Review of COVID aid received 2022

Over the last few years, the different autonomous communities have been approving and granting extraordinary and direct aid to entities and the self-employed to improve solvency as a result of the financial effects of the COVID-19 pandemic. On previous occasions it was not necessary for the justifications to be reviewed by auditors, on this occasion in some cases the justification must be accompanied by an auditor’s report, which must be submitted before 28 February 2022.

Background

On 9 November 2021, ORDER ECO/209/2021 of 9 November 2021 was published, opening the procedure for the third line of extraordinary direct aid to support business solvency in response to the COVID-19 pandemic, for individuals or companies with a tax domicile or permanent establishment in Catalonia, affecting certain sectors with the aim of reducing their indebtedness and helping their solvency.

Objective

The aid was to be used to satisfy the debt and payments to suppliers and other creditors, financial or non-financial, as well as the fixed costs incurred, including accounting losses, provided that these have accrued between 1 March 2020 and 30 September 2021 and come from contracts prior to 13 March 2021, satisfying firstly, payments to suppliers, in order of seniority and, if appropriate, the nominal amount of bank debt will be reduced, giving priority to debt with public guarantee.

It should be recalled that for the purposes of the Order, eligible fixed costs are considered to be those borne by the companies, such as rent, electricity, gas and other supplies, insurance, telephony, whether paid or not, wages and salaries paid and accounting losses, generated regardless of the level of production, during the eligible period, which are not covered by the profit contribution (revenue minus variable costs) during the same period, or by other sources, such as insurance, temporary aid measures or other aid, with losses due to one-off impairment losses being exempted. Commitments and obligations: Some of the commitments and obligations that must be specifically fulfilled are:

1. Maintain the activity corresponding to the aid until 30 June 2022.
2. Not to distribute dividends during 2021 and 2022.
3. Not to approve increases in the remuneration of senior management for a period of two years from the date on which the aid is granted.
4. Keep and safeguard the documentation accrediting the requirements and justifying the application of the funds received, as established in the regulatory bases of the aid, and make it available to the competent bodies.
5. To comply with article 55.2 of Law 19/2014, of 29 December, on transparency, access to public information and good governance and to adhere to the ethical principles and rules of conduct to which the beneficiaries must adapt their activity.
6. Comply with the other obligations provided for in current legislation on subsidies and the applicable sectoral regulations.

Justification of the aid

Article 9 of Order EMT/223/2021, which approves the regulatory bases, requires beneficiaries to provide an auditor’s report issued by a natural or legal person registered in the ROAC, in the following cases:

• In the case of having applied for aid for fixed costs consumed when the amount of the aid is equal to or greater than 60,000 euros
• In the event of having applied for aid for accounting losses caused by fixed costs not covered regardless of the amount of aid granted.

During the month of January and until 28 February, the entities or entrepreneurs that apply to them will have to carry out the justifications together with the corresponding auditor’s review within the established deadlines. As always, AddVANTE is at your disposal for any queries you may have regarding these justifications.