The Spanish government has announced an economic relief package for the tourist and retail sectors in response to the ongoing economic fallout of the coronavirus pandemic.
The Plan de Refuerzo package aims to provide small and medium companies with an array of measures aimed at providing liquidity including rent reductions, tax deferrals, access to finance and deferring tax and social security payments.
The Treasury Minister, María Jesús Montero, highlighted that the initiatives, which are in addition to those approved since the outbreak of the health crisis, will total some 4.22 billion Euros.
The tourist sector represents 12% of Spain’s GDP and has been decimated by the pandemic whilst bars and restaurants have seen a 50% drop in revenue with around 100,000 of the country´s establishments expected to have been lost by the end of 2020.
The government has created several categories of measures: incentives for rent reduction (with an estimated impact of €324 million), increased access to government-backed loans (€520 million), tax-related measures (€2.8 billion), and labor issues such as Social Security contributions (€567 million).
Companies in these sectors will be exempt from paying part of the social contributions that would accrue in the months of December 2020 and January 2021. In addition, they will be able to apply a 50% discount on their social security quotas for so-called permanent seasonal workers from April to October 2021.
There will be more time to repay loans backed by the state-owned Official Credit Institute (ICO). For retailers, restaurateurs and tourism entrepreneurs, the payment-free period has been extended from one to two years, while repayment may take place over eight years, up from five. The ICO has also announced a new series of guarantees providing 90% state backing to €500 million worth of loans to small businesses in the hospitality sector.
Travel agencies and tour operators may also benefit from ICO-backed funding to refund customers affected by pandemic restrictions.
Around 617,000 taxpayers will be able to defer tax payments for up to six months, with three months of that interest-free, on payments with a due date between April 1 and April 30, 2021, up to a top amount of €30,000. This would allow struggling businesses to pay in October. There are other reductions available for income tax (IRPF) and value-added tax (IVA).
The second bloc of initiatives proposes the creation of a new tranche of the COVID-19 line of guarantees of the Official Credit Institute (Spanish acronym: ICO) to SMEs and independent contractors in the tourism and hotel and catering sectors and related activities, with a provision of 500 million euros and a guarantee of up to 90%, stated María Jesús Montero.
Travel agencies and tour operators may use the financing secured by the ICO to return advance payments to their customers for trips contracted but not finally taken.
The minister added that another measure is the creation of a reciprocal mutual society exclusively for the tourism sector to facilitate access to financing through guarantees, including the capacity to inject liquidity of up to 700% of their capital.
SMEs and independent contractors will not have to pay tax in April for the first quarter of 2021, which may be delayed until October next year.
María Jesús Montero stated that they will thus have more liquidity at the most complicated time for their recovery.