Labour and Tax Actions regarding the CORONAVIRUS / Covid -19

We know you are facing a very hard period. However, you are not alone.

The Spanish Government has issued several legal rules to mitigate the severe economic and social consequences that could be established in the near future depending on the evolution of the Coronavirus crisis.

We have prepared a brief summary of possible actions and information to keep in mind if you are an employer, employee, tenant, or taxpayer:

LABOUR ACTIONS

First of all, working from home (teleworking) is highly recommended. In case this decision is taken, please let us know. We will provide you with a document that employees must adhere to in order to cover any labour risk legislation.

Actions you could apply:

1.- Suspension of labour agreements / Reduction of working time – ERTE – Expediente Regulación Temporal de Empleo

Suspension or reduction of work time will need to be duly justified by any of the following scenarios:  

Force majeure scenario: 

Suspension or cancellation of the activity, temporary close of business premises, restrictions to public transport, lack of supplies that imply the inability to continue with economic activity, employees affected by COVID-19, etc.

AVALAW will assist you in the preparation of a detailed report explaining the situation and the need to suspend/reduce work, together with the documentation supporting such circumstances. The Labour Authority will make a final decision five days after the issuance of a statement by the Labour Inspection. This process could be rejected in the event of the circumstances not being supported and/or sufficiently explained. A special communication needs to be sent to the employees.

– Economic, technical, organization and production scenario: 

In this case, firstly a negotiation commission of 3 employees must be constituted if there is not an employee representative present during a period of 5 days. A consultation period of 7 days will be established, plus an additional period of 7 days for the issuance of the report by the Labour Inspection.

Economic, Technical, Organization and production circumstances that justify the suspension will need to be duly justified.

SAVINGS for the employer Company:

    • During the suspension/reduction, employees’ salaries will be reduced accordingly. Holidays will not be reduced for reductions but will be for suspensions.
    • Under Force Majeure scenario suspension, no social security charges attributable to the company will be payable for companies with less than 50 employees. Please note that this exemption is only applicable as long as having the employees are retained for a further 6 months once the company has been reactivated. The non-payment of social security contributions attributable to the Company will not have any negative effects for employees in their future pension (retirement, unemployment).
    • Employees can obtain unemployment benefits payments even if they have not contributed to Social Security in the past.

2.- Dismissals

An action that no one wants to take, but that the law permits, is to decide to dismiss employees due to Economic, Technical, Organization and production circumstances.

Please have in mind that dismissals must be duly notified in order to be effective.

3.- Other options applicable

  • Suspension agreed with employee
  • Unpaid leave
  • Leave on personal grounds

TAX ACTIONS

Deferral of tax payments will be possible.

  • Accordingly, Tax payments due in April 2020 mainly referring to VAT (Tax form 303), Withholding of Salaries (Tax form 111), Withholding of rental payments (Tax form 115), and First payment in advance of Corporate Income Tax (Tax form 202) will be made in October 2020.

  • No interest in arrears will be charged in the first three months of deferral.

SELF-EMPLOYEES - AUTONOMOS

Self-employees / entrepreneurs will be able to get a pension for the end of the business activity if:

  • The activity has been stopped (ex. They have been obliged to close the business premise) 
  • The previous month’s turnover is reduced by at least 75% in comparison to the average turnover of the previous semester.

OTHER RELEVANT ACTIONS

  • Negotiation on rental payments with regards to the office space.
  • Financing facilities approved by the Government.

If you feel unsure about which type of action you should take, AvaLaw Legal Services can help you figure out what’s best for you. We are here to help you.

 

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Alejandro Puyo

Head of Tax & Accountancy Department

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