COVID-19 Rent Deferral

KEY CHANGES UNDER Royal Decree 15/2020 FOR COMMERCIAL LEASES:

On 22 April 2020, the Spanish Official Gazette published Royal Decree 15/2020, which introduces measures particularly relevant to the possibility of requesting a deferral of rent payments under leases for non-residential use, including commercial premises, offices, warehouses, and similar properties.

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WHO CAN APPLY:

On the tenant side, the measures benefit self-employed workers and small and medium-sized enterprises (SMEs).

ELIGIBILITY REQUIREMENTS FOR COMPANIES TO REQUEST A RENT DEFERRAL:

Companies are eligible if they meet at least two of the following conditions:

1. Total assets do not exceed four million euros.
2. Annual net turnover does not exceed eight million euros.

3. The average number of employees during the financial year does not exceed fifty.

ELIGIBILITY REQUIREMENTS FOR SELF-EMPLOYED WORKERS AND SMEs TO REQUEST A RENT DEFERRAL: 

 In addition, the self-employed worker or SME must also meet the following requirements in order to benefit from the deferral:

• If self-employed, they must be registered and actively enrolled with Social Security, whether under the Special Scheme for Self-Employed Workers, the Special Scheme for Sea Workers, or a mutual society acting as an alternative to the Special Scheme for Self-Employed Workers.
• The business activity must have been mandatorily suspended under Royal Decree 463/2020 of 14 March, or under orders issued by the competent authority under that Decree; or, where activity has not been mandatorily suspended, the tenant must be able to demonstrate that their turnover in the previous month fell by 75% compared to the monthly average for the same quarter in 2019.

TYPES OF COVID-19 RENT DEFERRAL:

Where the tenant meets the above requirements, the type of rent deferral available depends on the circumstances of the landlord:

1. Where the landlord is a public housing company or public entity, or a private owner holding more than 10 urban properties (excluding garages and storage units), or properties with a total built area exceeding 1,500 m², any rent accruing during the state of emergency and any extensions thereof, for a maximum of four months, shall be deferred and repaid in instalments over the twenty-four months following the end of the state of emergency, or until the end of the lease term, whichever comes first.
2. If the landlord does not meet any of the above circumstances, both parties may agree to use the deposit to cover rent payments, and the tenant would be required to replenish the deposit within one year of the end of the state of emergency, or by the end of the contract, whichever date is earlier.

DEADLINE TO REQUEST A COVID-19 RENT DEFERRAL:

In order to benefit from the arrangements described above, the tenant must submit a request to the landlord within one month of the Decree entering into force, that is, by 23 May 2020.

When submitting the request, the tenant must demonstrate that the eligibility requirements are met by providing the following documentation:

1. In the case of a reduction in activity, by means of a self-declaration stating, on the basis of accounting records and income and expenditure data, that monthly turnover has fallen by at least 75 per cent compared to the average monthly turnover for the same quarter of the previous year. In any event, if the landlord so requests, the tenant must make their accounting books available to the landlord to evidence the reduction in activity.
2. In the case of a suspension of activity, by means of a certificate issued by the Spanish Tax Agency or the relevant body of the applicable Autonomous Community, on the basis of the cessation-of-activity declaration filed by the party concerned.

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