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March 17, 2020 Spain declares State of Alarm: immediate tax implications Executive summary On 14 March 2020, the Spanish Government issued Royal Decree 463/2020 (the Decree) declaring a State of Alarm (In Spanish, Estado de Alarma) for Spain. The Decree sets forth certain temporary measures that will apply during the current world health crisis. The duration of this State of Alarm as per the Decree is of 15 natural days (the longest this State can be declared as per the Spanish rules), but it can be extended if so approved by the Parliament. In addition, on 13 March 2020, the Spanish Government issued Royal-Decree Law 7/2020 providing small and medium-sized companies with a deferral for payment of certain tax debts. This Tax Alert summarizes the measures that have been introduced and their impact with respect to the Spanish tax system. Detailed discussion The Royal Decree which approved the State of Alarm includes several measures aimed at containing the spread of COVID-19. Their implications for tax purposes are: Measures on existing administrative and jurisdictional procedures The following extraordinary measures on terms and deadlines are relevant for Spanish tax purposes:
Measures implying the lockdown of the administration In addition to the measures above, the Royal Decree introduces several measures aimed at limiting the spread of COVID-19, which include the lockdown of most of the administration buildings. As a result, and as published on the webpage of the Spanish Tax Authorities, all tax offices are closed until the State of Alarm ceases to be applicable. Other measures The Royal-Decree Law 7/2020 has introduced additional flexibility for small and medium-sized companies to defer the payment of tax amounts due not exceeding €30,000 for up to six months (the first three months without incurring delay interest). This measure applies not only to amounts resulting from self-assessment of taxes but also to withholding taxes. For these purposes small and medium-sized companies are those whose turnover in the previous year does not exceed €6,010,121.04 in 2019. Next steps EY will carefully monitor all new developments, as well as any additional guidance which could be issued by the Spanish Tax Authorities in this regard and, in particular, regarding the suspension of compliance with tax formalities. We will also follow any extension of the State of Alarm which may be agreed by the Parliament. For additional information with respect to this Alert, please contact the following: Ernst & Young Abogados, Madrid
Ernst & Young LLP (United States), Spanish Tax Desk, New York
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