Royal Decree-Law 18/2020, of 12 May, regulates a series of social measures in defence of employment. Among others, we highlight:
a new term is introduced: ERTE due to partial force majeure.
the new extension, until June 30, of the employment regulation proceedings (ERTE) due to force majeure, either total or partial;
the regulation of the exemption from Social Security contributions, based on the number of workers in the company and the type of ERTE (total or partial);
companies and entities that have their tax domicile in tax havens are not eligible for ERTE due to force majeure.
companies that are in a situation of force majeure cannot proceed with the distribution of dividends.
Differences between ERTE due to total or partial force majeure
Before knowing the exemption from Social Security contributions, it is necessary to differentiate between ERTE due to PARTIAL force majeure (a part of the activity is recovered) or TOTAL force majeure (the business activity is not reactivated).
In the event of ERTE due to partial force majeure, workers are allowed to return to work to the extent necessary for the correct development of the activity, up to a maximum period of 30 June and always giving priority to the reduction of working hours.
Depending on the type of ERTE, the percentage of exemption from Social Security contributions will vary.
How does the exemption from Social Security contributions work?
Those companies included in ERTEs due to total force majeure, which have less than 50 workers in the workforce on 29 February, may exempt (without paying) 100% of their Social Security contributions. On the other hand, in the case of having more than 50 workers registered with the Social Security, the exemption from the obligation to pay contributions will reach 75% of the company’s contribution (i.e. only 25% of the contributions will be paid). These exemptions will be maintained in May and June for total force majeure ERTEs.
In the case of ERTEs due to partial force majeure, there is an exemption from Social Security contributions, the percentage of which will depend on whether the workers restart their activity or continue with suspended activity. These exemptions will be more beneficial in the case of reinstated workers.
We provide a summary table of the different options
ERTE partial force majeure
Tax transparency and dividend distribution
Those companies and entities with tax domicile in tax havens will not be able to take advantage of the ERTE due to partial force majeure.
On the other hand, those companies that are included in ERTEs due to force majeure will not be able to proceed to the distribution of dividends corresponding to the fiscal year in which these redundancy plans are applied, except in the case that they return the exempted quotas. This limitation will not be applicable to those companies with less than 50 employees on 29 February 2020.