to the financing granted by credit entities, financial credit establishments, electronic money entities and payment entities to companies and the self-employed to meet their needs arising from, among others, the management of invoices, working capital needs, maturity of financial or tax obligations or other liquidity needs.
2. The Ministry of Economic Affairs and Digital Transformation may grant guarantees for a maximum amount of €100 billion. The applicable conditions and requirements, including the maximum period for requesting the guarantee, will be established by a Council of Ministers Agreement, without requiring further regulatory development for their application.
3. The guarantees regulated in this regulation and the conditions developed in the Council of Ministers Agreement will comply with European Union regulations on State Aid.
See in this regard the Resolution of 10 April 2020, of the State Secretariat for Economy and Business Support, which publishes the Agreement of the Council of Ministers of 10 April 2020, instructing the Official Credit Institute to launch the second tranche of the guarantee line approved by Royal Decree-Law 8/2020, of 17 March, and establishing that its beneficiaries are small and medium-sized enterprises and self-employed workers affected by the economic consequences of COVID-19 (Official State Gazette [BOE] 11 April), and the Resolution of 25 March 2020, of the State Secretariat for Economy and Business Support, which publishes the Agreement of the Council of Ministers of 24 March 2020, approving the characteristics of the first tranche of the ICO guarantee line for companies and self-employed workers, to mitigate the economic effects of COVID-19 (Official State Gazette [BOE]). March 26).
• Submission of a certificate issued by the financial institution confirming the request within a maximum of 5 days from the end of the self-assessment filing period. If the self-assessment was filed before April 23, even though the enforcement period would have already begun, it will still be considered within the voluntary payment period if the certificate is submitted by April 30, the financing is obtained, and the debts are effectively paid within one month of the self-assessment filing deadline.
• That the financing is granted for at least the amount of the tax debts.
• That these tax debts are paid within one month of the end of the self-assessment filing period.
5. Deferral of debts in the port area
Upon request, the Port Authorities may grant the deferral of the corresponding tax debt of the settlements of port fees accrued from the date of entry into force of Royal Decree-Law 7/2020, of March 12, which adopts urgent measures to respond to the economic impact of COVID-19 (i.e., from March 13) until June 30, 2020, both inclusive.
The conditions for the deferral will be as follows:
a) The maximum term will be six months.
b) No late payment interest will accrue and no guarantees will be required for the deferral.
6. Exceptional Availability of Pension Plans.
The possibility, established in Royal Decree-Law 11/2020, of expanding the possibilities for claiming benefits from different social security systems is further developed by broadening the contingencies under which vested rights can be exercised. For example, regulations are established regarding how to prove the circumstances under which the plans can be accessed, the time period to which these circumstances are linked, and the maximum amount available.
Specifically:
1. Participants in individual and associated pension plans, and participants in defined contribution or mixed employment pension plans for those contingencies defined under a defined contribution scheme, may request to exercise their consolidated rights in the cases of the twentieth additional provision of Royal Decree-Law 11/2020, of March 31.
Participants in employment pension plans of the defined benefit or mixed modality may also have access, for those contingencies defined in the defined benefit regime or linked to it, to the consolidated rights in case of being affected by a ERTE, the suspension of opening to the public of establishments or the cessation of activity, derived from the health crisis situation caused by COVID-19, when the commitment for pensions allows it and the specifications of the plan approved by its control commission provide for it under the conditions that they establish.
2. The existence of the circumstances referred to in section 1 of the twentieth additional provision of Royal Decree-Law 11/2020 shall be proven by the participant of the pension plan who requests the withdrawal by submitting the following documents to the pension fund management entity:
a) If the participant is affected by a temporary employment regulation file (ERTE) derived from the health crisis situation caused by COVID-19, the certificate from the company will be presented in which it is proven that the participant has been affected by the ERTE, indicating the effects of the same on the employment relationship for the participant.
b) If the participating entrepreneur owns an establishment whose opening to the public has been suspended as a result of the provisions of Article 10 of Royal Decree 463/2020, of March 14, the participating entrepreneur shall submit a declaration stating, under his responsibility, that he meets the requirements established in section 1, letter b) of the twentieth additional provision of Royal Decree-Law 11/2020, of March 31, in order to be able to exercise his vested rights.
c) In the case of being a self-employed worker who had previously been integrated into a Social Security scheme as such, or into an alternative mutualism scheme to this and has ceased his activity during the state of alarm decreed by the Government due to COVID-19, the certificate issued by the State Tax Administration Agency or the competent body of the Autonomous Community, as appropriate, will be presented on the basis of the declaration of cessation of activity declared by the interested party.
d) If the applicant is unable to provide any of the required documents, they may submit a sworn statement explaining the reasons, related to the consequences of the COVID-19 crisis, that prevent them from doing so. After the state of emergency and any extensions thereof have ended, the applicant will have one month to submit the missing documents.
3. The amount of vested rights available will be that justified by the participant to the pension fund management entity, with the maximum limit being the lower of the following two amounts for all pension plans held by the participant:
1. Depending on which of the scenarios indicated in section 1 of the twentieth additional provision of Royal Decree-Law 11/2020, of March 31, applies:
a) in the event that the participant is affected by a temporary layoff (ERTE) resulting from the health crisis caused by COVID-19: the net salaries not received while the ERTE remains in effect, with a maximum calculation period equal to the validity of the state of alarm plus one additional month, justified with the last payslip prior to this situation;
b) in the case of a business owner whose establishment has been suspended from opening to the public as a result of the provisions of Article 10 of Royal Decree 463/2020, of March 14: the estimated net income that has not been received due to the suspension of opening to the public, with a maximum calculation period equal to the validity of the state of alarm plus one additional month, justified by the presentation of the annual declaration of Personal Income Tax corresponding to the previous year and, where appropriate, the installment payment of Personal Income Tax and the self-assessments of Value Added Tax corresponding to the last quarter;
c) In the case of self-employed workers who had previously been integrated into a Social Security scheme as such, or into an alternative mutual scheme to this, and have ceased their activity as a result of the state of alarm decreed by the Government: the net income that has not been received as a result of the cessation of activity during a maximum calculation period equal to the validity of the state of alarm plus one additional month, estimated by means of the annual declaration of Personal Income Tax corresponding to the previous year and, where appropriate, the quarterly payment of Personal Income Tax and the self-assessments of Value Added Tax corresponding to the last quarter.
In the case of sections b) and c), the applicant must also provide a declaration of responsibility quantifying the monthly amount of income reduction.
2. The result of prorating the annual Public Indicator of Income for Multiple Effects (IPREM) for 12 payments in force for the 2020 fiscal year, multiplied by three, in the proportion corresponding to the duration of the ERTE (Temporary Employment Regulation File), the period of suspension of the establishment's opening to the public, or the period of cessation of activity, as applicable to each of the cases referred to in sections a), b), and c) of section 1 of the twentieth additional provision of Royal Decree-Law 11/2020, of March 31. In all three cases, the maximum period to be considered is the duration of the state of emergency plus one additional month.
4. The participant shall be responsible for the veracity of the documentation proving the existence of the factual circumstances required to request the benefit, as well as for the accuracy in quantifying the amount to be received.
5. The refund must be made within a maximum period of seven business days from the date the participant submits the complete supporting documentation. In the case of employment-based pension plans, this period will be extended to thirty business days from the date the participant submits the complete supporting documentation.
6. The provisions of this section shall also apply to the insured parties of insured pension plans, company social welfare plans, and mutual social welfare societies referred to in Article 51 of Law 35/2006, of November 28, on Personal Income Tax. In these cases, the references made in the preceding sections to managing entities, participants, and pension plan specifications shall be understood to refer to insurance companies, the insured parties or mutual members, and the insurance policies or benefit regulations, respectively. In the case of mutual social welfare societies that act as an alternative to registration in the Special Social Security Scheme for Self-Employed Workers, the economic rights of the products or insurance used to fulfill this alternative function may not be exercised.
7. The preceding sections define the assumptions and conditions under which the exceptional power to liquidate vested rights, provided for in the twentieth additional provision of Royal Decree-Law 11/2020 of 31 March, may be exercised. In matters not covered by these sections, the latter twentieth additional provision remains in force.
8. The amounts and documentation indicated in the previous sections may be modified by Royal Decree, in accordance with the provisions of section 3 of the twentieth additional provision of Royal Decree-Law 11/2020, of March 31.
7. Extension of Certain Deadlines for Tax Provisions
The extension of certain deadlines until April 30 or May 20, 2020, established in Article 33 of Royal Decree-Law 8/2020 and in Additional Provisions 8 and 9 of Royal Decree-Law 11/2020, is extended to May 30.
In summary, within the scope of the State, Regional, and Local Tax Administrations, this means the following:
• Payment deadline for debts assessed by the Administration, both voluntary and under enforcement proceedings, that were notified before or after March 14: the due date is extended to May 30, unless the notification expires after that date.
• Expiration of deadlines for deferral agreements communicated before or after March 14: the deadline will be May 30, unless the communicated deadline falls after that date.
• Deadlines for submitting allegations, responding to requests, etc., communicated before or after March 14: the deadline will be May 30, unless the communicated deadline falls after that date.
• The Administration may not enforce guarantees on real estate between March 14 and May 30.
• For the maximum duration of tax application, penalty, and review procedures, the period between March 14 and May 30 will not be counted.
• The statute of limitations and expiry periods are suspended between March 14 and May 30.
• The period between March 14 and May 30 will not be counted towards the maximum time limit for executing economic-administrative resolutions.
• The deadline for filing an appeal for reconsideration or for filing an appeal or claim in an economic-administrative procedure will begin on May 30.
• May 30 will be the deadline for responding to requests for information from the Directorate General of the Cadastre, as well as for submitting arguments, whether the communication was received before or after March 14, unless the communicated deadline expires after that date.
• The deadlines related to the development of auctions and the awarding of assets are also extended to May 30. Furthermore, the exercise of rights by bidders and successful bidders in the disposal procedures carried out by the Spanish Tax Agency (AEAT) is adapted to the extension of deadlines, such that bidders may request the cancellation of their bids and the release of the deposits made and, where applicable, the purchase price paid, provided that, with respect to successful bidders, a certificate of the award of the assets or the execution of a public deed of sale has not yet been issued.
8. Cancellation of bids and return of deposits and auction prices paid in auctions
The suspension of deadlines in the tax field included in Royal Decree-Law 8/2020 is modified, to adapt the exercise of rights by bidders and successful bidders in the disposal procedures carried out by the AEAT to the extension of deadlines that affects said procedures, specifying that:
• In auctions held by the AEAT, through the Auction Portal of the State Agency of the BOE, the bidder may request the cancellation of their bids and the release of the deposits constituted.
• Bidders and successful bidders in auctions where the bidding phase has ended will also be entitled to a refund of the deposit and, where applicable, the auction price paid, upon request, provided that no certificate of the award of the goods or public deed of sale has been issued by April 23, 2020. In this case, the deposit amount will not be lost.
You can contact this professional office for any questions or clarifications you may have.
Warm regards,
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A Àmbit Assessor, SL has 40 years dedicated to the tax, comptable and labor consultancy of the Pime.
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