Moratoria and deferral of social security contribution payments

Royal Decree-Law 11/2020, of 31 March, adopting additional urgent measures in the social and economic field to deal with COVID-19, establishes for companies:

• In Article 34, moratoriums for the payment of Social Security business contributions and those regarding joint collection, of six months, without interest, whose accrual period is between April and June 2020, and
• In Article 35, deferral of the payment of Social Security debts whose statutory period of entry takes place between April and June 2020, with an interest of 0.5% applied.

Order ISM/371/2020, of 24 April, implements Article 34 of Royal Decree Law 11/2020, of 31 March, which adopts urgent complementary measures in the social and economic field to deal with COVID-19.

Said Order determines the economic activities that may use it, in accordance with the current National Classification of Economic Activities (CNAE-2009).

These activities are as follows:

119 (Other non-perennial crops).
129 (Other perennial crops).
1812 (Other printing and graphic arts activities).
2512 (Manufacture of metalwork).
4322 (Plumbing, heating and air conditioning system installations).
4332 (Carpentry installation).
4711 (Retail trade in non-specialised establishments, predominantly food, drink and tobacco)
4719 (Other retail trade in non-specialised stores).
4724 (Retail trade of bread and bakery products, confectionery and pastry in specialised establishments)
7311 (Advertising agencies).
8623 (Dental activities).
9602 (Hairdressing and other beauty treatments).

For the contributions corresponding to March, it is only possible to request deferment of payment during the first ten days of April. With respect to the contributions corresponding to the months of April and May, the companies whose activity is not suspended due to the state of alarm and is included among those listed in Order ISM/371/2020, of 24 April , may opt to request a moratorium or a deferment of payment, as appropriate. If their activity is not included among those listed in the aforementioned Ministerial Order, they cannot request a moratorium, but they can request a deferment of payment.
The payments corresponding to the month of June may only be subject to a moratorium, if applicable, and only for those companies that meet the activity requirements.

Both moratoria and deferrals must be requested within the first ten calendar days of the statutory deadline for the deposit. 
As such, those companies that so desire, and provided that the conditions established for access to both the moratoria and the deferrals indicated, may, in general* terms:

1. Request, until 10 April, the postponement of the payment of assessed contributions for the month of March 2020,  
2. Apply, from 1 May to 10 May for a moratorium of 6 months, without interest, on the payment of their social contributions, and for those regarding joint collection, corresponding to April, or, failing that, the postponement of the quotas for that month of April, this would imply the timely regulatory entry of workers' contributions, as well as of occupational accident and illness fees, 
3. Request from the 1 to the 10 June, a moratorium of 6 months, without interest, on the payment of their social contributions, and those regarding joint collection, corresponding to the month of May, or, failing that, the postponement of the quotas of that month of May, this would imply the timely regulatory entry of workers' contributions, as well as of occupational accident and illness fees, and 
4. Apply from 1 to 10 July for a moratorium of 6 months, without interest, on the payment of their social contributions, and those regarding joint collection, corresponding to the month of June.

Social security business contributions and those regarding joint collection for which the accrual period is between April and June 2020.

Article 34 of Royal Decree-Law 11/2020, of 31 March, enables the Social Security General Treasury to grant six-month, interest-free, moratoria to companies and self-employed workers included in any social security scheme, providing the activities they carry out have been suspended due to the current state of emergency and they meet the requirements of Order ISM/371/2020, of 24 April, responsible for the implementation of the aforementioned Article 34.

Applications for a moratorium must be submitted, in the case of companies, through the electronic data transfer System in the Social Security field (RED system) regulated by Order ESS/484/2013. To identify CCCs and settlement periods for which the moratorium is requested, the Entering Collective Bargaining Agreements in CCC function has been amended and renamed Entering Unusual Contribution Cause in CCC. In this function, select the Enter Covid 19 Moratorium option.

Applications may not be submitted by means other than the RED system, with no effect on those which do not comply with the procedure indicated.

The Social Security General Treasury may enable any other electronic means other than the RED System or SEDESS for the application to be made.  In such a case, information will be provided.

Companies shall submit individual applications for each contribution account code containing the employees for whom the moratorium on the payment of their Social Security contributions and those regarding joint collection is being sought.  However, in order to simplify the submission of applications, an application may be submitted covering several consecutive liquidation periods, always within those first ten days.

Communication, through the means indicated, of the identification of the contribution account code and the payment period subject to the moratorium, will be considered as a request of the moratorium.

In order for the Social Security General Treasury to grant the moratoriums on the payment of Social Security contributions, the activity requirements established in Royal Decree Law 11/2020 and in Order ISM/371/2020, of 24 April, which develops Article 34 of Royal Decree Law 11/2020, of 31 March, which adopts urgent complementary measures in the social and economic field to deal with COVID-19, must be met.

In addition, these moratoria will not apply to the contribution account codes for which companies have obtained exemptions in the payment of the business contribution as well as in the joint collection fees. As a result of the procedures for the suspension of contracts and reduction of working hours by force majeure, as regulated in Article 24 of Royal Decree-Law 8/2020, of 17 March.

In the case of companies which do not have an authorised period of entry other than those established by regulations, the quotas for the liquidation periods of April, May and June 2020 shall be deposited in the months of November 2020, December 2020 and January 2021, respectively, and simultaneously with the October, November and December 2020 quotas.

The granting of the moratorium does not exempt companies from submitting payment settlements through the procedures and deadlines already established, nor self-employed persons or similar from depositing contributions.

Such a communication shall be deemed to have been made with the effective application of the moratorium on liquidations which are practiced from the time the application is submitted. Therefore, no specific resolutions or communications on the granting of the moratorium will be sent.

It is possible to request the deferral of quotas whose regulatory payment periods correspond to the months of April, May and June.

• Between 1 and 10 April: The deferral of contributions for the March liquidation period may be requested.
• Between 1 and 10 May: The deferral of contributions for the April liquidation period may be requested.
• Between 1 and 10 June: The deferral of contributions for the May liquidation period may be requested.

Requests for deferral which are submitted after the indicated deadlines for the current month shall be considered extemporaneous for the purpose of obtaining a COVID deferral with reduced interest, and the interest of delay shall be applicable.

Companies must submit deferral applications on their own behalf or by a representative of the legal or natural person, even if they are not a RED authorised person, using the Deferment of Social Security debt payments function on the Social Security e-Office Electronic Register.

The RED authorised person must submit requests for its companies’ deferrals through the procedure of the Social Security e-Office Electronic Register as an authorised representative of a legal person or of a natural person, as appropriate.

The corresponding field (COVID)  has been incorporated into the Social Security e-Office Electronic Register to specify whether the request for deferral corresponds to the reduced interest rate assumption of Article 35 of Royal Decree-Law 11/2020 or not, as well as the possibility of identifying the RED authorised person status of the applicant acting as a representative of a legal person or a natural person.

First, the company needs to be aware of the payment of its social security obligations, but it will also be necessary:

1. not to have a deferral in effect for debts corresponding to periods prior to March.
2. The application shall be made within the time limits set out in Royal Decree-Law 11/2020, and
3. via the channels referred to in paragraph 3.

If any of these requirements in subparagraphs (a), (b) or (c) are not met, the submitted request for deferral shall be processed and resolved in accordance with the general procedure, and the rate of interest of delay referred to in article 23.5 of Royal Legislative Decree 8/2015, approving the consolidated text of the General Law on Social Security.

The COVID deferral shall be processed and decided in accordance with the general procedure, with an interest of 0.5% being applied instead of the interest of delay in force at that time, which is that of the ordinary deferrals (art. 23.5 of Royal Decree Law 8/2015).

Therefore, the general rules governing deferrals to Social Security debts as well as the conditions required for their effectiveness and validity shall apply: the depositing of the non-deferrable quotas (those corresponding to occupational accident and occupational disease contingencies, and the contribution of the workers) within one month of the date of notification of the resolution granting the deferral, the provision of the guarantee offered when it becomes enforceable and the non-generation of debt after the granting of the deferral.

All affected Contribution Account Codes (CCC) may be included in a single deferral request.

In the case of companies whose owner is a natural person, included in the social security system as a self-employed worker, and wishes to extend the postponement of contributions to the Special Scheme for Self-Employed Workers, in addition to those for employed persons, such circumstances must be recorded in the same application by completing the relevant fields.

During the processing of requests for deferral submitted within the statutory time limit, and irrespective of the date on which the corresponding resolution is issued, no prejudice shall arise to the person concerned for the purpose of obtaining the certificate of being kept up-to-date prior to the month of accrual for which the deferral is being requested, nor shall it be after the concession charged for the time of processing of the deferral.

For the April and May payments, this deferral may be an alternative for those companies that cannot access the moratorium, as they do not meet the activity requirements established in Order ISM/371/2020, of 24 April, which develops Article 34 of Royal Decree Law 11/2020, of 31 March, which adopts urgent complementary measures in the social and economic field to deal with COVID-19 

However, both measures are incompatible with each other, with respect to the periods for which the deferral or moratorium is being requested.