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Changes approved by Royal Decree-Act 5/2021, of 12 March, on extraordinary measures to support business solvency in response to the COVID-19 pandemic



Up to and including 31 December 2021, any debtor who is insolvent is not obliged to file for bankruptcy, irrespective of whether or not they have informed the competent court that they have opened negotiations with creditors to reach a refinancing agreement, an out-of-court payment settlement or adopted a proposal of early composition agreement.


Up until 31 December 2021, the insolvent debtor may submit a proposal to change the refinancing agreement or arrangement or, in the case of refinancing agreements, submit a new one.



A direct Covid Grant Scheme has been created for the self-employed and businesses to support solvency and reduce indebtedness in the private sector.

Terms of the grant


Non-financial companies and self-employed people worst hit by the pandemic whose tax residence is in Spanish territory or, if they are non-resident non-financial companies, they must operate in Spain through a permanent establishment.

They must fall within the sectors defined in Annex I of Royal Legislative Decree 5/2021.

Annual turnover must have fallen by more than 30% compared with 2019, according to the tax return or as verified by the Administration through VAT or equivalent indirect taxation in 2020.

Employers or professionals who apply the objective estimate method to income tax and fall within the sectors defined in Annex I of Royal Legislative Decree 5/2021.

In the case of a consolidated group that pays corporation tax on a consolidated taxation basis, said group will be considered to be a single taxpayer recipient, rather than each of the entities in the group, so the turnover that is taken into account when determining if there has been a reduction in activity will be the result of adding up the turnover of each of the entities that make up the group.

Any employers or professionals who meet the aforementioned requirements and who, in the income tax return filed in 2019, declared a financial loss from their economic activities, having applied the direct estimate method to determine such losses or, where applicable, during that tax year, had a negative taxable income for corporation tax or non-resident income tax, before applying the capitalisation reserve and offsetting tax loss carryforwards, will not be recipients.

The requirements stipulated in point iv below must be met.


Final in nature and it must be used to pay a debt and make payments to suppliers and other creditors, be they financial or otherwise, in addition to fixed costs incurred by eligible self-employed people and companies.


7 billion euros.


Public support measures have been introduced, in addition to a Good Practice Code which, among other things, promotes coordination between financial institutions in adopting measures that help to strengthen the solvency of companies and self-employed people whose registered addresses are in Spain and which are experiencing a temporary asset imbalance as a result of a fall in revenue due to the COVID-19 pandemic.


Companies and self-employed people with their registered addresses in Spain which have entered into government-guaranteed financing arrangements with credit institutions or any other institution supervised by the Bank of Spain, between 17 March 2020 and the date of publication of Royal Legislative Decree 5/2021.

Moreover, the company or self-employed person must have previously requested the extension of the maturity dates and grace periods set forth in Royal Legislative Decree 34/2020 and the latter must have informed the ICO that it is implementing such measures.

Other requirements that must be met will be established by Agreement of the Council of Ministers.

The requirements stipulated in point iv below must be met.


3 billion euros.


Through an Agreement of the Council of Ministers, a voluntarily adopted Code of Good Practice is to be approved by credit institutions.


The aim of the Recapitalisation Fund for Businesses hit by COVID is to provide temporary public support based on profitability, risk and sustainable development impact criteria, to strengthen the solvency of companies with their headquarters in Spain, with eligibility criteria to be determined by Agreement of the Council of Ministers.

It has been allocated a total fund of 1 billion euros.

Additionally, the recipients must meet the requirements that appear in point iv below.


They must not have been sentenced, in a final judgement, to lose their right to claim public subsidies or grants or convicted of other crimes such as malfeasance or corruption.

They must not have given rise to the final termination of contracts entered into with the Administration due to wrongful conduct.

They must be up-to-date with all payment obligations pertaining to the repayment of public subsidies and grants and be up-to-date with all tax and Social Security payments.

They must not have filed for voluntary bankruptcy or been declared insolvent in bankruptcy or insolvency proceedings (unless an arrangement has come into force, they are not subject to receivership and they have not been disqualified and the set period of disqualification has not yet ended).

They must not have their tax residence in a country or territory that is classified as a tax haven.

Furthermore, the recipients agree:

To continue with the activity for which the grant was awarded until June 2022.

Not to pay dividends during 2021 and 2022.

Not to approve wage increases for senior management for 2 years following implementation of any of the measures.

Code of Good Practice

On 11 May 2021, the Council of Ministers approved the Code of Good Practice for the renegotiation framework for clients with guaranteed financing set forth in Royal Decree-Act 5/2021, of 12 March, on extraordinary measures to support business solvency in response to the COVID-19 pandemic.

The Code of Good Practice implements said Decree and, among other measures, it makes provision for a further extension to the maturity date of ICO loans.


Financial institutions that have benefited from the guarantees issued pursuant to Royal Decree-Act 8/2020 of 17 March and Royal Decree-Act 25/2020 of 3 July have one month to report that they are adopting the Code of Good Practice, a period which commenced on 12 May and ends at 24:00 on 12 June. The procedure for reporting adoption of the Code is governed according to the Resolution of 12 May 2021, which is now published on the website of the Treasury Office.[1] After the set period has passed, this Office will publish the names of the entities that have adopted the Code and the names of those that have not done so.


The further extension of the maturity dates of guarantees only applies to those institutions that have adopted the Code of Good Practice. The adoption of the Code by those institutions requires them to extend maturity dates, provided that the debtor meets certain eligibility requirements, as stipulated in the Agreement itself (Annex II) and in Royal Decree-Act 5/2021 (fourth additional provision).

We highlight some of these requirements, such as the absence of arrears, for the debtor not to be undergoing bankruptcy proceedings, for the debtor’s application to have been made no later than 15 October of the current year and for turnover to have fallen by at least 30% in comparison with 2019.

Regarding the requirement related to a fall in the level of turnover, it seems that this is the only requirement that the debtor may fail to meet and yet continue to benefit from the deferment, although a failure to meet said requirement means that the financial institution is not obliged to grant the extension. In such cases, said extension to the maturity may be agreed voluntarily between the parties.

For those debtors who receive public subsidies for the amount of 1,800,000 euros or less and debtors who receive an amount exceeding 1,800,000 an additional period of no more than 2 years is provided for if the term of the transaction has already been extended and 5 years if it has not.

Finally, it is worth noting that the costs are fixed for debtors who owe less than 1.8 million euros, i.e. the transaction incurs the same fee as it did prior to the extension of the maturity date. However, the costs rise for debtors who owe more than 1.8 million euros.

The internet connection costs borne by a teleworker in 2020 cannot be considered deductible expenses

In its recent binding consultation of 28 May 2021, the Tax Authority, through its Personal Income Tax Subdepartment,  has declared that the internet connection costs borne by a teleworker in 2020 cannot be considered deductible expenses when determining net earnings from employment.

Issue raised

The consulting party states that, during 2020 he worked remotely from home, with the company having provided him with the computer and monitor and the worker required to bear the internet connection costs.

The following question was asked: can the aforementioned costs be considered deductible expenses for the purpose of determining his net earnings from employment?

Applicable legislation

The Personal Income Tax Subdepartment (a body that is part of the Tax Authority) cites art. 19.2 of Personal Income Tax Act 35/2006, of 28 November to settle the consultation:

“Only the following will be considered deductible expenses:

a) Civil servants’ contributions to Social Security or mandatory mutual funds.

b) Deductions for pensions.

c) Contributions to orphan schools or similar entities.

d) Contributions paid to trade unions or professional associations, when affiliation is mandatory, for the amounts corresponding to the essential purposes of these institutions and up to the legally established limit.

e) Any legal defence costs that arise directly from legal disputes regarding the relationship between the taxpayer and the person from whom he/she receives his/her earnings, with a limit of 300 euros per year.

f) To cover other expenses that do not appear above, 2,000 euros per year. (…)”

As a result, the Personal Income Tax Subdepartment recognises that, pursuant to the aforementioned legal provision, “the expenses referred to by the consulting party would not be deemed to be deductible expenses when determining net earnings from employment, as such expenses are not included in the deductible expenses set forth in the aforesaid article for illustrative purposes”.

Furthermore, in the opinion of this body, the generic amount of 2,000 euros per year set forth in section f) of the aforementioned legal provision, “serves the purpose of including any expenses that are difficult to specify, quantify or justify or which are not included in the expressly stipulated expenses in the aforementioned art. 19 of the Tax Act and which correspond directly or indirectly to earnings obtained from employment”.

The Supreme Court cancels a SWAP agreement: Caja España did not inform its client of the risks that they were actually assuming

“If they had been aware of the essential characteristics of the product that they were purchasing and its inherent risks, they would never have signed it”. This was the judgement of the Senior Judge of the Supreme Court’s Civil Chamber in its ruling on 18 May 2021, settling the appeal filed by the company that had entered into the swap agreement.

In November 2007, the client company signed a contract entitled “zero cost collar with cap cancelling forward hedge”, which was a financial swap for the nominal amount of 4,000,000 euros. From the settlement in January 2010 to the maturity date, all settlements were negative for the customer and positive for the bank, resulting in a closing balance of 286,454.03 euros in favour of the latter.

The client company’s legal representatives initiated proceedings, requesting that the signed contract be annulled or, alternatively, that it be voidable. The specific basis for its claim was the absence of or error in consent, deceit, a violation of consumer and user rights and a conflict of interests between the financial institution and the plaintiff.

Furthermore, it requested that the contract be terminated due to the respondent being in breach of its contractual obligations of due diligence, good faith and disclosure and a breach of its obligation to provide advice and information on the product that was the subject of the litigation.

In the first proceedings, Court no. 7 of Palencia upheld the petition to make the financial swap agreement that was signed voidable, accepting that there had been an essential and excusable defect of consent and that the parties must proceed to the mutual repayment of all settlements made as a result of the application of the contract that had been declared void. Additionally, in the opinion of the Senior Judge, the minimum disclosure requirements were not met, as there was no clear explanation of the loan to which the transaction was supposedly link, nor how the hedging of interest rate rises works, or the high levels of risk being assumed by the client.

In a second hearing, it was declared that the action for annulment due to defect of consent had surpassed the statute of limitations as 4 years had passed since the initial settlement, resulting in the client company filing the aforementioned appeal.

It was asserted in the petition that the period for filing suits must be calculated from the date of fulfilment of obligations under the contract, which in the case in hand was 11 October 2012, the date of the last settlement.

However, in the second legal basis in its recent ruling, the Supreme Court’s Civil Chamber recalls that the specific issue pertaining to the calculation of the period for filing an action for annulment due to defect of consent in the swap contracts, which was disputed at the time, was finally settled by the High Court in Supreme Court Judgement 89/2018, of 19 February.

“In swap contracts or ‘mortgage hedging’, the obligations of the contract have not been fulfilled until the contractual relationship is concluded or terminated, as this is when the obligations have been fulfilled by both parties and the financial consequences of the contract actually occur. (…)

Thus, considering that a period of four years had not passed between the maturity date of the swap contract (11 October 2012) and the date on which the claim was filed (11 June 2016), in the Supreme Court’s opinion, in the case at hand, “there has been a breach of the provisions of art. 1301 of the Spanish Civil Code, as applied by the Provincial Court, so the appeal must be upheld”.

As noted above, the Supreme Court’s Civil Chamber upheld the appeal filed by the client company, rendering void the judgement issued by Section One of the Provincial Court of Palencia and upholding the judgement issued by Court of First Instance and Preliminary Investigation no. 7 of Palencia, insofar as it had upheld the claim that was filed, rejecting the arguments put forward by the respondent bank.

RAICH & LOPEZ ROYO has represented the partners of DINA-RENT during its sale to COALCI

COALCI, a company that is wholly owned by the García–Almirall Family and was founded in 2005, with a market-led approach to work at height solutions for all types of projects and with the aim of meeting its customers’ needs, has completed a major deal with the purchase of the company DINA – RENT, owned by the Sagrera and Xavier Castillo families, which also leases machinery and has over 30 years of experience in the sector and a large fleet of industrial forklifts, fixed and rotary telehandlers and also elevating work platforms.

With the acquisition of the company DINA – RENT, COALCI has established itself as one of the leading companies in the machinery rental sector, with the companies having a combined fleet of over 800 machines and a combined turnover of more than €6,000,000, with the ambition to continuing to grow and continuing to provide a wide range of work at height solutions to its customers.

FERRAN SAGRERA UMBERT remarked that he was extremely pleased that it was possible for the company, of which he has been a majority shareholder since its inception, to be bought by a family-run company with the same approach to business.

MONTSERRAT ALMIRALL CIVIT, Financial Director of the COALCI Group affirms that the inclusion of both companies on the consolidated balance sheet will generate EBITDA of €2,200,000, with shareholders’ equity of €5,000,000 and fixed assets of €9,000,000 on the balance sheet.

Both companies, with complementary product ranges and approaches, will soon be focusing their operations in the new facilities that COALCI recently opened in La Roca del Vallés, in the province of Barcelona, with sufficient capacity to continue growing and store more machinery to meet the needs of its customers.

The SAGRERA UMBERT and XAVIER CASTILLO families were advised throughout the process by CAMIL RAICH, DANIEL PUIG and MONICA MORALEDA, lawyers from the firm RAICH & LOPEZ ROYO, and the GARCIA – ALMIRALL CIVIT families were advised by the firm of the lawyer JOSÉ Mª CALVO MALLOFRE.