From ARCO ABOGADOS Y ASESORES TRIBUTARIOS, S.L.P. we are aware that the events related to the health and economic crisis of COVID-19 occurred in Spain and throughout the world, are confronting our clients with new and unforeseen problems that require the adoption of urgent measures.

The events that are taking place could have important legal impact for our clients in different areas, from a contractual, procedural, labor, and even criminal point of view.

The aim of this Circular is to inform our clients of the legal and fiscal measures applicable to this situation, as well as our collaboration to provide advice and respond to all legal and fiscal questions that may arise in the following weeks.

We would like to highlight that this document is aimed at informing on the recent developments on this exceptional and unprecedented crisis.  In that sense, please note that this paper is subject to changes  due to the evolution of the crisis in the coming weeks, to the exceptional measures that are adopted both, nationally and internationally, and to the criterion of the doctrine and the Courts of Justice, which, like us, will have to face these questions for the first time.




The following explains the measures decreed by the Spanish Government last week as well as those adopted by the Regional Governments:

Order PCM / 205/2020, of March 10, publishing the Agreement of the Council of Ministers of March 10, 2020, establishing exceptional measures to limit the spread and contagion by COVID- 19, banning direct flights between the Italian Republic and Spanish airports.

By this order, the Government has decided to restrict direct flights between Spain and Italy. The order entered into force at 00:00 on March 11, 2020, with effect until March 25, 2020 at 00:00. This prohibition does not apply to State aircraft, nor to non-commercial stopovers, exclusive cargo flights, positional, humanitarian, medical or emergency flights.

Royal Decree-Law 6/2020, of March 10, by which certain urgent measures are adopted in the economic field and for the protection of public health:


By this Royal Decree, the Government adopts a set of urgent measures aimed at the economic and public health fields:

  1. Law 1/2013, on the protection of mortgage debtors, is modified, suspending for four years until May 2024, launches that affect people in a situation of special vulnerability, also expanding the group of possible beneficiaries, without disrupting the foreclosure procedure. 
  2. Law 9/2012, of November 14, is amended as regards the legal regime of the Asset Management Company from the Bank Restructuring, S.A. (SAREB) refers, for the purposes of not applying the SAREB to the provisions of Article 363.1.e) of the Companies Act Capital, that is, the obligation to dissolve the company for losses that reduce the equity to an amount less than half of the share capital.
  3. Royal Decree 84/2015, of February 13 is amended to expand the kind of financial institutions already established which can request their transformation into banks.
  4. Organic Law 3/1986, of April 14, on Special Measures in Public Health Matters is amended, in the sense of providing that periods of isolation or contagion of employees as a consequence of the COVID-19 virus will be considered of a situation assimilated to an accident at work for the purposes of the economic benefit for temporary disability of the Social Security system.
  5. Organic Law 3/1986, of April 14, on Special Measures in Public Health Matters is amended to establish the centralized supply by the State of health products different from drugs.


This Royal Decree entered into force on March 12, 2020

We understand that the measure that could most affect our clients is the one regarding the consideration of a situation assimilated to a work accident for the purposes of the economic benefit for temporary disability of the Social Security system that will be applied to working people who are in periods of isolation or contagion as a consequence of the virus COVID-19. Prior to said measure, they were considered to be temporarily disabled (sick leave) due to a common illness.

This implies an improvement for these employees, as well as a relief for the companies where they work, because they will not have to pay any part of the salary that their employees charge.

  • Order PCM / 216/2020, of March 12, publishing the Agreement of the Council of Ministers of March 12, 2020, establishing exceptional measures to limit the spread and contagion by COVID- 19, by prohibiting the entry of passenger ships from the Italian Republic and cruises of any origin destined to Spanish ports.

The Order restricts travels between Spain and Italy by banning the entry of ferries from the Italian Republic and cruises of any origin destined to Spanish ports.

This measure entered into force on March 12, 2020.

  • Royal Decree Law 7/2020, by which urgent measures are adopted to respond to the economic impact of COVID-19.


By this Royal Decree, the Government adopts a set of urgent measures aimed at the economic and public health fields:


Chapter I adopts a set of reinforcement measures in the health field.

Chapter II introduces family support measures.

Chapter III articulates support measures for the tourism sector.

Chapter IV contains the transitional financial support measures.

Chapter V adopts a series of measures for the efficient management of Public Administrations.


Due to its relevance for our clients, the tourism sector support measures and the temporary financial support measures will be developed below.


1. Measures to support the tourism sector:


The expansion of the Thomas Cook financing line is agreed to serve all companies established in Spain included in certain economic sectors.

The financing line provided for in article 4 of Royal Decree-Law 12/2019, of October 11, is extended to all companies and self-employed workers with registered office in Spain that are included in the economic sectors defined in the first Additional Provision of this Royal

Decree-law (catering, transport, tourism and leisure) and will have an additional 200 million euros to that initially provided in the aforementioned article 4 of Royal Decree-law 12/2019, of October 11.

Support measures are implemented to extend the period of activity of employees with discontinuous fix contracts in the tourism, commerce and hospitality sectors linked to tourism activity.

The companies related to the tourism sector, that generate productive activity in the months of February, March, April, May, June and that initiate or maintain high during those months the occupation of employees with discontinuous fixed-term contracts, may apply for that months a detraction of 50 percent of business contributions to Social Security for common contingencies, as well as for the concepts of joint collection of Unemployment, FOGASA and Professional Training of said workers.

The foregoing will be applicable from January 1, 2020 to December 31, 2020.


2.Transitional financial support measures:


Deferral of tax debts.

The deferral of the income of the tax debt corresponding to all those declarations-settlements and self-assessments whose deadline for submission and payment ends from March 13th and before May 30, 2020.

This deferral will also apply to the following tax debts:

  • Debts from withholding or instalment payments.
  • Instalment payments of Corporate Income Tax (Impuesto sobre Sociedades).
  • Tax debts deriving from output taxes that have to be legally charged (mainly VAT).


To be granted with such deferment, the debtor (person or entity) should not exceed the volume of operations of an amount of 6,010,121.04 euros in 2019.

Ultimately, requests for deferment of tax debts of less than 30,000 euros may applied without contribution of guarantee and no interest will be accrued during the first three months if the deferral is for a duration equal or less than 6 months and is requested before May 30 2020.

Likewise, the AEAT (Spanish Tax Agency) has posted on its website the provisional Instructions to request deferrals according to said Royal Decree, which can be accessed through the following link:


Instructions on deferments AEAT


Request for extraordinary postponement of the repayment schedule for loans granted by the General Secretariat for Industry and Small and Medium-sized Enterprises.

The beneficiaries of concessions of the financial support instruments for industrial projects may request the deferment of the payment of principal and/or interest of the present annuity, provided that their maturity is less than 6 months from the entry into force of This Royal Decree-Law. Such deferment will be granted only if the health crisis caused by COVID-19 has triggered periods of inactivity in these beneficiaries, a reduction in the volume of sales or interruptions in supply in the value chain that make it difficult or impossible to attend its payment.  If the request is estimated, it will entail the corresponding re-adaptation of the refund schedule.

This Royal Decree has entered into force on March 13, 2020.


 Other measures.              


In addition, the temporary closure of educational centers and care centers for the elderly has been adopted, as well as a ban on large group events in closed spaces of more than 1,000 people.

As far as European Union is concerned, the Heads of State and Government held an extraordinary European Council on March 10 in order to analyze the situation in the Member States and reiterate the need for a common European approach.




The Spanish Government has declared the state of alarm, according to the Spanish Constitution, by enacting the Royal Decree 463/2020, of 14 March, in order to deal with the health situation caused by the SARS-CoV-2 coronavirus. The declaration of the state of alarm went into action on the midnight of Saturday 14th 2020, and affects the whole Spanish territory for 15 days.  The Royal Decree approves a series of measures including the following:


Suspension of administrative deadlines.


Terms are suspended and the deadlines for processing administrative procedures are suspended until the date on which Royal Decree 463/2020 is lost in force, that is, until 29 March 2020, without prejudice to its possible extension. The calculation of deadlines will resume when Royal Decree loses in force or, where appropriate, the extensions of it.

Nevertheless, based on the other tax measures implemented, we think the suspension does not affect to tax returns to be filed during the state of alarm period, i.e. VAT, wage tax and Form 720 which need to be filed before the 20th March 2020, regarding VAT and wage tax, and end of March 2020 regarding Form 720. 


Suspension of limitation and expiry periods.


The limitation periods and expiration of any actions and rights will be suspended during the term of the state of alarm and, where appropriate, during the extensions of it.


Suspension of Procedural Time Limits.


Terms are suspended and deadlines for all jurisdictional orders are suspended and interrupted. The calculation of the deadlines will resume at the time when the royal decree loses in force or, where appropriate, the extensions thereof.


A number of exceptions are made to the previous suspension:


In the criminal courts the suspension and interruption shall not apply to:

Habeas corpus proceedings.

To the actions entrusted to the on-call services.

To actions with detainees.

To protective orders,

Urgent proceedings on prison surveillance.

To any precautionary measures in matters of violence against women or minors.

Likewise, at the investigation stage, the competent judge or court may agree on the practice of actions which, as a matter of urgency, are urgent.


In other jurisdictional orders the suspension of terms and deadlines shall not apply to the following situations:


The procedure for the protection of the fundamental rights of the person provided for in Articles 114 and following of Law 29/1998, of July 13, governing the Administrative Jurisdiction, or the processing of judicial authorizations or ratifications provided for in Article 8.6 of that law.

The procedures of collective conflict and for the protection of fundamental rights and public freedoms regulated in Law 36/2011, of 10 October, governing the labour jurisdiction.

Judicial authorization for non-voluntary detention on the basis of psychological disorder provided for in article 763 of Law 1/2000 of 7 January on Civil Procedure.

The adoption of child protection measures or provisions provided for in Article 158 of the Civil Code.

Likewise, the judge or court may agree on the practice of any judicial proceedings that are necessary to avoid irreparable prejudice to the legitimate rights and interests of the parties to the proceedings.


Measures to content virus expansion in the field of commercial activity, cultural facilities, recreational establishments and activities, hospitality and catering activities, and additional ones.


The opening to the public of premises and retail establishments is suspended, with the exception of commercial retail food, beverage, everyday goods, pharmaceutical, medical, opticians and orthopaedic products, hygienic products, press and petrol stations, tobacco shops, technological and telecommunications equipment, pet food, internet trading, telephone or correspondence, dry cleaners and laundries.

Any other activity or establishment, which the competent authority believes may pose a risk of contagion, is suspended.

The stay in commercial establishments whose opening is permitted must be strictly necessary for consumers to be able to purchase food and essential products, being strictly forbidden the use or consumption of such goods in the commercial facilities.

Hospitality and restaurant activities are suspended during the state of alarm period, however, and in order to protect disable people, delivery services are permitted to restaurants.


Limitations on the movement of natural persons.


During the duration of alarm state, people may only circulate on the streets due to any of the following activities:

Acquisition of food, pharmaceutical and essential products.

To access healthcare services.
Commuting from home to the workplace to perform their work, professional or business activity and vice versa.
To assist old people, children, dependent persons and persons with disabilities or especially vulnerable.
To go to financial and insurance institutions.
Due to force majeure or situation of need.
Any of the activities above or of a similar nature shall be carried out individually, except for individuals accompanying disabled persons or, people holding any other justified causes.




With regard to the foregoing, we recommend our clients to go through the following points to check whether they may be helpful to face COVID-19 crisis:




Due to the alarm state declared by the Spanish government, clients are facing labour issues for which the following actions may result of interest:

Exceptional measures to prevent occupational hazards and for safety and health of workers.

In this area, account should be taken to the procedure for action on occupational risk prevention services against exposure to the new COVID19 of 5 March 2020 prepared by the Ministry of Labour and Social Economy. In that regard, it is advisable to implement a protocol that serves to minimize the health effects on workers and to ensure the functioning of the activity. Among the basics, it is recommended by trade unions to strengthen cleanliness, personal hygiene measures and reduce and limit contacts and face-to-face meetings.


Quarantine or leave for childcare.


According to Royal Decree Law 5/2020, of 10 March, quarantine or sick leave due to COVID-19 will be treated as an occupational accident for the purposes of the benefit for temporary disability granted by the Spanish Social Security System, therefore, workers under any of those circumstances will be entitled to received 75% of their salary of reference from day one of sick leave from and employers will not have to borne any expenses.

We expect extraordinary measures with regard childcare leave in order to address the issues related to the locked down of schools.

Remote work.

Despite it is recommended by employers’ associations and trade unions, to this date, no rule imposing tele-work or remote-work has been implemented. However, the preparation of means and protocols in this respect is key just in case distance work become mandatory in the next weeks. 


Measures to reduce labour costs during locked-down


In addition to the well-known EREs (Employment Regulation Dossier for collective dismissal), the Temporary Employment Regulation Dossier (ERTE) is to be seen as one of the solutions that companies can put on the table to tackle the economic crisis resulting from the coronavirus.

The ERTE dossier is a temporary measure for a company that serves to suspend one or more employment contracts for a specified period of time. Those employees affected by an ERTE, unlike those affected by an Employment Regulation File (ERE) or collective dismissal, shall not be entitled to severance payment since they will recover their jobs but they will be granted with unemployment benefits. During the period of time of an ERTE, the employers do not have to pay the wages to workers affected by it but, they have to continue paying their Social Security contributions.

The suspension of employment contracts and/or reduction of working time can be adopted for economic, technical, organisational or production reasons, as well as sue to force majeure reasons, according to Spanish labour laws. Under the current situation, we consider force majeure reason as the faster and more secured reason to justified any of labour measures above.

For the sake of clarity, the concept of force majeure as a cause of termination of employment contracts refers to an event external to the employer's sphere of activity, entirely independent of his will, which could not be foreseen or which envisaged could not be avoided and which makes definitively impossible to provision of work.




We recommend our clients to review the most relevant contracts signed to analyse the provisions relating to cases of force majeure and analyse the possible risks that the contracting party may face for possible non-compliance, delays, damages that may occur as a result of the current situation, all in order to prevent any adverse scenario and mitigate its effects.




It would be appropriate to review the scope of insurance coverage contracted to identify situations to which these policies apply and also to anticipate and prepare the procedures and implementation deadlines for reporting the damage.




It is recommended to watch out possible litigation scenarios in order to collect and constitute the necessary evidence to defend against potential conflicts that may arise.

The success of the claims of possible damages that our clients may suffer in the coming weeks will depend in large part on this work of preparing these litigations and their proof. 

Possible suspensions of hearings and pending procedures before the Courts are expected and possible slowdown in their processing.



16th March 2020.

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