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FAQ: What are the Consequences of Coronavirus?

Corona virus FAQ

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At Lexidy Law Boutique we are continuously monitoring and responding to this outbreak. This Coronavirus FAQ will be updated as more is known about how it is affecting people worldwide. For more information, check back regularly on Lexidy Law Boutique coronavirus pages.

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FAQ Coronavirus Consequences:

Q: How can I pay the rent if I do not have any income?

A: For the moment, the Spanish government has not announced any economic measures that could cover possible rent arrears. Therefore, the payment of the rent is not suspended or deferred automatically.

The best solution would be to negotiate with the owner a lowering of the rent or the payment of a part, deferring the rest in several payments. If it were not even possible to pay part of the rent, we could claim that this was a case of force majeure and this would lead to the suspension or termination of the contract, without it being a breach of contract. 

On the other hand, the Government has decided to allocate EUR 100 billion to Spanish to the companies in the most affected sectors (tourism, hotels industry, transport, education), in the form of an exceptional loan, operated through the Instituto del Crédito Oficial (ICO). Through these guarantees, companies will be able to have immediate liquidity, guaranteed by the state in order to meet their operating expenses.

Q: Can the supply companies cut off my basic supplies because of non-payment?

A: Government measures include a ban on cutting off basic supplies (water, electricity and gas) to vulnerable groups, such as those who have become unemployed as a result of the coronavirus or whose income has been reduced by 40% in the case of the self-employed.

 

Q: Do I have to keep paying my mortgage?

A: As a general rule, you must continue paying your mortgage. However, the Spanish government has approved a measure under which you may enjoy a one-month moratorium on mortgage payments if you meet the following requirements:

  • That you become unemployed or if you are a freelancer, that you have suffered a substantial loss of income or significant drop in sales.

 

  • That the total income of the members of the family unit does not exceed three times the Public Indicator of Multiple Effects Income (IPREM) in the month prior to the request for the moratorium. This means not to exceed the amount of 1,613.52 € per month. Limits are increased if the person has dependents within the household: children, ancestors, or people with disabilities

 

  • That the mortgage fee, plus expenses and supplies, exceeds 35% of the net income of the family unit

 

  • That as a result of the coronavirus health emergency the family unit has suffered a significant alteration in economic circumstances.

Employees who lose their jobs in the coming weeks will be eligible to benefit from this moratorium. At the moment, it is still pending to define exactly how this will work, but it would be reasonable for us to assume that it will last for several months or possibly for the duration of the economic consequences of the current crisis.

In order to take advantage of the mortgage moratorium you will have to go to your financial entity and request it within one month and fifteen calendar days, from today 18th March 2020.

 

Q: How do I pay the payroll to my employees if I cannot continue with my activity?

A: You can apply a Temporary Employment Regulation Procedure (ERTE), which is a way for companies to “freeze” employment contracts, without firing employees. When the situation normalizes in the future, firms will be able to re-activate employee contracts at their previous levels. In the meantime, employees are paid benefits by the government, which are a function of the salary that they were receiving under their contract. Additionally, employers with less than 50 employees who carry out this measure will be exempt from paying Social Security contributions for their employees.

On the other hand, as mentioned above, the Government has decided to allocate EUR 100 billion to Spanish to the companies in the most affected sectors (tourism, hotels industry, transport, education), in the form of an exceptional loan, operated through the Instituto del Crédito Oficial (ICO). Through these guarantees, companies will be able to have immediate liquidity, guaranteed by the state in order to meet their operating expenses.

This Q&A will be updated as more is known about COVID-19**

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