COVID-19 Tax Relief Measures in Spain

After Prime Minister Pedro Sánchez declared a ‘State of Emergency’, Spain came to a standstill with businesses temporarily shutting their doors and a limitation on the movement of citizens. The coronavirus pandemic brought about unprecedented measures including a complete lockdown and economic consequences.

Sánchez and the Spanish government put measures in place which included tax relief measures to assist businesses in crisis. The measures in place may seem less lenient than some other European countries; however, the government hopes that amendments made will offer temporary financial relief for individuals and companies in distress due to the coronavirus pandemic.

New Tax Relief and Amendments 

The government announced a suspension on deadlines not concluded by March 18. This applies to tax repayments, appeals, enforcement of guarantees, and the statute of limitations. Furthermore, all individuals and SME’s with a turnover of less than 6 million euros, qualify for a tax holiday of up to six months. Conditions set in place stipulate that taxpayers will be required to apply for the tax holiday, and no interest will be payable for the first three months, after which interest will resume for the remaining three months. Larger companies with a higher turnover than €600,000 per annum are exempt from this benefit.

The tax deferral amount is capped at 30,000 euros. The suggested deferral will be under the procedural laws across all jurisdictions and will only be activated after an application request by the taxpayer. Those, as mentioned above, will apply to corporate income tax, VAT, tax withholdings, and excise taxes. Custom duties and debt postponement apply for filings between April 2 and May 30. This postponement does not apply to taxpayers which include their VAT debts in their periodic VAT returns.

Although the tax measures were approved on March 18, the application is said to extend from March 14.

The government further extended tax relief measures for the most affected industries. The tourism sector took a significant setback as a result of this global pandemic. A new A 25% reduction in real estate tax is made available for restaurant, leisure, hotel, and retail properties. In addition, with another 25% relief for business activity tax. 

While the payment of tax deadlines may be suspended, the Royal Decree 465/2020 requires all taxpayers and companies to file their taxes and submit forms as per usual. Furthermore, the government has put other measures in place to financially mitigate economic damage and assist citizens financially affected by the COVID-19 crisis. 

Government’s economic measures are continually being updated and re-evaluated, to learn more about the latest tax-related issues in Spain, visit Royal Decree 465/2020.

As Spain moves to ease all restrictions gradually, it is still unclear on how long this virus will be around. Governments across the board are looking at ways to restore the economy while delicately managing the safety of its citizens. Taxes are necessary to keep the economy running, and these measures are only a temporary solution to a broader economic issue.
READ ALSO: COVID-19 Economic Response for Businesses in Spain

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